According to a recently published report from Dell’Oro Group, there is a significant shift in enterprise security spending patterns, with virtual and SaaS-based network security solutions expected to surpass $90-billion in cumulative revenue between 2023 and 2028.

This spending trend reflects a five-year revenue compound annual growth rate (CAGR) of 16%, indicating a strategic pivot away from traditional physical security appliances, which are projected to grow at a more modest five-year revenue CAGR of 6%.

“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,” says Mauricio Sanchez, senior 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.”

Additional highlights from Network Security Five-Year January 2024 Forecast Report include:

* Firewall Market: With a projected revenue approaching nearly $20-billion 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-billion 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-billion 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% 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%. This decline is primarily attributed to a strategic shift in enterprise security spending towards more advanced and cloud-based SSE solutions.