12/12/2008 -- The network security space looks to be in fine shape, and that's good news for Cisco Systems Inc. It continues to lead the segment, controlling -- as of the end of the third quarter of 2008 -- just under half of all network security revenues.

Network security revenues grew by 4 percent, sequentially, in the third quarter of 2008, according to market watcher Infonetics Research. "Almost every security vendor we talked to mentioned concerns about the economy, but most did not see significant weakness in 3Q and are seeing minimal effects on the pipeline for 4Q and beyond," said Jeff Wilson, a principal analyst for network security with Infonetics, in a statement. "Drivers for deploying security in large part are divorced from macro-economic drivers, and though business growth and expansion is a driver for security spending, contraction caused by declines in corporate revenue is being offset by more pressing drivers, including regulation and compliance, cost-saving security investments, service provider spending on security, and the explosive growth in the number, variety, and volume of threats."

Cisco, for the record, controlled 40 percent of total network security appliance and software revenues in the third quarter, followed by rivals Juniper Networks and Check Point Software. Cisco and other players were buoyed by sales of network-based intrusion detection systems (IDS) and intrusion prevention systems (IPS), which jumped by 21 percent in Q3. Cisco, ISS, McAfee, and TippingPoint were the primary beneficiaries of this spike, according to Infonetics.

The economic outlook might be bleak, but Infonetics nevertheless projects double-digit annual growth in sales of IDS and IPS devices through 2010. "The downturn in the global economy didn't start in October; we've been watching the slowly degrading global macro-economic situation for the last year and had already factored many of its effects into our forecasts," Wilson said. "As a result, we've made only a half-percent adjustment to our security forecast compared to last quarter's report, mostly due to consolidation in the finance sector." --Stephen Swoyer