Approximately Half Of All Organizations Will Increase Security and Networking Spending in 2010

Network security and WLAN top the list of priorities

Last week I blogged about ESG's new data on IT spending. Here is a bit more detail with regard to networking and security.

Nearly half of all mid-market (i.e. 100 to 999 employees) and enterprise (i.e. 1,000 employees or more) will increase their spending on network hardware in 2010. Top priorities include WLAN, IP telephony, and WAN optimization.

Fifty-five percent of mid-market and enterprise organizations will increase their spending on information security technologies. In this case there are difference between the sectors: 48% of mid-market organization will increase their spending on information security technologies while a whopping 61% of enterprises will increase their spending on information technologies. Top priorities are network security, endpoint security, and messaging/web security.

What does this mean for the tech industry?

1. Cisco, Juniper, Check Point, and McAfee are sitting pretty. These companies have product portfolios that touch most if not all of the high priority spending areas. Cisco has a broad portfolio but its love/hate relationship with security may open the door for others. Check Point certainly has the opportunity to branch out from its firewall bunker. Juniper has the most upside -- especially if it introduces its own JUNOS-based WLAN equipment as ESG anticipates. McAfee also has good coverage.

3. Microsoft could flex its mid-market muscle. While Microsoft networking and security hasn't had strong enterprise penetration, it certainly plays well in the mid-market. With Windows 7 and Windows Server 2008 R2 in tow, the data indicates that Microsoft has a great opportunity to bundle in products like ISA Server, Forefront, and even Office Communications Server.

2. WLAN acquisitions continue. It looks like it will be a good year for 802.11n -- likely at the expense of wired access switches. That being the case, Aruba's market share can't be ignored. Even though HP already made a technology play, an HP/Aruba marriage could really turn up the heat on Cisco. Meru has great technology and would likely be a value purchase for Brocade or Force 10.

3. What's old is new again. Note that two mature categories, network security and endpoint security are top priorities. Why? New threats, malicious code volume, regulatory compliance mandates, etc. This could mean vendor churn and opportunities for aggressive startups like Crossbeam Systems and Palo Alto Networks.

4. Look for the return of big projects. Many organizations made tactical purchases in 2009 to fill holes. Look for them to move in another direction with more strategic projects. For example, data center networks may be consolidated with large access switches and integrated security devices, while Universities and Healthcare organizations rip and replace old WLAN gear. ESG anticipates WAN optimization consolidation as well as users settle on a single vendor and architecture. Vendors should think architecture and strategy, not sales transactions.

All in all, the data points to more positive momentum. A good year for vendors to re-engage with customers, build long-term partnerships, and help them move beyond the Status Quo.

• 802.11n
• Aruba Networks
• Check Point
• Cisco
• firewall
• IDS
• IPS
• Juniper
• Meru Networks
• WLAN