Palo Alto Networks Overtakes Fortinet In Network Security Market

Palo Alto Networks overtook Fortinet in the network security market, taking third place in IDC's Worldwide Quarterly Security Appliance Tracker.

The IDC data is based on revenue and unit shipments and showed Palo Alto Networks as the fastest-growing vendor in the network security market with year-over-year revenue growth of 58.3 percent and revenue estimated at $181 million. Palo Alto Networks has a 7.6 percent revenue share and 17.6 percent share of unified threat management revenue, according to the IDC report.

Despite being overtaken by Palo Alto Networks, there was some good news for Fortinet in the report. Fortinet held the No. 4 position with year-over-year revenue growth of 25.1 percent, estimated at $173 million, IDC said, noting that the vendor had impressive shipment growth.

[Related: Fortinet, Check Point Sales Wins Tied To Security Services Expansion]

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’Over the past seven quarters, Fortinet has sequentially increased its unit shipments and remains the largest security appliance vendor in terms of shipments with 20 percent share of shipment volume in 3Q 14,’ IDC said.

Cisco Systems continued to maintain the No. 1 position with an 18.7 percent share of total revenue, a rise of nearly 3 points compared with the same quarter a year ago. Check Point Software Technologies was the second largest security appliance vendor with revenue growth of 12.2 percent. The IDC report noted Intel Security (formerly McAfee) gained revenue share from Juniper Networks to maintain its position among the top five vendors. Intel Security held a 5.1 percent revenue share and 9 percent year-over-year revenue growth, IDC said.

North America held 43.7 percent of total market revenue and showed growth of 6.5 percent and 15.5 percent in Canada and the U.S., respectively.

Palo Alto Networks has been getting more aggressive over the past year, said Shane Corbett, director of data center engineering at En Pointe Technologies. En Pointe recently gained Platinum level status in the Palo Alto Networks NextWave Partner program for its sales and enterprise security credentials. En Pointe also holds Platinum level status with Microsoft, Hewlett-Packard, Symantec, Adobe, NetApp and LANDesk, among other security and technology vendors.

Corbett said customers are seeing the company build out a compelling platform and that growing interest may be tied to emerging breach detection technology. The company’s technology partnerships, including a closer relationship with VMware is forward-thinking, he said.

’Palo Alto has embraced the whole software-defined networking model to a degree and trying to stay ahead of the curve by focusing on a couple of technologies that work well around VMware NSX,’ Corbett said.

NEXT: Palo Alto Wins; Fortinet, Check Point Land Data Center Deals

Palo Alto Networks unveiled a joint integration partnership with VMware’s latest network virtualization platform. The integration enables VM-Series Palo Alto Networks appliances to provide automated security services. Context is shared between virtualization and security elements and policies can be applied to each virtual machine container.

Palo Alto Networks has been displacing competitors, according to CEO Mark McLaughlin, speaking last month at the company’s fiscal first-quarter 2015 earnings call with financial analysts. McLaughlin said Palo Alto Networks appliances replaced networking gear from Blue Coat, Cisco and Websense at four Fortune 10 firms in the U.S. and replaced Cisco and Check Point in an enterprisewide deployment at one of Asia’s largest financial institutions.

’The security market is very strong right now; you can see that in our results, other folks’ results, it’s a good market to be in,’ McLaughlin said. ’We span the end of the year in this quarter, so we don’t have an impact of folks trying to pull spending in, but as a general matter what we’re seeing is increased attention, increased spending from folks, and definitely a desire to have prevention capabilities, and I think that’s why we’re selling so well.’

Palo Alto Networks' new Traps endpoint security software is also getting a warm reception, executives said. Early deals are being made with customers that already subscribe to its Wildfire suspicious file analysis service.

Large systems integrators such as Fishnet, which recently acquired Accuvant, Dimension Data, Dell-Secureworks and IBM are doing well because of the significant growth in next-generation firewall deployments, said Sterne Agee analyst Robert Breza in a recent interview with CRN. Firewall refreshes are expected to continue into 2015 with Fortinet, Palo Alto Networks, Check Point and others adding functionality that takes the firewall beyond a company’s core infrastructure, Breza said.

’People lump security into infrastructure, yet security is a bright, shining star,’ Breza said. ’The firewall is one of the basic security blocks of security and, when you look at it in that respect, you are investing in the core infrastructure, but I think businesses are beginning to recognize the added value the security brings to applications and continuity.’

Fortinet and Check Point each reported financial gains, citing strong interest in their networking security gear, during earnings calls in October. Fortinet said it was landing large data center deals with interest from telecommunications and MSPs expanding their data center footprints. Check Point cited wins in the retail, government and technology sectors with interest in the company’s data center software security blades.

Intel Security has been heavily marketing its next-generation firewall and advanced threat defense appliances and cited momentum at its recent partner conference in October. Intel claims its new Threat Intelligence Exchange framework provides a communication layer between the company’s products to create a more cohesive threat defense platform. The company also recently named former senior Cisco executive Chris Young as the new senior vice president and general manager of Intel Security. Young is leading a team developing joint security products with Intel and McAfee engineers.