Network Security SaaS and Virtual Solutions Soar While Hardware Falls, According to Dell'Oro Group

Palo Alto Networks and Zscaler Big Winners in 2023

REDWOOD CITY, Calif., March 5, 2024 /PRNewswire/ -- According to a recently published report from Dell'Oro Group, the trusted source for market information about the telecommunications, security, networks, and data center industries, the network security market in 2023 witnessed a pivotal shift with revenues reaching $22.5 B. 2023 marked a deceleration to a single-digit growth rate, significantly influenced by the declining fortunes of hardware-based solutions, which saw a 1 percent decrease. In stark contrast, the SaaS and virtual network security segments emerged as the industry's new powerhouses, surging by 26 percent to $9.6 B. Nearly $5 B was due to the meteoric 30 percent rise in the SSE market, fueled by the widespread adoption of remote work and cloud applications necessitating SSE's SaaS-based approach. The divergence between hardware, SaaS, and virtual solutions underscores a broader industry trend towards more agile, cloud-centric security solutions as enterprises seek to navigate the complexities of modern cyber threats and the evolving demands of a digital-first business landscape.

"In a year marked by economic recalibration and strategic introspection within the network security domain, the industry's gravitation towards SaaS and virtual solutions has been nothing short of revolutionary," said Mauricio Sanchez, Sr. Director, Enterprise Security and Networking at Dell'Oro Group. "2023's tempered growth rate, juxtaposed wit the explosive rise in demand for adaptable, cloud-centric security measures, paints a vivid picture of an industry at a crossroads, eagerly charting its course towards a more resilient, agile future."

Additional highlights from the 4Q 2023 Network Security Quarterly Report:

• The firewall market grew by low single digits in 2023 to nearly $13 B, highlighting its enduring relevance in enterprise defense strategies.
• The WAF (Web Application Firewall) market displayed remarkable resilience, recording a low double-digit increase, predominantly by the adoption of SaaS-based solutions.
• A pronounced shift in market dynamics saw North America and EMEA experiencing subdued single-digit revenue growth in 2023, largely attributed to hardware digestion and broader economic uncertainties.
• Palo Alto Networks and Zscaler emerged as notable 2023 victors in this evolving landscape, with Palo Alto Networks expanding its number-one firewall revenue share to over 25 percent and Zscaler capturing an unprecedented 30 percent of the SSE market to maintain its number-one spot decisively.

About the Report

The Dell'Oro Group Network Security Report includes manufacturers' revenue covering the ADC, Firewall, SSE, traditional SWG appliances, and WAF product segments. Moreover, SSEs are further broken down across four primary functions: CASB, FWaaS, SWG, and ZTNA. The report also splits many segments by form factor: physical, virtual, and SaaS. To purchase this report, please contact us at [email protected].

About Dell'Oro Group

Dell'Oro Group is a market research firm that specializes in strategic competitive analysis in the telecommunications, security, enterprise networks, and data center markets.  Our firm provides in-depth quantitative data and qualitative analysis to facilitate critical, fact-based business decisions.  For more information, contact Dell'Oro Group at +1.650.622.9400 or visit https://www.delloro.com. 

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SOURCE Dell'Oro Group

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