Demand for Net-based security products increases

Demand for Internet-based security products is exploding, as sales reached $243 million last quarter and are expected to more than double next year, a new study shows.

With Check Point Software Technologies and Cisco Systems leading the way, sales of virtual private networking (VPN) hardware grew to $243 million during the 2000 third quarter, triple the revenue from the same period last year and a growth of 32 percent from the previous quarter.

Sales of security products are expected to skyrocket to $506 million in revenue next third quarter, according to a new study by market research firm Infonetics Research.

"We're at the beginning of a period of astronomical growth in the VPN market," Infonetics analyst Jeff Wilson said in a statement.

VPNs allow companies to create secure connections using the Internet, offering a cheap and easy way to connect not only mobile workers, but also branch offices and partners to their corporate computer systems.

The VPN market has long been touted as a new way of networking that can save businesses money. Previously, workers on the road had to dial into corporate networks with a special number or over an expensive leased line. With VPNs, those same workers can log onto a network by calling a local Internet service provider number, eliminating the need for expensive calls.

For the third quarter, Check Point led the pack with 29 percent market share, followed by Cisco with 13 percent and Nortel Networks with 9 percent, according to the study. Check Point's figures include revenue from a partnership with Nokia, in which the two companies are jointly creating and selling VPN equipment.

Three other companies--Lucent Technologies, NetScreen Technologies and WatchGuard Technologies--followed with 5 percent market share each.

SonicWall captured 4 percent market share, while Intel grabbed 2 percent.

For 2000, companies are expected to rake in $840.9 million in VPN hardware sales, triple the amount last year, according to the study.