Ever since information systems became the underlying infrastructure for modern businesses, the security of information systems has been recognized as one of the most important aspects in assuring business continuity and protecting valuable information assets. As a result, the industry of security software, along with that of security hardware and security services, has grown rapidly in response to the continually higher demand for the protection of an ever-increasing base of information technology (IT) infrastructure. Figure 1, based on Gartner reports, shows that the worldwide security software revenue has increased quite rapidly from US$6.4 billion in 2004 to about US$14.7 billion in 2009; and even a worldwide recession in 2009 did not slow this market down.
The rapid growth has far exceeded all predictions about this market; for example, Latimer-Livingston and Contu (2007) predicted that the worldwide market would be about US$13.5 billion in 2011, a level that has already been achieved by 2008. IDC reports that the security software market in Asia (excluding Japan) alone has demonstrated about 23% growth in 2005 and is keeping pace with the rest of the world in its growth (Low and Chung 2006). Security software market thus has been regarded as one of a few prominent software markets with double-digit growth rate (McCormack 2006). Understanding the nature of this market, along with its evolution and trend, is of importance to vendors as well as consumers.
In general, security software can be classified into several categories, such as antivirus software, encryption software, firewall and intrusion detection/protection systems (IDS or IPS), and spyware remover. An antivirus software is perhaps the most well-known type of security software, primarily used to identify and remove viruses, but can often provide protection against other malicious invasions, such as worms, phishing attacks, and Trojans. An encryption software is used to encrypt computer data using an encryption algorithm. With the proliferation of broadband networks, security of online data exchange becomes a key determinant to the success of E-commerce vendors. By deploying an appropriate encryption software on its Web infrastructures, an E-commerce vendor can relieve customers from the concerns on privacy and security and thus build a reputation of trust.
Firewalls are used in local area networks to inspect the traffic going to or coming from an outside network and make decisions about whether a transmission should be allowed. Nowadays, Microsoft bundles a firewall with its Windows operating systems that can run on a personal computer. A spyware remover is a tool to detect and remove spyware a piece of software that gets installed on a computer, usually through the Internet, without the user’s permission. Although a spyware does not paralyze the computer or make modifications to the data, it can monitor the user’s behavior, collect various types of personal information, and pass the information to the party initiating the installation of the spyware.
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Impact of Network Externality in the Security Software Market
