I had the opportunity to attend Juniper’s annual analyst event held on September 15 and 16. During the two-day affair, Rami Rahim, CEO of Juniper, and his staff reviewed Juniper’s business and technology strategy. They were joined by a cadre of customers telling their story to why they chose Juniper. I also had the opportunity to sit down one-on-one with Samantha Madrid, VP of Security Business & Strategy and owner of Juniper’s security business, to dig deeper into their security strategy.

As I look back at the event from a network security purview, I see Juniper making three bets on growing security market share.

1. All Network Infrastructure is Security Infrastructure

Juniper seeks to position its entire product portfolio as part of its security vision and solution. They argue that security doesn’t stop at the network security solution, say a firewall, but extends to the total network footprint. They equally see the data center, WAN, and enterprise campus network infrastructure participating in their “Connected Security” security vision. Participation by the network infrastructure is two-fold. On the one hand, as a source of security telemetry, such as who is connected and where. On the other hand, as an enforcement point, where surgically precise remediation action can occur.

This bear hug of all infrastructure is a wise move by Juniper. According to recent revenue data in Dell’Oro’s routing, switching, and security reports, Juniper’s network security market share is nearly five times smaller than their routing market share and 50% smaller than their switching market share. Juniper is looking to leverage its more substantial non-security areas for the benefit of the security sales conversation.

2. Ease of Use Still Matters

Most, if not all, network administrators will say they feel like an unsung hero in their IT organization. When the network works, rarely does the network administrator get congratulated. But when it does go down, fire and brimstone readily come raining down. This means that network admins are eager for solutions to help keep the network going.

During the customer fireside chats, Juniper had the network director from a US municipality tout how Juniper’s SRX firewall solution had facilitated a significant reduction in the number of rules compared with their previous vendor. This customer further detailed their satisfaction with the day-to-day management environment spanning physical appliances on-prem and virtual appliances in the cloud.

Focusing on ease of use is never a bad bet. All too often, security solutions turn into science experiments that are more pain than gain.

3. Cloud-Based Security is the Future

Our data shows that we are at an inflection point in the network security market regarding form factor preference and market direction. We track three form factors in our network security program: physical appliances, virtual appliances, and SaaS (Software as a Service). Until recently, all three form factors were on a growth trajectory. However, due to the pandemic limiting physical infrastructure projects and a growing customer preference for cloud-delivered security, we expect the market in 2020 for physical appliances to decline 5%. The virtual and SaaS form factors will grow 6% and 27%, respectively.

Juniper sees the same writing on the wall and looks to pivot the cloud to a greater degree. Most of Juniper’s competitors have already entered the SaaS-based network security market (e.g., Secure Web Gateways). While no SaaS-based solutions were announced during the analyst event, the Juniper team made it abundantly clear that their direction was cloud-based and to expect future product announcements.

In summary, Juniper is making common sense bets, and we will be watching their developments with great interest.

To learn more about Dell’Oro Group Network Security and Data Center Appliances market research program, please check out the Network Security page for more information.

Dell’Oro Group published an update to its Data Center switch market five-year forecast report. The report shows that the data center switch market is expected to grow at a 4% CAGR from 2019 to 2024, approaching $17 B by the end of our forecast period. Despite the COVID-19 pandemic, our revised forecast of 4% CAGR shows only a slight downward adjustment from our prior January forecast of 5%.

Most of the downward adjustment was driven by the non-Cloud segment, which includes enterprises as well as Telco Service Providers (SPs). The non-Cloud segment comprises about 60% of the total data center switch revenue and accounted for more than 70% of the downward adjustment for every year during our forecast period. In the meantime, our current forecast for the Cloud segment shows only a slight downward revision, relative to our prior January report  as shown in the chart. Our Cloud segment includes the Top 4 U.S Cloud SPs (Google, Amazon, Microsoft, and Facebook), The Top 3 Chinese Cloud SPs (Alibaba, Tencent and Baidu), and other Tier 2/3 Cloud SPs that are mostly Content Cloud providers.

Within the non-Cloud segment, we have lowered our forecast for large enterprises, as well as for small and medium enterprises. However, while we project the “Large Enterprise” segment (which includes Fortune 2000 companies) to return to growth and surpass its 2019 pre-COVID revenue level in 2021, we predict that small and medium enterprises will continue to decline during our forecast period—never to return to growth, for reasons explained in more details in our Ethernet Data Center Switch Five-Year Forecast Report.

Within the Cloud segment, we essentially maintained our projections for the Top 4 U.S. Cloud SPs, as well as the Top 3 Chinese Cloud SPs, as our underlying assumptions for the growth in those segments have remained unchanged. These assumptions are mostly driven by the timing of the 200/400 Gbps adoption as well as the consumption/digestion cycles. However, we have lowered our forecast for the “Rest of Cloud” segment, as macroeconomic headwinds may affect the ability of these Tier 2/3 Cloud SPs to grow revenue, consequently impacting their ability to expand their data center infrastructure to support their business. We believe that some of these Tier 2/3 Cloud SPs may rely on Tier 1 Public Cloud providers to expand capacity during and after the pandemic. Leveraging Public Cloud SPs is an opex alternative that allows them to scale up and down capacity according to the demand.

Other highlights from the report

• 400 Gbps adoption in 2020 will continue to be driven mainly by Google and Amazon, and benefit mostly white box switch vendors. In the meantime, we don’t expect the adoption of 200/400 Gbps by Facebook and Microsoft to materialize until 2021. Facebook and Microsoft still deploy a fair amount of branded switches but we do expect a potential change in the vendor landscape in tandem with the 200/400 speed transition at these accounts.
• We predict Google, followed shortly by Amazon, will spearhead the adoption of 800 Gbps in 2023/2024. 800 Gbps will be driven by the availability of 100 G SerDes technology which will allow to build dense 100 Gbps or dense 400 Gbps systems in 1 U form factor (i.e., each 800 Gbps port can be used as 2×400 Gbps or 8×100 Gbps). 100 G SerDes will also allow to match the electrical lanes with the optical lanes.
• With the transition to 400 Gbps and higher speeds, the role played by optics will become even more crucial for several reasons including increased optics prices, the possibility to displace DWDM systems in the data center interconnect (DCI) and the potential migration to co-packaged optics at high speeds. For these reasons, some switch vendors are increasing their offerings of optical transceivers. In the report, we explain if/when we will include optical transceivers in our data center switch revenues. We also expect to see many consolidations and acquisitions in the market in order for switch, chip, and optics vendors to position themselves during this transition.
• The adoption of disaggregated switch systems will continue to increase during our forecast period, although at a slower rate than in the prior years. Early adoption of disaggregated systems has been driven mainly by large Tier 1 Cloud SPs and has greatly affected the market given their scale (involving a server-installed base of well over one million). However, the next wave of adoption will be driven either by Tier 2 Cloud SPs (which are significantly smaller in size than the Tier 1) or by some large enterprises.

If you need to access the full report to obtain revenue, units, pricing, relevant details including speeds, regions, market segments, etc., please contact us at dgsales@delloro.com

About the Report

The Dell’Oro Group Ethernet Switch – Data Center Five Year Forecast Report provides a comprehensive overview of market trends and includes tables covering manufacturers’ revenue, port shipments, and average selling price forecasts for various technologies: Modular and Fixed by Port Speed; Fixed Managed and Unmanaged by Port Speed. We forecast the following port speeds: 1000 Mbps; 10 Gbps; 25 Gbps; 40 Gbps; 50 Gbps; 100 Gbps; 200 Gbps; 400 Gbps. We also provide Regional Forecast as well as forecast by different market segments (Top 4 U.S. Cloud SPs, Top 3 Chinese Cloud SPs, Telco SPs, Rest of Cloud, Large Enterprises, Rest of Enterprises).

The Network Security and Data Center Appliance market, consisting of the Firewall, Content Security, Intrusion Detection System and Intrusion Prevention System (IDS and IPS), and Application Delivery Controller (ADC) markets, is forecasted to grow at 6% five-year CAGR and go from $14 B in 2019 to $19 B in 2024.  Growth at 6% is slightly weaker than the typical high single-digit pattern we have seen over the last decade, but considering the ongoing COVID-19 pandemic is explicable. Several of the key takeaways from our forecast report include:

• The ongoing COVID-19 pandemic will continue to impact the market both negatively and positively throughout 2020 and into the first half of 2021, assuming that an effective therapy or a vaccine is developed that allows society to restabilize.
• In aggregate, the network security market, which consists of the Firewall, Content Security, IDS, and IPS markets, will continue to experience both positive and negative factors. The negative factor of delayed spending will have a slight advantage, however, leading to flat Y/Y growth in 2020.
• We expect that post-pandemic, the network security market will return to the overall growth of 8% Y/Y from 2021 to 2024 and reach $17.1 B in 2024.
• The network security market will vary significantly from historical growth trends during the pandemic. We expect that the Content Security and Firewall market will rebound and return to nominal growth post-pandemic. However, the IPS and IDS market will not and will continue to its long decline.
• During the pandemic, the ADC market will be affected by both positive and negative factors. Overall, we anticipate that the positive factor of surge spending will keep growth in positive territory at 1% Y/Y in 2020.
• Post-pandemic, we expect that the ADC market will accelerate slightly faster than we predicted in our previous forecast due to the combination of positive factors ranging from market demand and vendor dynamics. The five-year CAGR of our current forecast is 1% versus our prior forecast of flat growth.

For a near-term perspective on the effects stemming from the pandemic, please refer to our recently published blog: Network Security Market Not Immune to the Pandemic.

The Top Four Trends Impacting our Forecast

• Investment in enterprise IT transformation will accelerate due to the pandemic and drive overall market growth. Many enterprises that are neither digitized, multi-cloud present, nor mobile-friendly have experienced more business continuity problems during the pandemic than those farther into their transformation. Expect investment to be broad-based in the service of securing new applications, new data centers, and connectivity solutions for mobile, branch, and campus environments.
• The pandemic has drastically increased the ranks of teleworkers. While we expect many teleworkers will eventually go back into the office, we also believe that the percentage of teleworkers post-pandemic will be significantly higher versus pre-pandemic, falling somewhere between 20% and 45%, as work and cultural norms change in favor of teleworking. Anticipate that secure connectivity solutions will stand to benefit as enterprises invest for the long-term.
• We expect the pandemic will accelerate enterprise automation and expand the network and application footprint that needs to be secured. Many enterprises want to automate manufacturing processes to ensure business continuity while implementing physical distancing. We believe the increase in automation and the associated expansion of the network footprint will continue post-pandemic, as the growth in connected devices, commonly referred to as the Internet of Things (IoT), accelerates.
• Investment by public cloud service providers and telco service providers will continue to grow to support the higher number of enterprise IT workloads and 5G on their platforms, respectively.

If you need to access the full report to obtain revenue, units, pricing, relevant segmentation including technology, end-users, use cases, regions, vertical markets, etc., please contact us at dgsales@delloro.com

 

About the Report

Dell’Oro Group’s Network Security & Data Center Appliance 5-year Forecast Report offers a complete overview for the Firewall, Content Security, Intrusion Detection System and Intrusion Prevention System (IDS and IPS), and Application Delivery Controller (ADC) markets and discusses the short- and long-term market and technology trends that shape the forecast.

 

Dell’Oro Group published an update to its Campus switch market five-year forecast report. The report shows that the campus switch market is expected to be profoundly impacted by the COVID19- pandemic and to decline at 1% CAGR from 2019 to 2024, compared to our prior January forecast of + 3% CAGR.

Analysis of market performance during the prior two recessions was a fundamental part of our forecast process, as we assessed the impact of the COVID-19 pandemic. However, it is very important to recognize how this pandemic-induced recession may differ from the prior two recessions, not only at a macro level but also from a technology perspective. COVID-19 will bring many changes to our lives and will impact the adoption of technology in different ways. Some of these changes may be short-term, but we believe a number of them will remain with us for the long term. In the report, we detail our view on the potential impact of the COVID-19 pandemic on the market, in terms of both upside and downside. We also explain how and why this recession may differ from the prior two recessions. Our view is the result of numerous interviews over the last three to four months with end-users, system integrators, VARs, and manufacturers. Below are some highlights:

Downside Impact from the COVID-19 Pandemic

• Although GDP outlooks are reflecting anticipation of a rebound in 2021, we expect the actual rebound in campus switch revenue to lag behind GDP recovery. This is the result of high exposure to verticals that are heavily impacted by the pandemic and may take years to recover (such as Healthcare, Higher Education, Hospitality, Logistics, Retail).
• Our interviews revealed consistent expectations among end-users, distributors, system integrators, and vendors that the portion of the remote workforce will increase following COVID19. However, it is still anyone’s guess as to what the degree will be and what the new normal will look like. Our models assume a 20% to 45% increase in the portion of remote workforce post-COVID.
• A more distributed workforce, working remotely either from home or from smaller distributed office spaces, will negatively impact the number as well as the type of switch ports needed in those campuses.
• Wireless LAN will become more favorable for user connectivity than wired Ethernet, as it supports features and services that help businesses comply with re-opening guidelines such as contact tracing, people counting, and other location-based services.

Upside Impact from the COVID-19 Pandemic

• The digital transformation is accelerating as businesses try to adapt and evolve. This, in turn, will expedite the pace of the campus switch refresh cycle. Automation, security, visibility, and analytics/intelligence are several added functionalities that IT managers need for the new digital era. We expect campus switch vendors to try to monetize those features, which may boost market average selling prices (ASPs) and help the market recover faster than currently projected.
• We forecast the higher-priced PoE ports to comprise about a third of the total campus switch ports by 2024. The increased portion of IoT devices connected to the network will drive an increased portion of the PoE ports.
• Adoption of subscription-based consumption models will become a theme during and after the pandemic. The conversion from Capex to Opex makes it much easier for companies to scale their costs down or up, according to the demand.

If you need to access the full report to obtain revenue, units, pricing, relevant segmentation including regions and vertical markets, etc., please contact us at dgsales@delloro.com

 

About the Report

The Dell’Oro Group Ethernet Switch – Campus 5-Year Forecast Report offers a complete overview of Ethernet switches built and optimized for deployment outside the data center, for the purpose of connecting users and things to the Local Area Networks. The report contains tables covering manufacturers’ revenue, average selling prices, and port/unit shipments by speed (Fast Ethernet, Gigabit Ethernet, 2.5 Gigabit Ethernet, 5.0 Gigabit Ethernet, 25 Gigabit Ethernet, 10 Gigabit Ethernet, 40 Gigabit Ethernet, 50 Gigabit Ethernet, 100 Gigabit Ethernet) plus regional breakouts.

The enterprise-class Wireless LAN (WLAN) market has enjoyed high single-digit revenue growth rates for the past several years. In 2019 sales decelerated as a result of broad-based economic uncertainty causing customers to delay expenditures. Customer hesitation correlated with rising trade war tensions and tariffs, Brexit, and economic slowdown in all macro-regions of the world. The pandemic emerging in 2020 amplified the deceleration.

COVID-19 Near-Term Impact on WLAN Market

As portrayed in the figure, Dell’Oro Group forecasts temporary near-term declines in the enterprise-class WLAN market until the COVID-19 virus passes. Specifically, Dell’Oro Group has lowered its forecast for 2020-2022 removing approximately $4 B from the enterprise-class WLAN market, as a result of a reduction in unit shipments as well as a shift to lower-priced, lower-featured units. For example, an access point suitable for remote worker setup is nowhere near the feature-richness as an access point suitable for a corporate office, a university auditorium, or a sports stadium. Access points suitable for remote workers/home deployments generally have a list price under $500 vs. between $1,000 and $2,000 for those suitable for corporate deployments.

Certainly, both unit volume and a return to a high portion of feature-rich, higher-end, higher-priced access points will lift WLAN market revenues, however, it is access points with 6 GHz capability that will truly catapult market revenues. Manufacturers cannot bring these access points to market fast enough!

Feedback from system integrators reveals that large enterprises from many vertical industries are eagerly awaiting Wi-Fi 6E products. We estimate a portion of users will postpone purchases to wait for Wi-Fi 6E and the number of users that will wait rises as product availability approaches. We expect enterprise-class Wi-Fi 6E access points to become widely available in 2022, and lift WLAN market sales to pre-COVID levels.

 

Wi-Fi 6E Strengthens WLAN Market Outlook

We assume that Wi-Fi 6E strengthens the outlook for the WLAN market, making the technology more competitive, and that access points will be higher-featured, as well as higher-priced. The advantage of being “first in”, or among the early adopters of Wi-Fi 6E technology is access to a massive amount of bandwidth with no other traffic—the high-end of the market, and the upper end of the midrange market would be willing to pay a significant premium which could span several years (i.e., the premium could last several years). While our forecast assumes 6E access points command a similar price premium that Wi-Fi 6 had vs. Wi-Fi 5, we believe the premium could be significantly higher because the benefits of the technology are so palpable.

Long-term, we predict the pandemic will permanently reduce the portion of the workforce that is present in the office full time. While the timing of the rebound will vary by region and by industry vertical, we expect an increase in the number of transient workers which will more likely connect to the enterprise LAN with a wireless rather than a wired connection. We anticipate a portion of the CAPEX previously allocated to wired LAN (i.e., Ethernet switches) will be reallocated to other technologies such as intelligence applications, security, WLAN, etc. Also, many vertical industries will find new use cases that will require low-latency, high-definition video transmission capabilities—enabled by Wi-Fi 6E.

To get a deeper insight of the WLAN market and access the full WLAN market July 2020 5-Year Forecast Report, please contact us: dgsales@delloro.com.

 

About the Report

The Dell’Oro Group Wireless LAN 5-Year Forecast Report offers a complete overview of the industry, covering Enterprise Outdoor and Indoor markets, with tables containing manufacturers’ revenue, average selling prices, and unit shipments by the following wireless standards: 802.11ax (separate reporting of  Wi-Fi 6 and 6 GHz), 802.11ac (Wi-Fi 5) Wave 1 vs. Wave 2, 802.11n (Wi-Fi 4), and historic IEEE 802.11 standards. It includes forecasts for regions of the world and for Cloud-managed vs. Premises-managed.

Related Videos to the WLAN Market Forecast:

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