The security services edge (SSE) and SD-WAN markets each saw more than 30% growth during the second quarter despite an expected slowdown due to supply chain issues, the Russia-Ukraine war, and an “environment of macro-economic angst,” Dell'Oro Group Research Director Mauricio Sanchez said.

Dell’Oro Group views SSE and SD-WAN as the two components that make up secure access service edge (SASE), the Gartner-coined term for an infrastructure with converged networking and security.

Sanchez noted disaggregated SASE vendors – those that offer SD-WAN or SSE separately – still hold the largest slices of the market. The top three SSE vendors were Broadcom/Symantec, Cisco, and Zscaler, which represented 60% of the market by revenue. Fortinet, Cisco, and VMware made up 50% of the SD-WAN market at the end of the quarter.

“I see these railroad tracks, one side being networking, one side being security, flourishing unto themselves,” Sanchez told SDxCentral, but he doesn’t yet see “any particular cannibalization by those leaders in those respective markets penetrating laterally across the other side.”

Sanchez said this trend is not surprising against the context of a customer base that still thinks of the SASE networking and security segments as “two parts of a puzzle.”

Sanchez noted that unified SASE has seen traction in the lower tiers of the market where organizations with lean IT staff may not have a preference for best-of-breed networking or best-of-breed security. Still, he sees the real question being how long it will take to get to unified SASE solutions that have “all the bells and whistles” of the best-of-breed networking and best-of-breed security. 

“I think we're still far off from that,” Sanchez added. “The unified will still be growing at a very healthy clip and represent a sizable part of that market, but I don't see in the next five years an end state where all of a sudden the share of a wallet will be owned by a single SASE vendor.”

There are several factors within the current security environment that are giving these markets momentum, according to Sanchez, the first being many “Fortune 100 boards are still up in arms making sure that they don't get hit” by security breaches. 

“They are not necessarily giving that blank check for everything, but they're pretty loose still with the pocketbooks for making security investments,” he added.

Combined with a push for digital transformation, hybrid work, and increasing Ethernet speeds, Sanchez said “there's just a motivation to upgrade to make sure that the solution can stay abreast together.” He added that new IT paradigms like IoT, operations technology (OT), and artificial intelligence (AI) are becoming another factor in driving investments and solutions toward SASE and SSE.

The Dell’Oro Group report also showed the SASE market has more than 35 vendors, with the top 11 companies representing 80% of the market by revenue.

While Sanchez said the expectation is the market’s momentum should remain the same, with more than 30 vendors, there won't be enough space for everyone. He indicated that over the course of the next 12 to 18 months the market may see consolidation, with mergers and acquisitions being the more likely cause.

“I'm not saying necessarily that folks are going to close up shop, because I think that there's enough interest even in the IP for anyone that's considering the close up shop to be picked up by larger fish,” he said. “I'm not saying it will happen in the next couple of quarters, but a market can't be serviced by 30 different vendors.”

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