The enterprise security market is both growing rapidly and evolving fast as the demands for compliance drives demand for new technologies.

According to researchers at Canalys, the value of the enterprise security market in the Europe, Middle East and Africa rose by 27% in the third quarter of 2004 compared to the same period a year earlier, to hit €420 million (£295 million).

Cisco retained its leadership of the sector, although it saw a drop of 2% in its share from 20% in the third quarter of 2003. The most staggering growth over the year came from Nokia, where the value of shipments grew by over 58%, taking it into third place with 8% of the market. That still leaves it well behind Symantec, however, which held its share at around 16%.

One major driver is concern about complying with measures such as the Sarbanes-Oxley Act and Basel II. Related to that, spend on intrusion protection products grew by 74% during the third quarter and demand for authentication tools increased by 351%, says Canalys

*Organisations are increasingly looking to security appliances to solve some of their network security headaches – at the expense of more mature security standalone technologies such as firewalls and virtual private networks (VPNs). Revenue for security appliances in the third quarter of 2004 grew 54% to reach $155 million worldwide, says market watcher IDC.

During the quarter, its researchers observed that newer, less-established security appliance categories, such as intrusion detection and prevention (ID&P) appliances and unified threat management (UTM) appliances, were capturing further share from the larger, more mature firewall/VPN appliance category.

However, that category still dominates, with its 71% of the revenue pie comparing to 19% for ID&P appliances and UTM appliances' 10%.