The increasing sophistication and complexity of cyberattacks and growing regulatory pressure is spurring investment in IT security in Israel. In 2006, IT security spending in the country exceeded $165 million, or more than 4% share of total IT spending for the year. The numbers underscore the continuing importance of IT security. In 2007, spending on IT security products and services is expected to grow by almost 16% to more than $192 million.

"The complexity of attacks and the understanding that security is a value add to the end-user's IT system, network, and endpoints and not just a necessary evil, is driving spending on IT security across all industries and company sizes," said Chani Stern, research analyst, IDC Israel. "With manageability, simple implementation, and cost effectiveness being the key requirements, demand is growing for all-in-one security appliances at the expense of software solutions."

Security software made up the bulk of the Israeli security market in 2006, accounting for almost 43% of IT security spending. Security services were the second-largest segment with 33.0% share of security spending, while security hardware constituted 24.4% of the total.

In terms of functional areas, secure content and threat management was most in demand on the Israeli market, while identity and access management and secure compliance and vulnerability management played marginal roles.