Top firewall vendors Cisco, Fortinet, and Palo Alto Networks devoured over half of the hardware and virtual firewall market share by revenue again in the second quarter of 2022, according to Dell’Oro Group’s latest report. Research director Mauricio Sanchez saw the market is on track to have a $12 billion yearly revenue this year.

For the last five years, the trio has captured a large share of the firewall market, and “it's really just been a shift in terms of who leads,” Sanchez noted. “As firewalls mature, it seems that the concentration incrementally increases amongst that leadership peloton.”

Other than the top three, Microsoft is growing quickly in the virtual firewall market which just accounted for a small slide of the total firewall market sales, he added. Other players such as CheckPoint and Juniper Networks have been “treading water,” but their market share is largely stable.

The total hardware and virtual firewall market surged 14% year over year, reaching $3 billion in revenue in the second quarter, despite facing the headwind from supply chain issues. Hardware firewall demand outstripped supply for the sixth consecutive quarter, according to Dell’Oro Group’s Network Security Quarterly Report, which covers Application Delivery Controller, firewall, email security, security services edge (SSE), secure web gateway (SWG), and web Application firewall (WAF) markets.

Sanchez chose to highlight the growth in the firewall market. “I think a lot of people yawn at firewalls, right? Because they're not the sexy tool and a toolkit that things like SASE and SSE and CNAAP and other things that are the shiny chrome. And secondarily, from a revenue perspective, it's a huge river,” he said. “We're on track for it to be a $12 billion market this year.”

The ongoing secular trend of increasing network capacity; specialization for 5G core, OT, and IoT security; and the evolution of malware and threat detection drove the firewall sales, on top of the firewalls being foundational to good Enterprise network security practices, Sanchez said.

That’s why he doesn’t foresee the firewall appliance market disappearing over the next five years, despite more organizations looking to adopt cloud-delivered network security services such as SSE. “I also don't see it entering a phase of decline in the same way we've seen in other network security segments.”

Palo Alto Networks partnered with Amazon Web Services (AWS) to natively integrate its cloud firewall into the public cloud. Oracle Cloud also recently tapped the security vendor’s VM-series firewall to power its cloud-native, managed firewall service.

As many customers already use security vendors like Palo Alto Networks for their firewall services, the cloud services providers would choose to ensure a better customer experience rather than competing with those vendors, Sanchez said.

Meanwhile, Microsoft Azure and Google Cloud took another route to offer cloud firewalls natively. Even though Microsoft has the longest track record among the hyperscalers in trying to compete in the open vendor landscape, firewall vendors still saw it as a strategic competitor, he added.

Sanchez argues the increasing adoption of multicloud and hybrid-cloud strategies makes it difficult to rationalize putting all the eggs in one cloud provider basket, but cannot leverage the same security functionality across other environments.

This gives the security vendors who offer a multicloud or hybrid-cloud strategy an edge. However, this situation might change over time.

“The cloud services providers are raising the bar,” he said. “They may start off with a pretty basic version, but over the course of time, they continue to get better and better and enterprises may or eventually find that: Hey, it's good enough, I'm not going to kick Palo Alto [Networks] firewalls to the curb, or the F5 ADCs to the curb, or the Akamai WAF to the curb, and so be it.”