Software based network security revenue predicted to soar

In general worldwide network security spend is projected “to be on a steady upswing through 2029,” says the analyst. It reckons total network security revenue, which includes physical appliances, software, and SaaS form factors will climb from $24 billion to $38 billion as hybrid work, application migration to cloud, and AI-enabled attacks “recalibrate corporate defence strategies.”

However it specifically highlights the portion of the market sold as software and SaaS, which it says will significantly outpace physical appliance growth thanks to the greater agility and scalability they offer, leading to almost a doubling of associated revenue to $22 billion in that time.

By 2029 firewalls are projected to remain the largest segment by revenue, expanding at an 8% CAGR as virtual firewalls outpace physical refresh cycles. Security Service Edge (SSE) is forecast to nearly double to $11 billion, growing 14% a year as enterprises lean in to cloud‑delivered security.

Web Application Firewalls (WAF) revenue is expected to grow at a 14% CAGR, bolstered by “API security mandates and the continued rise of cloud-based applications.”

Meanwhile Application Delivery Controllers (ADC) are projected to “hold steady” with a 1% CAGR and traditional SWG appliances are forecasted to decline at a 4% CAGR “due to the structural pivot from appliances to SSE.”

“Enterprises are accelerating the move to elastic, cloud-centric security so they can adapt as quickly as the threat landscape evolves,” said Mauricio Sanchez, Sr Director, Enterprise Security and Networking at Dell’Oro Group. “Vendors that fuse networking and security into integrated software and SaaS-based platforms will capture the lion’s share of the $38 B opportunity ahead.”

The analyst has put out another report this week which says the campus ethernet switch market has returned to demand-driven growth after a slowdown clocked last year. Revenue is expected to grow over the next five years, as enterprises invest in higher capacity networks.

“The wide use of AI agents is expected to put new requirements on the Local Area Network,” said Siân Morgan, Research Director at Dell’Oro Group. “It is still too early to determine exactly how it will play out, but traffic patterns, volumes and sensitivity to latency are likely to change—leaving room for product differentiation by campus switch vendors.  Enterprises recognize the importance of a high-performance LAN, especially as they plan for the implementation of AI use cases.

“Outside North America, Wi-Fi 7 adoption was strong in 2024.  We expect that American vendors will see strong growth in Wi-Fi 7 sales in 2025, and this will continue to fuel enterprise purchases of multi-gig, Power over Ethernet switch ports.”

Specifically it says revenue CAGR (2024-2029) from the sale of 5.0 Gbps ports is expected to exceed 20%, driven by higher speed wifi APs. End-of-life dates in 2025 and 2026 are driving switch refreshes of both modular and fixed form factors, and “richer feature sets” such as AIOps functionality, are expected to drive up vendor software revenues, says the analyst.

Source: https://www.telecoms.com