There is a significant shift in enterprise security spending patterns, with virtual and SaaS-based network security solutions expected to surpass $90 B in cumulative revenue between 2023 and 2028, according to a recently published report from Dell’Oro Group.
This spending trend reflects a 5-year revenue compound annual growth rate (CAGR) of 16 percent, indicating a strategic pivot away from traditional physical security appliances, which are projected to grow at a more modest 5-year revenue CAGR of 6 percent.
“We are witnessing a seismic shift in the network security market, propelled by the growing sophistication of cyber threats and the need for more dynamic security solutions,” said Mauricio Sanchez, Sr. Director, Enterprise Security and Networking at Dell’Oro Group. “The surge in virtual and SaaS-based network security investments underscores a fundamental transition towards more flexible, cloud-centric approaches, aligning with the evolving work environments and distributed application needs of modern enterprises,” added Sanchez.
Additional highlights from Network Security 5-Year January 2024 Forecast Report:
- Firewall Market: With a projected revenue approaching nearly $20 B by 2028 and a single-digit CAGR, the firewall market faces a nuanced growth pattern. Despite a robust start, the market is expected to encounter varying growth rates annually, influenced by the lingering effects of the pandemic on purchasing behaviors and a gradual shift towards more agile security solutions.
- Web Application Firewalls (WAFs): The WAF segment is poised for a significant expansion, with an expected revenue of over $6 B by 2028, representing a double-digit CAGR. This surge is driven by the escalating need to protect an increasing number of Internet-facing enterprise applications from a broad spectrum of cyber threats.
- Secure Service Edge (SSEs): Demonstrating resilience against macroeconomic uncertainties, the SSE market is anticipated to reach nearly $10 B in revenue at a double-digit revenue CAGR. This growth is fueled by the transition of security perimeters from traditional on-premises solutions to cloud-based services, catering to the demands of distributed applications and the rise of hybrid work models.
- Application Delivery Controllers (ADCs): The ADC segment, forecasted to achieve a 2 percent CAGR, reflects its status as a mature market. Its growth is tempered by the increasing integration of ADC capabilities into software infrastructure and cloud services, which challenges the demand for standalone ADC solutions.
- Secure Web Gateway (SWG) Appliances: The SWG appliance market is experiencing a downward trend, with an anticipated five-year revenue CAGR of -3 percent. This decline is primarily attributed to a strategic shift in enterprise security spending towards more advanced and cloud-based SSE solutions.