Spam, encryption to drive security spending

Margie Semilof

New ways of tackling spam and a general need for better overall IT security are pushing a growth in spending for security products, according to one market research firm.

In a new study, The Radicati Group Inc., of Palo Alto, Calif., said security products are now at the top of the list for IT spending, while spending for other technologies is still somewhat sluggish. The study said total revenue from enterprise security products will grow from $2.9 billion in 2004 to $6.6 billion in 2008 -- an average rate of 24% each year.

"It's a market that has picked up steam," said Sara Radicati, the company's president and CEO. "In the past we had predicted 10% to 15% growth."

One of the trends cited by the study is the move away from products that do one task and toward software suites that tackle a whole range of security problems. Revenue for such security software suites is expected to jump from $185 million in 2004 to $492 million in 2008, the research firm said.

Clearswift Ltd.'s Mimesweeper, Tumbleweed Communications Corp.'s Mailgate and CipherTrust Inc.'s Ironmail are all examples of products that combine various technologies such as firewalls and antivirus and antispam software, Radicati said.

The all-in-one product segment has an advantage in that it is more convenient and can be less costly to operate. "It simplifies the overall management infrastructure and they are easier to install," she said. "The downside is they may be less specialized than a point [product]. Point [products] will always be a tad ahead."

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Antispam software is experiencing steady growth, too. Revenues are expected to increase from $979 million in 2004 to $1.7 billion in 2008 -- an average rate increase of 16% over four years.

Antispam technology in general is experiencing an evolution. Microsoft is making some moves in this regard with the planned release of Sender ID technology built into Exchange Edge Services, which is due out in 2005. Sender ID, a draft specification that is currently before the Internet Engineering Task Force, is designed to help reduce the problem of domain spoofing and protect against phishing schemes.

"Everyone is realizing that the real issue isn't just spam but the integrity of Internet communications," Radicati said.

And there is a resurgence of encryption technology. Simpler encryption techniques are helping to push encryption software beyond the early adopters. Revenue for e-mail encryption products will soar by 71% each year for the next four years, from $34 million in 2004 to $287 million in 2008, she said.

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