ANALYST'S CORNER

P> By now, everyone who leads a less isolated life than the Unabomber knows three things about the Internet:

- The Internet is penicillin: Getting on the Internet will make all companies healthy, wealthy and wise.

- The Internet is poison: As soon as you connect to the Internet, you will be overrun by perverts, hackers, pirates, pestilence and Info Warriors.

- All you need is a firewall to turn the poison back into penicillin. Of course, the first thing everyone learns by actually using the Internet is that all the above assumptions are false:

- If your business is sick, poor and dumb, the Internet will likely help make it sicker, poorer and dumber.

- Walking the aisles of infotech conferences is much more dangerous than surfing the Internet.

- A firewall is only one element of protecting your Internet connection, much the way a deadbolt is only one part of protecting your house.

Firewalls are a big deal in the Washington, D.C., area. Three leading firewall vendors -- Trusted Information Systems, V-One and ANS -- are all based here, as are the three biggest Internet service providers, America Online, UUNET and PSINet.

And just when you thought the popularity of the Internet might peak, along come "intranets," internal TCP/IP networks using World Wide Web technology for business information services.

As homes become more wired, and ISDN, ADSL or cable modems provide dedicated Internet connectivity to the home, the potential market for firewalls will become nearly infinite, but the prices will drop precipitously.

International Data Corp. predicts that the firewall market will grow from $160 million in 1995 to nearly $1 billion by 2000. The market will grow at a compounded annual growth rate of 44 percent, even while prices drop by nearly 50 percent each year. IDC predicts unit shipments will grow at a rate 173 percent worldwide.

Such a high-growth market will quickly experience the inevitable shakeout, In 1995, 41 percent of the firewall business was done by companies with less than 1 percent market share.

The rapid drop in firewall prices will accelerate the commoditization of firewalls, with buying decisions driven by factors such as distribution and ease of use, rather than price or unproven claims of increased levels of protection.

John Pescatore is an analyst with IDC Government in Falls Church, Va.