The network security market saw a modest single-digit revenue growth in Q1 2024 reaching $5,5-billion, according to Dell’Oro Group. This muted growth, down from double-digits 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.

The shift away from traditional hardware to more adaptable, cloud-based solutions is reshaping the industry as enterprises respond to evolving cyberthreats and the need for scalable security measures.

“In a market facing economic headwinds and shifting architectural preferences, the decline in hardware-based network security solutions was expected but still notable,” says Mauricio Sanchez, senior director, Enterprise Security and Networking at Dell’Oro Group. “As enterprises continue to navigate the complexities of modern cyberthreats the pivot to more adaptable, cloud-centric solutions is unmistakable and essential for future resilience.”

Additional highlights from the Q1 2024 Network Security Quarterly Report include:

* Firewall Market: Overall firewall revenue declined for the third consecutive quarter, dipping by single digits to just shy of $3-billion. On a sub-segment basis, there was significant variation in revenue performance ranging from a 14% YoY decline in high-end firewalls to a 28% YoY increase in virtual firewalls.

* 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.

* SSE Market: SSE revenue grew by 24% YoY which was its lowest-ever growth rate and the first time revenue did not rise on a quarter-on-quarter basis since tracking began in Q1 2019. Despite this, Zscaler, Palo Alto Networks, and Netskope – whose aggregate revenue represented over half of the market – together saw a 38% YoY revenue rise as a reflection of the breadth of their solutions and strong customer appeal.

* The top SSE vendors by revenue continued to be Zscaler, Broadcom/Symantec, and Palo Alto Networks.

* WAF Market: WAF revenue increased by 23% YoY, marking a continuation of a rebound that started in Q1 2023 as enterprises placed renewed attention on application transformation and its security needs. Akamai continued to be the number one vendor by revenue.