SDN, NFV boosting managed security services revenue

Networks Asia staff
01 Apr 2016

Global revenue from managed security services grew 9% in 2015 to $17.4 billion, and is expected to grow by one‑third over the next five years, according to IHS.

More than half (54%) of security service revenue in 2015 came from customer premises equipment (CPE) based services, with cloud-based offerings contributing 46% - but this ratio is expected to reverse by 2020.

Managed security providers are now beginning to adopt SDN and NFV, to scale delivery of managed security services. But with the advent of virtual CPE solutions, many providers expect managed CPE-based service revenue to continue growing as well.

“SDN deployments in cloud and hosting environments will help providers build more scalable, flexible and profitable hosted and cloud security services,” said Jeff Wilson, cybersecurity research director for IHS Technology.

“The availability of a new generation of virtual CPE services driven by NFV will enable carriers to deliver services to the customer edge on a common hardware platform capable of running virtual machines. While common wisdom says the transition to the cloud and cloud services for security will overwhelm CPE, there’s still a play for on-premises services, even in a virtualized world.”

Sales of cloud-based security services grew 12% in 2015 from the prior year, and the segment is expected to grow at a CAGR of 9% over the five years from 2015 to 2020. The largest contributor to cloud-based security service revenue is content security, followed by managed firewall services, other security services, distributed denial of service (DDoS) mitigation, and intrusion detection and prevention systems.

“The majority of providers IHS tracks either met or exceeded their revenue expectations for the year,” Wilson said. “The long-term outlook for this market -- especially for cloud services -- is strong.”

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