Network Security Is Becoming the New Trend

"Network security may be a permanent trade. It's like lock to key. As long as the lock is upgraded, and so is the key." said president Wang Yongfeng of Neusoft Co., Ltd. in his new office. The northeastern man, who became president of a listed company only seven years after he joined the company, is straightforward and never puts on airs; however, he has penetrating insight and full confidence in the future development trend of Neusoft Co., Ltd..

In Wang Yongfeng's opinion, in order to control the future market, it is necessary to lay a good foundation now. If a business can only bring about short-term profit, no matter how good, it will not last. Wang Yongfeng and the management of Neusoft Co., Ltd. have a long-term business vision with an emphasis on sustainability and long-term profits.

"If a product only has three years' life cycle in the market, we won't develop it. We set our vision in 10 years, 20 years and even farther in time, and network is the very thing that lasts permanently." The network security product- Neteye received its position in Neusoft Co., Ltd. because of its long-term potential and capacity to part of a new trend. The e-Net reporter learnt through a chat with staff of Neusoft Branding Promotion Department that a extensive marketing campaign centered around network security products will be launched in the latter half of the year, which is different from the common practice of Neusoft integral brand marketing. Network security products, though developed later, has become the most important product type.

Market scale sharply expanded

Neusoft practically started the development of network security product as early as 1995 when it undertook the research program on network security for the National 863 Program and Key Research Projects Tackling Program of "the ninth-five-year-plan." However, people did not have sufficient understanding of the market then, assuming that security meant nothing more than killing-virus, and they even did not view the network security field apart from the information security field. Consequently, the market for network security products was extremely narrow and Neusoft network security technology was obscure until 1999 when it was arose in prominence.

Only when the killing-virus market became completely mature and the market was sufficiently divided, did the beginnings of a network security market develop. Many domestic firms came to fully realize the importance of network security after suffering losses from hacker attacks. The market expanded suddenly when many firms began to install network security products such as firewall, intrusion detect and VPN.

" The size of the network security market at least doubles every year, which is a 100% increase," said director Cao Bin of Neusoft Network Business Department. Currently there are various statistics on this market; however, they may not be completely true, some of which even said that the present annual revenue of China network security market was RMB10 billion yuan. Cao Bin said that from his point of view, 10 billion yuan may be exaggerated, but 2 billion might be a an accurate figure for this year's revenue.

Just as fragrant flowers attract butterflies, the immense market of network security products inspired great enthusiasm among manufacturers. It is estimated that there were only 10 manufacturers in the network security market in 1999, 300 in 2000, and the number jumped to nearly one thousand in 2001 with several hundreds of firewall brands. Some large group companies such as Legend, Fangzheng Digital, Tsinghua ShiDe also entered this market. One member of this industry remarked, "Such fierce competition is rarely seen even in the used-to-be heated competition in household appliance market."

In June this year, Tsinghua ShiDe initiated a campaign of price-cuts by lowering down the price of a hardware firewall with 4 ethernet interfaces to 5999 yuan, and lowering the 20,000 yuan VPN module to 10,000 yuan. The emergence of this price war more or less forecasted the beginning of market maturity. What follows maturity is the practice of the law "survival of the fittest".

"I estimate a shuffle of the market will be started next year or the year after next and the mainstream market will have about 10 survivors after the shuffle.", said Cao Bin.

Shuffle: technology, brand and scale

In Cao Bin's point of view, the market shuffle will be conducted in three aspects, namely technology, brand and scale.

In terms of technology, prior to 2000, domestic network security products had various bugs and defects, and customers have been tolerant, giving time for the manufacturers to modify the products. However, under the current situation of fierce competition, the customers will not tolerate a technology gap and they may choose better technology and products. For the many start-up manufacturers, great technological barriers lie in front of them for penetrating into this market since defects in technology are unavoidable for them.

Meanwhile, the strengthening of hacking attacks have resulted in improvements in network security. With the emergence of new technology, new chips and new operation systems, network security products need to be constantly upgraded to survive.

Second, in terms of brand, the future network security market will form several leading brands of their own. Brand establishment is based on product quality as well as service. Service is usually charged by the hour in overseas businesses, while in China, customers do not have the habit of paying for services and therefore, services are always offered free. Even if the services are offered free, they contribute to the establishing of brands by spreading a good reputation of the manufacturer.

Cao Bin also believed that scale is vital to the survival of manufacturers. Neusoft now is the leader in domestic firewall market, which gives us a competitive advantage. However, Neusoft will not confine itself to the domestic market, and our goal is to compete with large international firms like Netsceen and Checkpoint on the global market. Neusoft has confidently stepped on the road to globalization.