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October 6, 2003
VPN/firewall market to touch $4.2 billion in 2006

UNITED STATES -- Worldwide VPN and firewall hardware and software revenue grew 1 percent to US $705 million in Q2-03, and will reach US $831million by Q2-04, according to Infonetics Research's quarterly worldwide market share and forecast service, VPN and firewall products. By 2006, annual revenue is likely to hit US $4.2 billion, a CAGR of 16 percent.

Jeff Wilson, principal analyst at Infonetics Research, said: "The market was sluggish this quarter, particularly in the middle price bands for appliances; with all the changes going on with security products and architectures, end-users are hesitant to make purchase decisions quickly. Most vendors report that demand is still good, but that sales cycles are lengthening."

Q2-03 market highlights:
· Cisco is the revenue market share leader for total VPN/firewall hardware and software with 39.9 percent, followed by Check Point;
· NetScreen, Nokia, Nortel, SonicWALL, Symantec, and WatchGuard are strong second-tier players for revenue market share, with significant market share across a number of categories;
· NetScreen continues to grow faster than the market and most of their competitors, gaining 0.6 percent in overall revenue market share between the first and second quarter;
· Worldwide application-layer VPN gateway revenue fell slightly to US $18.3 million in Q2-03, but will grow 140 percent to $43.9 million by Q2-04, and $607 million by CY-06, a CAGR of 105 percent. The dip in revenue this quarter is temporary, not indicative of a slowdown overall; several vendors are closing up shop, but leading vendors are still reporting strong demand and growth.

The VPN and firewall products report tracks VPN and firewall appliances in six price-banded categories, hardware and software secure routers, application-layer VPN gateways, and VPN and firewall software (standalone and appliance). Updated quarterly, the forecasts cover all regions including North America, EMEA, Asia/Pacific and CALA.

Companies tracked in this service include Avaya, Aventail, Celestix Networks, Check Point, cipherOptics, Cisco, Computer Associates, Crossbeam, CyberGuard, D-Link, Enterasys, eSoft, Global Technology, Intel, Intrusion, Linksys, Lucent, Neoteris, NETASQ, NETGEAR, Netilla, NetScreen, Nokia, Nortel, SafeWeb, Secure Computing, ServGate, Siemens, SonicWALL, Stonesoft, Symantec, WatchGuard, Whale, ZyXEL, and others.

Contact:
Infonetics Research Inc.

Tel: +1-408-298-7999, Ext 226
jeff@infonetics.com
www.infonetics.com





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