Fighting the slowdown
Regardless of the specialty, a majority of security vendors and their partners have posted growth in their quarterly and annual financial statements. And even in this cash-strapped global economy, security giants from around the world have continued to report cash balances that climb up into the billions.
Check Point's Mckinnel believes the positive cash flow reports are a response to the dotcom bust earlier this decade. "I think a lot of people running security companies were a little bit rattled after the dotcom crash in 2001 so there was a big shake out then," he says.
Check Point itself reported US$1.444 billion in cash and investments as of 31 December, 2008 compared to US$1.242 billion in 2007, and the vendor doesn't see that changing. "I can assure the expectation for the Australia and New Zealand business unit is growth," Mckinnel says confidently.
"We haven't seen anything yet. We know somewhere most markets will be hit somehow but no one really knows when or what.
"For us what we're really doing in terms of battling through is continuing our normal products and planning and revenue growth as per our normal business."
Part of Check Point's success story is aligned with the company's fiscal policy which remains consistent regardless of the economic times. "The reason why we're not out of control is because we run a fiscally tight company and have done so from day one," says Mckinnel. "It's fair to say the American culture is famine and feast: in the good times they put on a lot of staff and go on these massive expansion schemes because their employment legislation allows them to and when they are in the bad times they cut, cut, cut.
"[Instead,] we run a very lean model when it comes to staffing numbers," says Mckinnel. According to the company's CEO, Gil Shwed, Check Point will not be making any redundancies of staff globally.
The vendor will not be making any staff cuts from Nokia's Security Appliance Business unit either, which it acquired in December. "Making an acquisition in this market and then actively seeking not to make any redundancies probably gives you an idea about the strength of the company," says Mckinnel. "Instead, Check Point is on a big cost-reduction exercise which includes restrictions of expenses such as travel."
For RSA, the security arm of storage giant EMC, business in Australia has doubled in size in the past 24 months. Revenue grew 39 percent last year compared to the previous year and the company forecasts 30 percent growth this year.
"Locally that's what our expectations are [based on] the way we're looking at the business right now and the projects our customers are talking to us about [that] we can see will materialise," says country manager Mark Pullen. He says the growth is the direct result of the solution space RSA is in - information governance. "These are the challenges enterprises have, the management of risk around information," says Pullen.
Privately owned Russian internet security vendor Kaspersky Lab also forecasts an upward trend this year and sees strong growth across all the regions it sells in. The Asia Pacific region is among the company's fastest growing. "We are broadening our distribution channels everywhere," says Alexey Gromyko, director of channels Australia and New Zealand.
Kaspersky's local business grew by 165 percent in 2008 and in 2009 the company expects this figure to grow significantly, particularly as the vendor forms new alliances in the tier one retail segment, explains Gromyko. "It's important to note that in other markets, such as parts of Europe and in the US, Kaspersky is growing very quickly. We know the competition is worried about our success, and they know our future product roadmap is very strong," Gromyko claims.
Meanwhile, in its December 2008 quarter, internet security firm Symantec reported a non-GAAP (generally accepted accounting principles) revenue growth of 1 percent over December 2007. The vendor claims its growth is driven by consumer, storage, data loss prevention and services businesses. The Europe, Middle East and Africa region represented 31 percent of total non-GAAP revenue for the quarter but declined 9 percent year-over-year.
Instead, the Asia-Pacific/Japan revenue for the quarter represented 14 percent of total non-GAAP revenue and grew 1 percent year-over-year. Overall the company is in a strong cash position exiting the December quarter with a cash balance of US$1.5 billion.
David Dzienciol, senior director of channels for Symantec Australia and New Zealand, believes there is a strong correlation between regulation in Australia and the continuation of the buoyant security market. There has been a steady increase in the number of regulations and laws in Australia that call for better management, security and storage of information.
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