The virtual- and Software-as-a-Service (SaaS)-based network security market experienced its 20th consecutive quarter of global revenue growth in Q1 2023, which signifies a “seismic shift in how enterprises consume network security technology,” Dell'Oro Group Research Director Mauricio Sanchez told SDxCentral.

Deploying hardware “just doesn't cut it anymore,” Sanchez said. Today's global scale of applications, data and users requires the flexibility and agility of cloud-based delivery models like security services edge (SSE) rather than traditional hardware security solutions, he explained. SSE is comprised of four main functions – cloud access security brokers (Cloud Access Security Broker), firewall-as-a-service (FWaaS), secure web gateway (SWG) and zero-trust network access (ZTNA).

The analyst firm reported more than 20% year-over-year revenue growth for the virtual network security market, which includes firewalls, SSE, SWG and web Application firewalls (WAF). “If you include the portion of the market consisting of hardware security solutions, [20% Q1 growth] is no longer true,” Sanchez noted. This preference for non-hardware network security services will likely continue in the future, he added.

Virtual network security solutions address Enterprise challenges like hybrid work security and threat protection. “Firewalls provide broad spectrum protection, while WAFs protect against Application threats,” Sanchez explained.

Zscaler leads the virtual network security market with 5% more market share than No. 2 Akamai and No. 3 Palo Alto Networks, which are within a percentage point of one another, according to Dell'Oro. After the introduction of SSE by Gartner in early 2021, Zscaler almost immediately found itself leading the pack among a bevy of other vendors preferring to address the cloud security end of the problem rather than offer a full-on SASE architecture.

The reigning No. 1 vendor participates only in the SSE segment of the virtual network security market, and “the fact that Zscaler is leader by its performance of SSE alone reflects its strong market position,” Sanchez said.

Akamai's SSE and WAF services are driving its No. 2 position in the market, while Palo Alto Networks “has SSE and virtual firewall driving its number,” Sanchez noted, adding that he considers Palo Alto Networks' revenue from WAF to be inconsequential.

Sanchez noted significant innovation is happening in a few areas of the virtual network security market based on current unsolved Enterprise pain points. Two main problem areas stem from the shift to cloud-based architectures, including transitioning on-premises workloads to the cloud – or multiple different clouds.

“The first area is about the security innovation taking place in cloud workload security,” specifically in regard to cloud workload protection platforms (CWPP), Cloud Security Posture Management and cloud-native Application protection platforms (Cloud Native Application Protection Platform), he said.

The other area where Sanchez expects more innovation is distributed cloud networking. “As enterprises embrace multiple cloud providers, there are enormous networking and security implications for the infrastructure teams. Many enterprises haven’t figured out how to integrate public clouds into their existing IT infrastructure landscape and workflows,” and he expects vendors to continue addressing those challenges.