Cloud- and Software-Delivered Gains Favor as Hardware Refresh Lags
REDWOOD CITY, Calif. – September 16, 2025 – According to a recently published report from Dell’Oro Group, the trusted source for market information about the telecommunications, security, networks, and data center industries, global Network Security revenue reached $6.4 B in 2Q 2025, growing 8 percent year-over-year (Y/Y). The expansion was driven by double-digit gains in Security Service Edge (SSE) and Application Delivery Controllers (ADC), as enterprises adopted AI-aware application protection and platform consolidation strategies to streamline operations and enhance defenses. In contrast, uneven hardware appliance refresh cycles tempered firewall growth, exposing the divergent trajectories between software-led and appliance-based.
“SSE grew 19 percent and ADC surged 24 percent, both more than double the overall market’s 8 percent rise, while virtual firewalls climbed 27 percent and physical appliances contracted 5 percent, underscoring the tilt toward cloud- and software-delivered controls,” said Mauricio Sanchez, Sr. Director, Enterprise Security and Networking at Dell’Oro Group. “Enterprise buyers are rewarding vendors that integrate AI-aware inspection and consolidate management consoles, and this mix shift will persist as organizations recalibrate hardware footprints and embrace cloud application-centric architectures.”
Additional highlights from the 2Q 2025 Network Security Quarterly Report:
- Revenue associated with cloud- and software-delivered network security controls is projected to increase by 20 percent in 2025, while hardware appliances are expected to decline by 2 percent.
- Network Security market projected to eclipse $26 B in 2025, reflecting high single-digit growth powered by zero-trust mandates, AI workloads, and continued cloud workload expansion.
- Within AS&D, virtual ADC revenue jumped 49 percent Y/Y while SaaS WAF accelerated by 21 percent.
- Virtual and SaaS-based Network Security solutions captured 78 percent of new spend.
The Dell’Oro Group Network Security Report includes manufacturers’ revenue covering the ADC, Firewall, SSE, traditional SWG appliances, and WAF product segments. Moreover, SSEs are further broken down across four primary functions: CASB, FWaaS, SWG, and ZTNA. The report also splits many segments by form factor: physical, virtual, and SaaS. To purchase this report, please contact us at dgsales@delloro.com.
Dell’Oro Group is a market research firm that specializes in strategic competitive analysis in the telecommunications, security, enterprise networks, and data center markets. Our firm provides in-depth quantitative data and qualitative analysis to facilitate critical, fact-based business decisions. For more information, contact Dell’Oro Group at +1.650.622.9400 or visit https://www.delloro.com.
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