Secure Storage Emerges as a Nascent Market

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Market Overview

Secure storage is an emerging technology that integrates a complete and bullet-proof security solution with online storage. This technology is based on the premise that securing your entire network is not possible. However, securing your documents and data is achievable, through the use of advanced secure storage technologies also know as digital vaults or secure data exchange applications.

The target buyer for this new market is corporations or federal agencies of all sizes that have confidential data that requires extreme security. It has been determined that even reputable managed security providers are not able to alert their customers, and keep them safe from all security vulnerabilities. Numerous customers that once thought that hiring a managed security monitoring service was the answer to keeping out the bad guys, have cancelled their subscriptions after being hacked into while under contract with these providers. As a result of not being able to live up to their customer expectations, managed security monitoring services have not seen the returns that originally anticipated. Pilot Networking, recently announced that it was closing its doors due to company insolvency problems. Counterpane recently let go forty employees. And Internet Security Systems has scrapped their managed security monitoring service altogether.

Though a managed security monitoring service is a great idea in theory, in practice, these companies can only reduce risk -- they cannot keep out the bad guys. With an impetus to do so, cybercriminals will continue to break into networks, systems, and corporate data repositories. Through the use of a secure storage solution, company's can virtually eliminate the risk of someone hacking or obtaining your confidential information by magnitudes far greater than what you could achieve through a managed security monitoring service, a firewall, VPN, or perimeter security network (often referred to as a DMZ).

Today, secure storage is a $300 million market growing at a rate of close to 70% year. The company's to watch in the secure storage arena are Baltimore Technologies, Cyber-Ark, Lexias, RSA Security, and Xdrive.

Market Trajectory

Market Name

Secure Storage

Market Components

Digital Vaults, Secure Data Exchange, Content Security, Document Encryption

2001 Market Size (Revenues)

$300 million

Market Growth Rates

$200 million a year for the foreseeable future.

Market Leaders

Cyber-Ark, Baltimore Technologies

Market Challengers

Security component technologies

Market Winners

The market leaders in secure storage are Baltimore Technologies and Cyber-Ark. The biggest difference between Baltimore Technologies and Cyber-Ark is that Baltimore's solutions require a more hands-on management by them while Cyber-Ark's Private Ark is something that an end-user can get up in running the same day. From an ease-of-use stand-point, Cyber-Ark is clearly the winner. With customers like Lucent, Deloitte-Touche, and the Israeli Army, Cyber-Ark is out in front and has the resources available to keep their market lead for the foreseeable near future. Their product has an elegant user interface that is easy and intuitive to use, and virtually requires no training.

Baltimore Technologies' Secure Web Access service offers secure hosting and storage based on sophisticated digital certification technologies. Though they do not market this technology as "secure storage" per se, it is in fact a complete secure storage solution. An advantage of Baltimore's solution over Cyber-Ark is that it has advanced transaction features which are particularly useful for eCommerce vendors. With customers like American Express, Mastercard, Sony, and the Bank of Tokyo, Baltimore Technologies has a proven track record in secure storage technologies and will likely continue to grow and prosper in the years to come.

Market Challengers

Information security market component technologies, such as firewalls, virtual private networks (VPNs), intrusion detection applications, and authentication applications are the biggest market challengers. The advantage to using the component technologies is that they offer greater flexibility and more choices for end-users. The biggest disadvantage is that they require far more time to procure, configure, implement, and management than an all-in-one secure storage solution. The cost to implement a secure perimeter network is at least 10 times the cost of using a secure storage vault. There is a huge price to pay in dollars and time for the flexibility to be gained by using individual security component technologies.

Market Losers

Relevant Technologies expects the market for security monitoring services to decrease steadily. There have been numerous cases of security breaches that have occurred while being monitored by outside managed security monitoring services. As well, standard application hosting service providers have not been able to provide enough security to completely lock-out cybercriminals from pilfering confidential data and information.

As insurance companies begin to understand that monitoring does not prevent security breaches, they will look to more sophisticated technologies to eliminate corporate risk. Secure storage and data vaults, if implemented properly, can virtually eliminate risk altogether. As companies strive to lower expensive general liability insurance premiums, Relevant expects insurance companies to offer significant savings on corporate general liability insurance premiums for customers who use a secure storage mechanism to hold all their confidential information.

Building a secure perimeter network on average costs anywhere from $20,000 to $200,000 depending on how many security component technologies are deployed on it. And even after an expensive and time-consuming role-out, your data is still at risk. With a secure storage mechanism, you get a firewall, authentication, access control, built-in encryption, and file-sharing for less than $20 per user. The data itself is encrypted so that even if the vault did get compromised (very unlikely) the data would be of no value to anyone since it would be fully encrypted and unreadable.


Predictions about Market

According to Dataquest, the storage market is doubling every year. Gartner Group estimates that 55% of information technology spending is on storage technologies. Relevant Technologies forecasts that the market for secure storage, a $300 million market today, will reach $500 million by 2002 and will grow at a rate of $200 million a year for the next five years.

Relevant predicts that small secure storage vendors such as Lexias will be acquired by larger security companies that are trying to break into the secure storage market. For a large established security company with enough financial resources to capitalize on the technology, Lexias is a perfect acquisition target.

Market Vendor Recommendations

Baltimore Technologies Secure Web Access service holds a great deal of promise, however the terminology "PKI" steers end-users away from this technology. Though from a technology perspective PKI is a sound security solution, general IT decision makers do not understand it well enough to embrace. Without changing their technology, if Baltimore changed its pitch to focus on eBusiness, and "secure storage," IT decision makers would embrace their technology at a faster pace.

Security monitoring services should reposition their strategy to look into partnering with secure storage vendors so that they can offer more sophisticated security services. The market for secure monitoring services will dwindle, and Relevant Technologies expects that most vendors such as Counterpane, Riptech, and Akaba will not see the returns that they originally anticipated.

Market User Recommendations

Unless a requirement is that no software be installed on the client side, Cyber-Ark's product offers extreme security and is very easy to use. With secure financial backing, and an on-board support team, Cyber-Ark is ready to serve end-users directly, or through partnerships such as the one they currently have with EMC.

If a requirement is that no software be installed on the client side, Lexias' DigiVault product offers a solution like no other. However, Lexias is currently having financial difficulty, and though their product holds industry promise, without an infusion of capital, it remains to be seen whether they will be around for the long-haul.

If eCommerce and financial transactions need to be enabled, Baltimore Technologies offers top-notch capabilities, currently unmatched by other vendors.


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