Home Blog 2018 What Is Driving Growth in the B2B Security Appliance Market?

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Michael Diamond

Summer, Summer, Summer Time! – Security Appliances

Aug 17, 2018
Michael Diamond , Director, Industry Analysis ;
Commercial Technology

Picture this scenario, you’re a small business owner and you decide to have your teenager work a few days a week over the summer at your small shop to give them some experience. Your child is of course “thu-rilled” to be working during the summer when they could be heading to the beach with their buddies or catching up on NetFlix. When you open up shop one day, your computer alerts you that all of your data (e.g., customer lists, financials, etc.) has been locked and you must pay a ransom in Cryptocurrecy, or else. Immediately, you think, was my child looking for free music, videos, and more while they should’ve been working at the shop? Unfortunately, this is one of many scenarios that small businesses deal with on a regular basis and are looking to the B2B channel to help thwart such incidents.

According to The NPD Group’s B2B Distributor and Reseller Tracking service, the U.S. B2B security appliance market grew 13 percent in unit shipments from Q2 2017 to Q2 2018. From a market share perspective, the top five vendors were Cisco, which led the market with 48 percent unit share followed by SonicWall (17 percent), Fortinet (8 percent), Palo Alto Networks (8 percent) and WatchGuard (5 percent). During the period, Cisco was the only vendor in the top five that grew its market share more than single digits. 

From a price band perspective, the market is broken out between the $500+ segment, targeted at branch offices and mid-sizes firms, while the $500 and below segment is geared towards small offices or the small office/home office market. The $500+ segment grew 21 percent overall with units priced from $1,000- $1,499 experiencing the fastest growth (32 percent). The growth in the $500+ segment implies branch offices and mid-size firms are continuing to gravitate towards next generation firewalls that incorporate increased functionality, at a higher price point.

Conversely, growth in the entry-level and mid-range areas implies:

  • Small and mid-size firms are realizing that they are also at risk for attacks and many of those firms are in industries that have mandates to protect consumer and highly classified information. For example, according to the Small Business Administration, half of the firms in the 1-499 employee range are in retail, healthcare, hospitality, and professional services, and many also do contract work for major companies dealing with highly confidential information, making them targets. More functionality is being woven into individual appliances (e.g., VPN, IDP/IPS, etc.) making them more affordable and attractive for smaller businesses.
  • More companies are offering employees flexible work options, such as telecommuting a few days a week, and those employees must access the network through an encrypted connection.
  • In a world of companies upgrading customer experience strategies, many now have 24x7 web servers offering FAQ-based content, appointment scheduling, real-time inventory and more for their customers, which is driving growth of the web application firewall segment. 
  • Hackers are smarter than we realize, creating customized content similar to a highly creative marketer profiling targets on social media with a phishing attack.   

For channel partners, key growth verticals will continue to be those that are tied to federal mandates that protect consumer and patient information, those that are dealing with sensitive information with their partners in the federal, aerospace, and manufacturing markets and those that have highly distributed environments with flexible workforce policies.


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