As we arrive at the end of 2020, it’s a good time to look at the forthcoming year. We assume that 2021 won’t surprise like this year, and we’ll be able to start returning to pre-pandemic routines. On a global scale, most things will return to the way they were, but some may not. The same is true for the network security market, where we predict two new trends and a return of a historical one:
1 – From Work at Home to Work Anywhere Securely (New)
Before the pandemic, few business leaders imagined running their entire business with a remote workforce, let alone plan or invest in one. Fortunately, the bottom didn’t fall out when their employees had to stay home to help stem the spread of COVID-19. Many businesses found that productivity didn’t suffer, and in some cases, improved. While some employees may never adjust to a life where the line between personal and work life is fuzzy, for many it has been empowering change, and they have no desire to go back into an office.
Enterprises are taking notice. Progressive ones, like Nationwide Insurance and Twitter, have already announced that most, if not all, employees never need to come back. Most businesses now see that remote work isn’t a liability but an asset.
In 2020, many enterprises were forced to cobble together a work from home solution. These solutions weren’t meant to be permanent. In 2021, we see enterprises making “work anywhere” a formal business goal and begin making long-term changes and investments.
Security vendors have already been responding with new cloud-based solutions that bring together networking and security in what is being billed as SASE (Secure Access Service Edge) solutions. Early adoption of SASE has started, and 2021 may be the first year it becomes mainstream.
2 – Cloud-Centric Security Will Continue to Grow Faster than Overall Market (New)
During our 2020 interviews with state VARs, we heard how digital, multi-cloud, and mobile user-friendly enterprises weathered the pandemic better than those that were not. Because of the pandemic, enterprises that were already investing in IT transformation accelerated, while those that had not started finally began their journey. The numbers we track bear this out.
We track the network security market not just by product segments but also by form factor. We follow three form factors, Physical Appliances, Virtual Appliances, and Software-as-a-Service (SaaS). We consider Virtual Appliances and SaaS to be the two form factors to be most cloud-friendly and at the heart of cloud-centric security deployments.
While we expect the overall network security market to return to high single-digit growth in 2021, we expect both Virtual Appliance- and SaaS-based network security to grow north of 20 % in 2021, or more than twice as fast as the overall market.
3 – Firewall Revenue Will Rebound (Historical)
Historically, Firewall revenue has been growing on average nine to ten % every year. In 2020, Firewalls are on a path to squeeze out just 2 to 3 % growth. Considering the Firewall segment is a $9 B market and nearly four times bigger than any other security segment we track, any sluggishness quickly impacts overall market numbers.
Most firewall sales – in particular, physical firewalls, which account for 95% of the Firewall segment by revenue – are part of a broader network infrastructure purchase together with network switches and routers. Early on in the course of the pandemic, many enterprises halted network expansion projects, which naturally led to the deceleration in Firewalls we saw in 2020.
In 2021, we expect the Firewall segment to rebound and return closer to historical growth rates for the following two reasons:
- Need for greater capacity – 5G networks and increasing popularity of 100G/400GbE over 10G/40GbE or 25G/100GbE with cloud and telco service providers drive the need for faster, more scalable Firewalls. High-End Firewalls will stand to benefit.
- New features and use cases – Over time, Firewall vendors have proven adept in maintaining customer relevancy with support for new features and use cases. We see this continuing in 2021 with an expansion of Low End and Midrange Firewalls into SASE.
Across all three predictions, we hold a generally optimistic view towards 2021. We feel our bias is well warranted considering the high priority security investments have held in enterprise budgets due to the threat landscape remaining as thorny as ever.