9/13/2004 -- If — as TCPMag.com reported last month — the VPN Services market is one of the hottest sectors in the networking industry, then the market for VPN appliances is positively scorching.

That’s the upshot of a new report from market research specialist In-Stat/MDR, which found that firewall/VPN security appliance shipments grew at a 27 percent clip in 2003.

What’s driving this growth? According to In-Stat researchers, demand from enterprise customers, prompted by a move — en masse — from trial evaluations of VPN appliances to full-scale production deployments. As they deploy VPN appliances in production environments, In-Stat researchers note, companies are inevitably abandoning traditional solutions.

“Corporations are also migrating from stand-alone perimeter firewall architectures to a multi-layered network security approach where security functions are distributed throughout the network,” said Keith Nissen, a senior analyst with In-Stat/MDR, in a statement. “This allows for greater refinement of security policies on a departmental, or even a work group basis.”

According to In-Stat researchers, enterprises are currently deploying low-end and SMB-level products to support departmental, remote and branch office applications. Because it has a substantial concentration of companies with 1,000 or more employees, North America currently accounts for about 49 percent of the VPN appliances market. In-Stat believes this will change over time, and that Asia-Pacific will dominate this market.

Currently, and through 2008, the low-end and SMB product segments will continue to post the biggest growth. Growth in the low-end and SMB spaces is probably abetted by a complementary trend — the integration of security features typically found in high-end firewall/VPN appliances into lower-capacity product lines. These features include application proxies, intrusion detection and prevention, and content filtering.

Among vendors, Cisco and Scandinavian giant Nokia dominated the high-end firewall and VPN appliance market in 2003. Elsewhere, SSL VPN shipments account for a sizeable share of revenues, growing 160 percent during 2003, prompted, In-Stat says, by companies attempting to provide secure remote access capabilities to increasingly mobile workers. -Stephen Swoyer