The security processor market actually comprises two submarkets-secure socket layer (SSL) and Internet Protocol security (IPSec). The combined market opportunity is expected to increase at a 36 percent compound annual growth rate, from $86 million in 2000 to nearly $400 million in 2005.

At the low end of the IPsec market, below 100 Mbits/second, vendors should expect that opportunities in the standalone security processor market will be fleeting. Indeed, a flurry of design activity for residential gateway chips reveals that security functionality will rapidly become integrated.

Players focused on this opportunity include Broadcom,Centillium, Ishoni Networks, Texas Instruments and Virata. With its intellectual-property core-licensing business already ramping, SafeNet should benefit most from this trend.

At the high end of the IPsec market, beyond 1 Gbit/second, competition will prove to be intense. As with most communications semiconductor opportunities, the market should accommodate two to three major players.

So, what will happen to the rest? Though the IPsec accelerator market itself may not be massive, embedded security functionality will become a must-have for every major semiconductor vendor. In all likelihood, the industry will see consolidation, with startups being acquired by semiconductor vendors lacking such technology. Acquisition values will be lowered if intellectual-property licensing becomes rampant.

The standalone market for SSL accelerators, meanwhile, should be under less pressure than the IPsec market. Though there is significant competition in this sector, SSL acceleration should remain a standalone coprocessor opportunity at least over the next five years.

Jeremey Donovan (jeremey.donovan@gartner.com) is a principal analyst at gartner dataquest.