The company indicated that the operating environment was more difficult than in prior quarters, resulting in some smaller deals and a few deals moving into the June quarter. Positively, we believe that security spending remains solid relative to the rest of the technology sector because security spending has lagged other technology sectors for the past several years. Consequently, we reiterate our positive outlook for Internet Security Systems and maintain our 2001 estimates. Solid demand for both network and host-based IDS fueled the increase in sales, including sales wins over competitors such as Symantec and Network Associates. In fact, a number of Symantec customers have vented frustration over the Symantec host-based IDS product owing to slow product development.
Penetration rates remain low, which contributes to smaller deal size and sales growth.
Today, Internet Security Systems manages over 2,800 gateways and has relationships with more than 16 service providers generating revenue for Internet Security Systems. Overall, we think that although the managed security sector has been slow to take off, Internet Security Systems is among the best positioned companies because of its software focus and strong branding. Nokia began to ramp up in the quarter, although it did not contribute materially. We think that Nokia could become an important partner to Internet Security Systems as customers begin to realize the performance and manageability benefits provided by appliances. Internet Security Systems currently has more than 8,000 customers, including most of the Fortune 1000.