Cisco Leads in Security Appliances—But for How Long?


Dec. 4 2017, Updated 9:03 a.m. ET

Cisco leads, but PANW reported the most YoY growth

So far in this series, we’ve discussed FireEye’s (FEYE) 3Q17 results and key players in the security appliance space. Cisco Systems (CSCO), with its 15.9% market share, retained its lead in the security appliance market in calendar 2Q17. In second place, Palo Alto Networks (PANW), held 14% of the market share in 2Q17, up from 12.1% in 2Q16.

According to IDC and as the above presentation shows, PANW’s share of the market increased the most among the top five vendors. Although Cisco (CSCO) leads the security alliance space, its market share fell from 16.3% in 2Q16 to 15.9% in 2Q17. Check Point Software Technologies (CHKP), Fortinet (FTNT), and Huawei are also on the top-five players list.

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UTM drove growth in the security appliance market

According to IDC, global security appliance revenues grew 9.2% to $3 billion in 2Q17. The UTM (unified threat management) sector revenues grew 16.8% to $1.6 billion in 2Q17. UTM revenues surged to a record high, reporting the highest growth among all sub-markets.

UTM now contributes more than half of the security appliance market revenues and is responsible for driving growth in the overall security appliance market.

Notably, for diversified exposure to select software companies in the United States, you might consider the SPDR S&P 500 ETF (SPY), which has 8% exposure to the application software industry.


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