The worldwide revenue for virtual firewalls rocketed 51% in 2Q 2023 while hardware firewalls barely registered 2% revenue growth, according to a new report from Dell’Oro Group.

The market was deeply affected by a steep revenue drop-off in high-end firewalls preferred by service providers and large enterprises for data centre applications.

“The bust of high-end data center class firewalls during the depths of the pandemic was followed by an accelerated pace of investment. We believe this trend is ending as service providers and large enterprises pause their investments,” says Mauricio Sanchez, senior research director: enterprise networking and security at Dell’Oro Group.

“This pause is driven by the combination of macroeconomic uncertainty and purchasing more than they needed when product lead times were long and thinking was they needed to get in line. In the meantime, enterprise spending on Virtual Firewall revenue has consistently grown by mid-double-digits as enterprise IT shifts to the more cloud-friendly virtual form factor.”

Additional highlights from the 2Q 2023 Network Security Quarterly Report include:

* The worldwide firewall market surpassed $3-billion and registered 6% revenue growth.

* The top four firewall vendors (Palo Alto Networks, Cisco, Fortinet, and Check Point) owned over 60% of the firewall market.

* Palo Alto Networks owned the number one revenue position in virtual and physical firewalls.

* After three consecutive quarters of revenue deceleration, the worldwide web application firewall (WAF) marked a return to accelerated growth with a 14% rise.

* SaaS- or virtual-based network security solutions experienced a 28% revenue increase, while physical appliance network security had a barely 2% bump.