The network security market has been on a strong rebound since last year, but Dell'Oro Group forecasts a slightly weaker pace of revenue growth over the next several years.

The firm’s bi-annual network security revenue forecast report analyzed email security, firewall, security services edge (SSE), secure web gateway (SWG), web Application firewall (WAF), and Application Delivery Controller products. It found market revenues surged nearly 15% in 2022, though it expects that growth to slow at a low double-digit Compound Annual Growth Rate through 2027.

“We believe what goes up must come down. So while we don’t expect anything resembling a crash, we are forecasting spending to modulate downwards to historical norms starting in 2024 as enterprises digest what was already purchased and tighten budgets incrementally,” explained Mauricio Sanchez, research director of network security, SASE, and  SD-WAN at Dell’Oro Group.

Sanchez detailed the revenue CAGR forecast for individual products, with email security at mid-single digits, firewall at high single-digit, SWG at negative single-digit, SSE at mid-teens, WAF at mid-teens, and ADC at low single-digit.

In an earlier report about firewalls, Sanchez anticipated the hardware and virtual firewall revenue to be on track to $12 billion this year, led by top vendors such as Cisco, Fortinet, and Palo Alto Networks.

“Durable demand for high-end firewalls driven by the secular force of increasing Ethernet speeds. With 400Gb Ethernet pipes coming online and Ethernet expected to continue to increase in speed, each speed step is the driver for a new wave of high-end hardware firewalls,” Sanchez told SDxCentral in an email. “Hardware is really the only way still to process the enormous amount of data. On the other hand, I see standalone low-end firewalls shifting to become secure SD-WAN boxes.”

Sanchez highlighted SSE’s mid-teen CAGR is above the overall network security market and he expects SSE to “kill the traditional SWG appliance business,” while putting pressure on the firewall market.

Coined by Gartner, the SSE framework includes SWG, zero-trust network access (ZTNA), firewall-as-a-service (FWaaS), cloud access security brokers (Cloud Access Security Broker), decryption, and other capabilities.

Among SWG, CASB, ZTNA, and FWaaS, Sanchez noted SWG is the most mature and largest revenue component with the slowest growth. While “ZTNA and FWaaS as more recent additions to the picture will exceed the overall SSE CAGR. Interest and monetization of both are expected to remain good during the forecast horizon.”

He added firewalls are multi-purpose tools so he didn’t expect the business to “disappear like traditional SWG.”

“In terms of adoption of SSE functions, the preponderance near-term is still associated with SWG and CASB, but the good interest in ZTNA and FWaaS is leading to them to go from smaller revenue contribution to being more balanced over the five-year horizon,” Sanchez wrote.