Security & Enterprise Networks Archives - Page 5 of 15

Happy New Year! Right before the holidays, we published our 3Q22 reports which provided a good overview of the market performance for the first nine months of 2022. Based on those results and while vendors have not reported their 4Q results yet, the Campus Switch market is estimated to have achieved a stellar double-digit growth, reaching a record-revenue level in 2022.

Now the big question is what’s next and what does that mean for 2023 performance? Should we expect a market pull-back, especially in light of rising macroeconomic uncertainties? And what other trends should we watch in 2023?

1) Market Performance to Remain Healthy in 2023

Despite the remarkable performance in 2022 resulting in a tough comparison for sales in the new year, we project that the Campus Switch market will continue to grow in 2023. Our optimism is underpinned by the healthy backlog witnessed in the market. On the latest earnings calls, almost every switch vendor reported near record-level backlog and most did not expect a return to normal in the next several quarters. As the supply situation continues to improve in the first half of 2023, it will help fulfill this backlog, providing a cushion for market sales not to crash, even when booking growth rates start to moderate. Furthermore, this backlog will be priced at a premium compared to what has been shipped in 2022, as explained later in this blog.

However, as we head into the second half of 2023, we believe that improvement in the supply situation, combined with macroeconomic challenges, will put a break on the panic-purchasing behavior that led to the extraordinary levels of backlog recorded so far in the market. We, therefore, expect a significant slowdown in bookings, followed shortly thereafter by a slowdown in revenue, as most of the backlog will have been fulfilled during the first half of the year.

2) Market Prices May Finally Start to Rise

As you know, almost every vendor had to increase its list prices by an average of 10-15% as a way to protect margin by passing some of the increased supply-related costs to customers. However, those list price increase actions have not yet started to impact recognized revenues as most of the products that have been shipped in 2022 are from orders placed ahead of the list price increase. However, as supply improves and as this old backlog starts to get fulfilled in 2023, we expect the market to start to benefit from this list price increase, although it may partially be offset by regional, customer, and product mix dynamics.

3) Wide Discrepancy in Regional Performance

2023 is expected to be a wild and uncomfortable year from a geopolitical and macro perspective. The war in Europe, the global energy crisis and inflation are expected to put pressure on market demand and curb enterprises’ appetite for spending. However, we expect this slowdown in demand to be more severe in certain regions compared to others. For instance, we expect the slowdown to be more severe in Europe than in the U.S. Additionally, China will also be dealing with the increased rate of COVID infections following the end of the zero-Covid policy.

4) 2.5/5.0 Gbps Campus Switch Adoption to Accelerate

We predict 2.5/5.0 Gbps shipments to grow in excess of 50% in 2023, showing an accelerated growth rate compared to 2022. This accelerated ramp is a reflection of improved supply but also increased demand. We expect a higher portion of Wi-Fi 6E and Wi-Fi 7 Access points (APs) to ship with 2.5/5.0 Gbps uplinks and to drive the need for 2.5/5.0 Gbps switches. Additionally, as employees return to their offices, even on a part-time basis, network traffic will surge, requiring higher-speed Wi-Fi APs and switches. Last but not least, we expect this growth in 2.5/5.0 Gbps switch shipments to be diversified among a wide variety of vendors, unlike during the prior years when Cisco used to comprise well in excess of two-thirds of the shipments in the market.

5) Network-As-A-Service Offerings to Increase and Open the Door for Heated Competition in the Market

Perhaps one of the main questions we have been getting in 2022 and expect to persist in 2023 is around Network-As-A-Service (NAAS) offerings. What is the definition of NaaS? What does it include? What is the target market? How are vendors charging for it? What is the delivery model? How are the different responsibilities being divided to provision, maintain and operate the network?

Given the complexity of the matter, we felt the need to address all the questions above and even more in an advanced research report that is planned to be launched in 2023. Stay Tuned!

For more detailed views and insights on the campus switch market, please contact us at dgsales@delloro.com

In the new year, the time is ripe to reflect on our 2022 predictions and look to a fresh batch of 2023 predictions. A year ago, we made the following predictions for 2022:

Only a minority of enterprises will fully deploy SASE in 2022, but all will force SASE of their vendors
The physical Firewall market rebound will modulate, while cloud-centric security will continue to grow faster
Firewall-as-a-Service will begin to cannibalize carrier-class Firewall physical appliances

On our first prediction, we believe we were right. SASE, an architectural IT direction to transform and unify WAN-centric networking and security for branches and remote users, continued to gain interest and traction. However, how the enterprises deployed SASE networking versus security technologies remained extremely disaggregated and on different timelines due to the difficulty of changing too many parts simultaneously. The implications for the technology vendors were that irrespective of whether disaggregated or unified–or even whether single-vendor or multi-vendor SASE–they had to demonstrate to customers that they could help them on their SASE journey today and into the future. In other words, vendors were forced to show SASE capability even if customers didn’t yet take advantage.

Our second prediction was a split decision. We were right that cloud-centric security–the SaaS- and virtual-based variants of network security solutions–would grow faster than traditional network security solutions. While there will always be a role for hardware, the ongoing shift to the cloud limits the role that hardware can play in the enterprise, particularly in the data center. However, as corporate networks–or even cloud service provider networks–footprint expands in size, hardware firewalls play a role. We are wrong about how much appetite the market still had in 2022 after robust 2021. 4Q22 numbers haven’t come in, but if current trends hold, the full-year 2022 revenue growth of the hardware firewall market will match the 2021 rates.

Our third and last prediction was the boldest, and we were wrong. We still believe that cloud-based firewalling can and will eventually put pressure on the highest tiers of firewalls (carrier class), but 2022 was a different year. However, at the branch or even small data center level, we did some start on displacing lower-end firewalls.

Gazing in our crystal ball, we have the following three predictions for 2023:

1 – Security spending to remain stable in looming economic storms

Most economists predict that in 2023 the worldwide GDP growth rate will be weaker at 2.1% compared to the actual 6.0% and expected 3.0% growth in 2021 and 2022, respectively. Put in perspective, 2.1% growth would be the third weakest rate of growth in the last 20 years and only overshadowed by the Great Recession in 2009 and the Covid-19 drop in 2020.

While it would be folly to say security spend will break records in 2023, we expect it to remain stable against increasing economic storminess. Of late, security has and is expected to continue a board-level discussion and hence be a top investment priority. Attacks aren’t stopping even if the economy does. No CEO wants their mugshot on the nightly news because of a security breach.

2 – SASE to keep growing, but a split decision between networking and security components

SASE is the amalgamation of networking (SD-WAN) and security (security service edge [SSE]) technologies. Most enterprises have and will continue to purchase separate SD-WAN and SSE solutions to (eventually) integrate them to achieve the disaggregated form of SASE. We expect enterprises to continue to prioritize the security side of SASE but slow down the networking side as the economic pressure increases. As a result, we foresee the SSE-side of SASE to post another year of solid growth in 2023, but we anticipate that SD-WAN will see a marked deceleration in its growth.

3 – Increased cloud breaches to cause spending on cloud workload security to be over $6 B in 2023, which is over 4x higher than in 2020

This past Fall, we issued our first Advanced Research Report on the cloud workload security market, which goes by various names, including CNAPP, CWPP, and CSPM. We delved into this space because network security vendors have entered cloud workload security as a natural adjacency. We found a market in hypergrowth as enterprises that have or embrace the cloud find many new, thorny security problems. As a result, we expect that enterprises will have to spend the money and lead the cloud workload security market past the $6 B mark, which is 4x higher than in 2020.

A year from now, we’ll reevaluate and see what came true. Until then, all the best in the new year.

Watch This Video:

What’s next for SD-WAN, SASE, and network security in 2023?

There’s nothing like starting the New Year armed with the latest information and insights; so I thought I would share some of Dell’Oro Group’s key predictions for the Wireless LAN market in 2023.

Supply chain acrobatics was the name of the game for Wireless LAN in 2022. Manufacturers demonstrated some impressive flexibility by redesigning products, expediting components, and paying for air freight in a bid to fulfill their accumulating orders. Just as the lockdowns were underlining the importance of Wi-Fi to the hybrid work model, WLAN equipment became a scarce commodity.

In 2023, the WLAN market will be all about growth. It’s not that the supply constraints have gone away, but they are lessening, and the solutions put in place by the manufacturers are bearing fruit. Meanwhile, enterprises are still clamoring for connectivity.

In this context of accelerating supply meeting backlogged demand, here are a few predictions for the year to come.

1) The Enterprise Class WLAN market will surpass $10B in 2023

Last year, we projected that the WLAN market would break the $10B mark in 2025. However, the last couple of quarters of 2022 showed us how high prices can combine with rising unit volumes to bring record-level revenues. We’ve brought our $10B prediction forward an astonishing two years.

After one of the most prolonged periods of year-over-year price increases, it may seem bold to predict that they will keep rising into 2023. However, there are a couple of unfolding trends backing up this prognosis.

First, prices over the past few quarters have been driven up by the adoption of Wi-Fi 6 (802.11ax) – and there is still room for Wi-Fi 6 to grow. Its adoption curve has been altered by the supply constraints but we are still expecting several more months of gain in share of shipments.

The second trend buoying prices is the rise of manufacturers’ costs, which has been passed on in the form of WLAN price increases. With a backlog worth two quarters of revenues for most manufacturers outside China, it takes at least six months for the higher-priced WLAN orders to flow through to delivery. This means a boost to manufacturers’ revenues in the first half of 2023. Eventually, the basic laws of economics will prevail and price erosion will kick in. We are predicting that prices will peak and start to come down in the second half of the year.

2) Unit shipments will defy the usual seasonality

History tells us that the Enterprise Class Wireless LAN market is back-end loaded. That is, the majority of units are shipped in the second half of the year. But 2023 will be a year like no other. The industry’s unprecedented backlogs are coinciding with a period of slowing economic growth.

In 2023, we predict that the market won’t follow its usual seasonality, and half of the year’s units will be shipped in the first two quarters of the year – six points above the five-year average.

**3) The WLAN industry will gain clarity around Campus Network As A Service offers, and the NaaS business model will be put to the test**

The term “Network As A Service” was bandied around quite a bit in the context of Campus IT services in 2022, although the industry lacks a common definition for the term.

On one hand, we saw new companies, like Meter, Nile, and Shasta promising to change the way enterprises consume Wireless LAN, building their brand on both technological and pricing innovation. The latter involves moving Wireless LAN from an upfront purchase to a recurring monthly expense, often based on a simplified metric, such as office area or number of employees – a metric that is more intuitive than the number of access points or switches.

On the other hand, we heard incumbent HPE Aruba announce some mega-NaaS deals, with large retailers and educational institutions. These companies bought the As A Service offer in part because it included “Day-2 Operations”; that is, professional services such as network design, monitoring, and troubleshooting. This definition of NaaS is similar to Managed Wi-Fi offerings already being delivered by service providers and systems integrators.

As we peel the onion of the different Campus NaaS offers, we find important dimensions such as consumption-based pricing; a mix of self-managed, co-managed, or fully-managed equipment; value-added network services, service-level guarantees; evergreen technology offers; and AI-enhanced operations.

Which market segments will be attracted to which definition of Campus NaaS? How will the service impact manufacturers’ revenues? We will start to get some answers in 2023, and Dell’Oro Group will be front and center in defining and sizing the opportunity.

Watch This Video:

What’s next for Enterprise Class Wireless LAN market spending in 2023?

In this blog, Sameh Boujelbene, Senior Research Director for Data Center Switch Ethernet, will share two key takeaways from the OCP Global Summit’22 event related to SONIC adoption and high-speed optics.

In this new blog, exclusively contributing to RCR Wireless, Siân Morgan, Research Director for Wireless LAN market, will explore whether these are the reasons that Wi-Fi 6E adoption has lagged, or whether other factors could be preventing access to the 1200 MHz of spectrum that was supposed to bring us better-performing Wi-Fi.

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1 – Security spending to remain stable in looming economic storms

2 – SASE to keep growing, but a split decision between networking and security components

3 – Increased cloud breaches to cause spending on cloud workload security to be over $6 B in 2023, which is over 4x higher than in 2020

Watch This Video:

What’s next for SD-WAN, SASE, and network security in 2023?

1) The Enterprise Class WLAN market will surpass $10B in 2023

2) Unit shipments will defy the usual seasonality

3) The WLAN industry will gain clarity around Campus Network As A Service offers, and the NaaS business model will be put to the test

Watch This Video:

What’s next for Enterprise Class Wireless LAN market spending in 2023?

**3) The WLAN industry will gain clarity around Campus Network As A Service offers, and the NaaS business model will be put to the test**