As the 5G network rollout accelerates worldwide, the market for network security is materializing quickly. Global technology intelligence firm ABI Research forecasts a total revenue opportunity of US$11.6 billion by 2026. Delivered initially through hardware sales to telcos, the software and services opportunity is expected to grow significantly in the latter part of the forecast period.
Initially, the capex on network security appliances is driving the hardware opportunity, as the new infrastructure is being built by communication service providers. “Communication Service Providers (CSPs) are buying the solutions required primarily from network equipment providers and pure-play cybersecurity vendors. In time, other specialized third parties will penetrate the market as CSPs move towards 5G stand-alone,” explains Michela Menting, Digital Security Research Director at ABI Research.
In time, as CSPs start offering enterprise applications, these initial security investments are likely be turned into security service offerings to enterprises; a significant pivot and a big new opportunity for CSPs to recoup security spend and create new value in network services.
This pivot to security provider won’t be easy for CSPs. They will need to tailor and adjust their security posture accordingly for various enterprise use cases and industry verticals, and much of this will require the implementation of new processes and extensive security training internally. “In large part, CSPs will likely obtain the technology and required skills either through acquisitions or by partnering with security-focused firms. As such, partnerships will be key for CSPs to seize the security software and service opportunity,” Menting says.
For Network Equipment Providers (NEPs) and other third parties, such as hyperscalers and pure-play cybersecurity providers, there is a dynamic demand today for network security solutions in order to build the 5G infrastructure alongside telcos. Closely symbiotic with the telco industry is the role of NEPs, who are positioned as the ideal partner for this pivot, firstly because they provide the building blocks for the underlying infrastructure, but also because they have a long-standing relationship with CSPs. NEPs are also likely to have a significant opportunity to target the enterprise market directly; their experience with CSPs, and carrier-grade offerings will be appealing from a trust perspective for enterprises.
Nonetheless, CSPs and NEPs are not the innovators or leaders in the virtualization and cloud environments, and security in these contexts is as complex at best. This is to the advantage of hyperscalers and pure-play cybersecurity providers. Hyperscalers present the biggest threats to NEPs, and not just in the security software and services space; they live and breathe cloud which is at the core of 5G stand alone. “Their only limitation is their traditional lack of experience with CSPs, and so they will need to prove they can offer carrier-grade security. But they are agile, they are competitive, and they are very keen to engage this market. The opportunity is there, and the market contenders are already jostling for space,” Menting concludes.
These findings are from ABI Research’s 5G Network Security market data report. This report is part of the company’s Digital Security research service, which includes research, data, and ABI Insights. Market Data spreadsheets are composed of deep data, market share analysis, and highly segmented, service-specific forecasts to provide detailed insight where opportunities lie.
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