Gartner predicted the demise of the standalone "intrusion detection system". Denny's product is enabling infrastructure for network monitoring and network security tools. It's not an intrusion detection system; it's lower on the value chain than that.
The market for intrusion detection systems, which are sold almost entirely to enterprises, evaporated in the 3 years following that Gartner report. There were several hundred million addressable dollars of it in 2003. Now there may be 50.
You probably don't care about this. But what you might care about is, there's a difference between bootstrapping a company into a 15MM/yr niche and funding a company to go after a billion dollar market. The former has an outcome like nCircle's, where you limp for the next 5-10 years of your life. If you do well, you get a "lifestyle company". The latter has an outcome like SourceFire, which involves private jets.
Lifestyle companies are great. But they don't have promising exits. The "Paul Graham Way" involves exits; murder yourself for 2 years, never work again. This is more the "Joel Spolsky Way"; end up with private offices, a 4 day work week, and an Aeron chair.
We've been bootstrapping for a couple years now. It's definitely cost us time, and we have the constant hazard of falling into a lifestyle company. I'm not saying one approach is better/worse than the other. But if you're selling to enterprises, ignore the analysts at your own mortal peril.