Is Security Hardware Plus Services Sustainable?
Security hardware vendors are trying to reverse the slide in appliance sales and margins by marrying cloud-based services to the on-premise box. While it sounds like a good deal, solution providers should examine the go-to-market structure to ensure they're getting a sustainable share of the business.
Sales of security hardware and appliances fell more than 16 percent in the first quarter of the year, which is pretty steep but not nearly as bad as the 20-plus percent decline in sales of core networking gear. While market research firm Infonetics believes security appliances-firewall/VPNs, unified threat management devices, etc.-will rebound before year's end, many vendors are now pursuing a strategy of "hardware+services," in which the user still buys an on-premise appliance but also subscribes to an ongoing service.
This hybrid schema is an approach long championed by Microsoft, which coined the awkward term "software plus services" as means to recognize consumers' desire to buy applications as a service but also the necessity to continue purchasing and hosting on-site and client-side applications. It's really not a bad idea from an architecture and operational perspective. But Microsoft still hasn't unlocked the secret to making "software plus services" a profitable venture for its throng of solution providers.