Dell’Oro Group research says the network security market saw a modest single-digit revenue growth in the first quarter of 2024, reaching USD5.5 billion.
The telecommunications, security, networks, and data centre market information provider said the muted growth, down from double-digit growth a year ago, was driven by a significant decline in hardware-based solutions and a contrasting surge in cloud-delivered and virtual network security solutions.
“In a market facing economic headwinds and shifting architectural preferences, the decline in hardware-based network security solutions was expected but still notable,” said Dell’Oro’s Mauricio Sanchez. “As enterprises continue to navigate the complexities of modern cyber threats, the pivot to more adaptable, cloud-centric solutions is unmistakable and essential for future resilience.”
Additional key takeouts from Dell’Oro’ 1Q 2024 Network Security Quarterly Report include:
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Overall firewall revenue declined for the third consecutive quarter, dipping by single digits to just shy of USD3 billion. On a sub-segment basis, there was significant variation in revenue performance, ranging from a 14% year-on-year decline in high-end firewalls to a 28% year-on-year increase in virtual firewalls.
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The top four firewall vendors (Palo Alto Networks, Fortinet, Cisco, and Check Point) owned 68% of the total market, representing an all-time high that has been steadily increasing over time as enterprises consolidate on a core set of vendors.
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Security Service Edge (SSE) revenue grew by 24% year-on-year, which was its lowest-ever growth rate. The top SSE vendors by revenue continued to be Zscaler, Broadcom/Symantec, and Palo Alto Networks.
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For the first time since tracking began in the first quarter of 2019, revenue did not rise on a quarter-on-quarter basis. Despite this, Zscaler, Palo Alto Networks, and Netskope, whose aggregate revenue represented over half of the market, together saw a 38% year-on-year revenue rise as a reflection of the breadth of their solution and strong customer appeal.
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Web application firewall revenue increased by 23% year-on-year, marking a continuation of a rebound that started in 1Q 2023 as enterprises placed renewed attention on application transformation and its security needs. Akamai continued to be the number one vendor by revenue.
