IHS Report Forecasts Steady Growth for Cloud Based Security Services

By CIOReview | Tuesday, April 19, 2016
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FREMONT, CA: According to the report titled Cloud & CPE Managed Security Services Market Report - Regional – 2016, published by IHS, a global information company, the total revenue from managed security services amounted to $ 17.4 Bn in 2015, a nine percent rise from the previous year. While 54 percent of the revenue came in from the customer-premises-equipment- (CPE-) based services, the remaining share was accounted for by cloud based offerings. The report estimates that the ratio is likely to reverse by 2020.

Software-defined networking (SDN) and network functions virtualization (NFV) are being rolled out in abundance by providers of managed security services. The advent of Virtual CPE solutions has led many providers to expect growth in revenue from managed CPE solutions.

“SDN deployments in cloud and hosting environments will help providers build more scalable, flexible and profitable hosted and cloud based security services,” said Jeff Wilson, cyber security 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.”

The report shows that the sales of cloud based services grew 12 percent in 2015 from the previous year.  The segment is expected to grow at a compound annual growth rate (CAGR) of 9 percent over the five years from 2015 to 2020.Content security is the largest contributor to cloud-based security service revenue 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.” he added.