"At any given time, we're tracking about 50 players that are in our space in some way, and those are only the most serious contenders," Palmer says. "In addition to the larger players, there are many local competitors that do well in some geographies, particularly in the non-English-speaking countries."
The nature of SaaS service offerings is also changing, the executives say. Where once enterprises were willing to purchase services for a single problem -- say, email antivirus capabilities -- most enterprises today are looking for a provider that offers a variety of services with one throat to choke.
"[Enterprises] start out looking for some help with one problem, like email security, and then they add [instant messaging] security, archiving, and encryption fairly quickly," Palmer says. "They don't wait 12 months anymore before they're willing to outsource another security component. They trust SaaS enough now to move more quickly."
The economy has also caused enterprises to change their attitudes about SaaS, the executives say. Today's businesses are looking for ways to reduce capital expenditures, stretch security staff resources, and make costs more predictable -- all elements that work in SaaS's favor.
"Eighteen months ago, price would have been one of the lowest priorities for customers in evaluating SaaS offerings," Palmer says. "Now I'd say it's up at the top."
The threat also has changed, Tuvey says. "Twenty-three percent of the billion or so threats we blocked in 2008 were threats that were not picked up by traditional, signature-based, on-premises software tools," he says. "With so many zero-day threats out there, a cloud-based offerings is much more effective."
So with a skyrocketing market and a plethora of players, how can enterprises -- particularly small businesses, which generally don't have security skills on-staff -- choose the right provider? For many, the answer is to outsource that decision, too -- to a value-added reseller of SaaS services.
"I would say we do about 50 percent of our business through direct channels, and 50 percent indirect," Palmer says. "Interestingly, it's sort of the reverse of most other channel models -- the resellers come more into play in the large enterprise, where the need is for more commodity services, and we do more direct sales in small businesses, where there's a need to work more directly with the customer to deliver what they need."
ScanSafe's sells its services through many of the largest Internet service providers, including AT&T and Sprint. The company's market share in SaaS-based Web security services is "10 times our nearest competitor," Tuvey says, quoting from an IDC study. MessageLabs also claims huge market share, holding 60 percent of the email security market to Google/Postini's 20 percent and Microsoft's 10 percent, Palmer says.
But these discrete market segments may soon become obsolete, the executives concede, as each provider dips into the other's business. MessageLabs, which made its name in the email space, now does about 20 percent of its business in Web security, Palmer says. And ScanSafe, which cut its teeth on Web security, now offers a full range of email security services. Most of the companies that have built their businesses on premises-based security software now have SaaS offerings, as well.
But Tuvey says users should think twice before buying SaaS services from a vendor that comes from software roots. "Is there a successful company that can do both [SaaS and software]?" he wonders. "I think it will be difficult. SaaS and traditional software have very different customer support models. Software companies are concerned about cannibalizing their software sales. It's hard to do both. It will be interesting in the future to see how it evolves."
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