Nothing is getting in the way of the network security market, according to a new report from market-research firm IHS Markit. Despite massive changes brought on by the cloud and global issues like Brexit, demand for network security appliances and software continues to grow.
IHS forecasts that the global market for integrated security appliances, secure routers, VPN and firewall software, and other network security products will grow to $10.8 billion in 2020, up from $8 billion in 2015. Jeff Wilson, senior research director of cybersecurity technology at IHS Markit, cited virtualization and cloud enablement as key drivers in the market's projected growth.
The network security market finished the first half of 2016 with a flourish, he reported: Worldwide revenue of $2.2 billion was up both sequentially and year over year.
"Fortinet and Palo Alto Networks continue to post solid year-over-year growth, and vendors are experiencing minimal impact from macroeconomic issues like Brexit," Wilson wrote in a research note. "Vendors are reporting strength across their portfolios as well and strong traction for integration of next-gen advanced threat protection (ATP) and virtualization/cloud applications."
Revenue for pricey data center and carrier network security appliances (costing $30,000 and up) and virtual security appliances was $2.4 billion last year, according to IHS Markit. By 2020, the firm expects that revenue to grow to $3.9 billion, with purpose-built virtual appliances posting the highest growth.
Wilson notes that enterprises are redesigning their security infrastructure in the face of a rapidly changing threat landscape and emergence of software-defined networking and network functions virtualization. SDN and NFV are leading enterprises and service providers to look more closely at virtual appliances and other software options that work in those environments, he said.
The growth of hosted security services and the move to the cloud for IT infrastructure "is raising questions about what security architectures will look like five years from now," Wilson said. "A significant portion of future revenue growth will be driven by carrier rollouts of virtual customer premises equipment (vCPE) and the use of mainstream virtual integrated appliances in large data center and cloud environments."
In this rapidly changing environment, most network security vendors are "hedging their bets, offering a bit of everything, from standalone appliances and software, to integrated products, virtualized offerings and even full cloud services," according to Wilson.
IHS believes that security revenue will be less impacted over time by Brexit -- the United Kingdom's plan to withdraw from the European Union -- than other areas of IT.