Worldwide Security Appliance Revenues Declined 6% in the First Quarter While Unit Shipments Increased, According to IDC

FRAMINGHAM, MA – JUNE 26, 2003 – According to recent data released from IDC's Worldwide Quarterly Security Server Appliance Tracker, factory revenues in the worldwide security appliance market totaled $316 million in the first quarter of 2003, down 6% in comparison to the first quarter of 2002. Although security appliance revenues declined in 1Q03, unit shipments have actually increased from 1Q02 by 17%.

"The decline in vendor revenue and the increase in total shipments is the result of a number of factors – increased deployment of devices for branch and remote offices, increased price pressure throughout the market coupled with a weaker US dollar, and the clearing of inventory in anticipation of the release of new products," said Charles Kolodgy, research director for IDC's Security Products service.

In the first quarter of 2003, Netscreen barely surpassed Nokia for the number 2 vendor position – Netscreen achieved 14% market share compared to Nokia's 13%. Netscreen and WatchGuard both saw positive year-over-year revenue growth in 1Q03. Cisco remains the clear leader in the overall security appliance market with a strong 36% market share.

In terms of product price bands, security appliances priced from $3K-$5.9K generated $86 million in revenues, making it the most attractive price band among customers. The sixth biggest price band ($25K-49.9K) achieved 42.5% sequential revenue growth – the largest growth rate out of the eight price band categories tracked by IDC.

Top 5 Vendors, Worldwide Security Appliance Factory Revenue, First Quarter 2003 ($M)

Vendor Q1 2003 Market Share Revenue Growth


Cisco 36.8% -19.4%

Netscreen 14.4% 86.6%

Nokia 13.4% –21.3%

Sonicwall 6.2% -21.0%

Watchguard 4.8% 37.6%

Others 24.5% .9%

Total 100.0% -5.6%

Source: IDC, June 2003

IDC's Worldwide Quarterly Security Server Appliance Tracker is a quantitative tool for analyzing the global security server appliance server market on a quarterly basis. The Tracker includes quarterly shipments (both ISS and upgrades) and revenues (both customer and factory), segmented by vendor, sub-market, family, model, region, operating system, price band, CPU type, and architecture.

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