Spending on cybersecurity is set to exceed $200 billion a year by 2024 as the market switches to cloud-based security with the network and endpoint security sectors likely to see the fastest growth, a new report from Bloomberg Intelligence (BI) says.
Increased remote working is partly responsible for the expansion of the market, which was worth around $132 billion last year, but cloud-based software was already expanding in security before the COVID-19 pandemic as it replaced older systems.
Cloud software is already established in sectors such as enterprise resource planning, databases, systems software, and customer relationship management but BI believes the network and endpoint security are the big growth areas.
Companies such as CrowdStrike, Zscaler and Okta are best placed to benefit from growth and could expand three to four times faster than the market as a whole, BI says.
However larger network security firms such as Palo Alto Networks, Check Point and Fortinet could focus on mergers and acquisitions given their strong balance sheets and need to shift to cloud products.
BI Senior Industry Analyst Mandeep Singh said: “The biggest upside to expectations of high single digit growth for the cybersecurity market may come from faster-than-expected adoption of cloud-based security in areas such as network and endpoints.
“These two segments with about $31 billion in combined annual revenue depend heavily on sales of appliances and on-premises software and may benefit most from a migration to the cloud.”
The BI report, Cybersecurity Primer: Accelerating Cloud Shift, says new market leaders could emerge to challenge Cisco, Symantec (Broadcom), Palo Alto Networks, Check Point and Fortinet with Crowdstrike the strongest contender.
No security company currently has annual sales of more than $5 billion unlike other infrastructure and application software segments where organisation such as Amazon.com, Microsoft, Google and Salesforce.com have run-rates of more than $10 billion.
BI believes security spending will take a larger share of IT budgets as companies try to fend off more sophisticated cyberattacks and avoid the reputational and business risks.