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Dataquest: Security Software Sales Sail North

A study released by Dataquest Tuesday found that firms will have spent $3.2 billion on security software by the end of the year -- a 22-percent increase over the $2.5 billion spent in 1999.

What's more, the market is projected to grow at a compound growth rate of 21.7 percent through 2004, with revenues topping $6.7 billion, said Dataquest, a Gartner Group division.

Common sense dictates this should not come as a surprise: As more and more e-commerce businesses head online and begin to ramp up their offensive attack on rivals, more and more defense becomes a necessity.

"As Internet and e-commerce applications mature, security will gain increased focus, creating more opportunity for vendors," said DiCenzo said. "Vendors of point solutions that are not best-of-breed need to widen their portfolios to address the limited market for suite-type solutions or look for merger or acquisition partners."

Hackers, too, are becoming more sophisticated and malevolent code savvy, cooking up nasty little virus such as this year's Melissa e-mail bug and, most recently, the Palm Phage virus, which was the first true virus to affect personal digital assistants. This makes bolstered protection much more of a necessity than a convenience.

Roberto Medrano, head of HP's Internet Security Solutions Division, told InternetNews.com Tuesday that Dataquest's estimates are neither overblown nor conservative.

"I've seen estimate that were higher and estimates that were lower," Medrano said. "What we will see is an increase in the number of security solutions for wireless devices and for WAP protocol. Growth will not be as significant in the PC industry, but will continue to increase for infrastructure."

Medrano also said he noticed security increasingly since the Y2K preparations began a few years ago.

"Peoples' attitudes have changed," Medrano said. "It used to be people would get security for defense, but now I call it an enabler of business. People need this to continue bringing in new customers in e-commerce and e-services. It's just like when I go to a bank -- I go there because I know my money is secure."

Medrano, who was in New York at Wireless World 2000 to promote a new HP security for WAP-enabled Nokia phones, said that the more technology and hackers get sophisticated, the greater the need for new technologies.

That's where firms such as Network Associates, Symantec and Trend Micro chime in as leaders (31 percent all-told) of the anti-virus software market. With 43.8 percent, 33.8 percent and 11.9 percent of the market share, respectively, the three firms constitute the bedrock of the industry.

However, they are not the only players in the their sector. Until September, RSA Security, a leader in e-security via public key infrastructure, had held a patent on an encryption algorithm that was so important, one of its largest rivals declared the firm had held the industry back.

That competitor, Baltimore Technologies, went on to release a number of products using the algorithm before notching a blockbuster purchase in mid-September when it bought Content Technologies for nearly $1 billion.

Content Technologies products enable organizations to implement policies protecting them against confidentiality breaches, exposure to e-mail legal liability, junk e-mail, e-mail-borne viruses, and misuse of e-mail and the Web. With the purchase, Baltimore tacked on over 6,000 customers and 6 million users throughout the world currently use Content Technologies MIMEsweeper to protect against business and network integrity threats.

"Just as e-security solutions have enabled and become the de facto standard f