TheInfoPro

High Profile Breaches and Mobile Devices are key spending drivers according to a report authored by Daniel Kennedy, former Wall Street Chief Information Security Officer and now Research Director for Information Security at TheInfoPro

NEW YORK, November 17, 2011 – TheInfoPro, a division of leading analyst and data company The 451 Group, recently released the findings from its bi-annual study of the Information Security market, where the source of the data is in-depth, one-on-one interviews with over 150 decision-makers in the Global 2000. Key findings include: …

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Written by Daniel Kennedy, Research Director for Networking

Originally published as a ThursdayTIP to the respondent network of TheInfoPro. Would you like to receive all of the ThursdayTIPs the minute they are released on a complimentary basis? Then join TheInfoPro’s respondent network.

What’s it’s certainly not the only one, Blue Coat Systems has had a rough time of it in the equity market following its earnings call last week, wherein announced revenue and forward revenue guidance didn’t meet Wall Street analysts’ predictions. Blue Coat announced revenue of $109.5 million for the first fiscal quarter, compared with $122.5 million in revenue for the same fiscal quarter last year, and at nearly the same time announced Gregory Clark as its new president and CEO.

While share pricing in the equity market is a complex result of a number of factors, not least of which is the overall flow of the market, the swing of a company’s revenue generally does correlate well to the user sentiment on a company reflected in our respondent network. To find out what current end-user sentiment is, we will examine Blue Coat’s lead product area, web content filtering, in the most recent set of available interviews, which are part of the Wave 14 Information Security Study.

Primary Providers for Web Content Filtering Solutions

Comparing this breakdown to the data in last year’s wave, it would seem Blue Coat has increased its market share in web content filtering, moving from a 19% share in the previous wave of research to 28% (the leader in the 2010 study, Websense, was at 35%). This represents a bit of a rebound for Blue Coat, though, as the 2009 study put its share at 26%.

Other key stats culled from the Wave 14 Information Security Study for BlueCoat:

• Seventy-one percent (71%) of respodents noted spending less than $100,000 on Blue Coat solutions this year. For the third consecutive year, the number reporting spending more than $100,000 on web content filtering in general has continued a downward trend, as has the number of respondents stating they will spend more money in this area.
• Compared with 2010, about 85% reported spending around the same on Blue Coat this year, while 14% reported spending less.
• Going into 2012, nearly all of those respondents rating Blue Coat noted no expected change in spending from 2011 levels, and 7% stated they would spend more.
• When asked whether they were considering switching from Blue Coat, respondents almost directly mirrored spending levels: about 85% said no, 14% said yes, and none said maybe.

Measuring sentiment through user narrative from our respondents, there is a primarily postive tone, with a few caveats.

• “Blue Coat is a name in web content filtering that is old and trusted. The interoperability is great. We have never had a compelling reason to change. We never hear from the sales people; I think it is due to the fact we spend less than $100,000 with them. They need to improve customer relationship skills.”
• “Performance is the top strength for Blue Coat. I like the reliability as well. They do not cause us many problems. They are not doing deep packet protection.”
• “Blue Coat does have a good product overall, with good brand recognition.”
• “Blue Coat offers a very reliable product, and they have great functionality.This is one of those products that I do not have to worry about. It does what it does very well. Down side, it has a flat knowledge of user behavior. They are not as user-aware as Palo Alto.”

The last comment may be telling for the web content filtering space as a whole. One respondent made this point about switching to a Palo Alto solution that most would categorize under firewall, yet he references a content filtering provider as being switched from:

• “It’s an appliance, relatively easy. Switching from Websense was easy, for example.”

As edge security products, using next-generation firewalls as an example, increase in sophistication, will it be necessary to maintain a separate vendor product for web content filtering?

In response to the revenue results themselves, David Hanna, chairman of Blue Coat’s board of directors, offered the following:

• “Our first-quarter results were disappointing, as they came in below our expectations. We are taking the necessary actions to reinforce our leadership position in the web security market, while capitalizing on opportunities in the WAN optimization market based on our strong competitive advantages.”

The Wave 8 Networking Study showed Blue Coat as third in market share (around 3%) for WAN optimization solutions, coming in behind Riverbed (18%) and Cisco (nearly 15%). Our Wave 9 Networking Study is in the field now, and will provide intelligence as to whether the aforementioned strategy articulated around WAN optimization will bear out.

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