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Post-Pandemic Work from Anywhere and Digitization Initiatives to Fuel Strong Demand

We just published the latest edition of our 5-year forecast for the Network and Security and Data Center Appliance (NSDCA) Market that spans Firewalls, Secure Web Gateways, Email Security, IDS/IPS, Application Delivery Controllers, and Web Application Firewalls. A year ago, we debated the effects of the US and China relationship and Brexit on the market, but this year all attention is on the COVID-19 pandemic. The pandemic is reverberating through the market with both near-term and long-term consequences.

Near-term, we see overall NSDCA market growth muted that will only attenuate as societies turn the corner on the pandemic. We forecast the market will post meager growth of just 2% year-over-year (Y/Y) in 2020. Historically, the total market has been averaging 7% to 9% Y/Y growth. Fortunately, we believe the market will begin reverting to more robust growth in the latter half of 2021 as vaccination against COVID-19 ramps up.

We project post-pandemic growth to be stronger than what we predicted pre-pandemic in January 2020 and rise from $17.6B in 2020 to $28.8 B in 2025, representing a 10% five-year compound annual growth rate. The key difference from a year ago is the pandemic’s expected long-term effects on how businesses operate:

  • The Work Anywhere Workforce – The pandemic substantially increased the ranks of teleworkers as many people worked from home in compliance with state and local government health mandates. While some workers are beginning to return to corporate offices, we believe that many will continue to telework post-pandemic, whether full- or part-time. According to our analysis relying on US Bureau of Labor Statistics data, 10% of the US workforce worked remotely pre-pandemic. We anticipate that post-pandemic, 20% of the total US workforce will work remotely. On a global scale, we foresee similar dynamics.
  • The Fully Digital, Multi-cloud, Mobile user-friendly Enterprise – The pandemic forced businesses from paperwork and handshakes to digital documents and online transactions. While the multi-year journey of enterprises to be fully digital was well underway before the pandemic’s arrival, it accelerated upon its onset. We see this momentum continuing post-pandemic.

Though a rising tide lifts all boats, in our report, we dig into the details on how cloud-friendly technologies will rise faster than on-premise technologies post-pandemic.  For example, the Firewall segment, representing over 50% of the overall market, is not expected to match our pre-pandemic forecast. We do expect the Firewall segment to rebound, but not as strong as other segments. The Firewall segment has traditionally been biased towards physical appliances and on-premise corporate deployments.  We see physical appliances playing a shrinking role in the market as enterprises move to virtual and software-as-a-service embodiments.

Delll'Oro Group Network Security and Data Center Appliance 5-Year Forecast ReportAbout the Report

The Dell’Oro Group Network Security & Data Center Appliance market 5-Year Forecast Report offers a complete overview of the industry with tables covering manufacturers’ revenue for Firewall, Secure Web Gateway, Email Security, IDS/IPS, Application Delivery Controller, and Web Application Firewall product segments. Each of these segments is further split by Physical, Virtual, and SaaS (Software-as-a-Service) form factors. Manufacturers’ units shipped and average selling price is provided for the Firewall and Application Delivery Controller segments. To purchase this report, please contact us by email at dgsales@delloro.com.