Security is one of the more tantalizing -- and perilous -- markets for network operators to consider. Tantalizing because the revenue potential is enormous; perilous because success is far from guaranteed.
With the need to find new revenue sources greater than ever, more operators are venturing into the security space, with managed security services being a primary entry point. With this sector now taking shape, Heavy Reading has launched a new research service that monitors and analyzes this emerging sector.
Heavy Reading's Telecom Security Market Tracker is a 101-slide PowerPoint report analyzing the market for telecom-oriented security products, services and solutions. It defines the market for security products and solutions sold to telcos and CSPs; discusses security market trends; provides estimates and forecasts for telco/CSP spend on security solutions (broken out by region, service provider type and core solution type); summarizes the vendor landscape; and profiles 24 leading suppliers.
Until recently, telcos' managed security services have been based on the resale and management of hardware firewalls and other security appliances to large enterprises and public sector clients. The market has been the preserve of incumbent operators. Some, such as Verizon, NTT, BT and SingTel, have developed sophisticated offers and built up large customer bases internationally, competing with -- and sometimes acquiring -- independent managed security service providers (MSSPs).
But the real growth opportunity in the MSSP market is in the small and midsized business (SMB) sector, and in the consumer space. While there are challenges to the monetization of security in general, and in selling managed services generally to these customer groups, some operators are succeeding, using network-based services as well as those based on deployment of managed hardware CPE.
But it is the virtualization of security functions that will really help telcos address this market. Some telcos that are experienced in the MSSP sector are making use of virtualized security solutions that they have started to deploy for use in their own network. Verizon launched its Unified Security Services in 2015, targeting business customers with a managed Fortinet gateway appliance. Verizon has transitioned services into the cloud and now resells VNF security solutions from Cisco, Juniper and Palo Alto Networks as well as Fortinet as part of its portfolio of cloud services for business. It stresses the rapid deployment and breadth of services it can offer this way, as well as flexible commercial terms.
Not all operators are as advanced as Verizon in the virtualization and cloudification of their own networks, but the potential is clear, and telcos are in a good position to develop it. The Telecom Security Market Tracker looks at this market, and forecasts the size of the opportunity. While all parts of the telco managed security service market are expected to grow, it is the SMB and consumer markets that are forecast to grow fastest. Telcos can now target less well-served buyers with services that can be easily added to what they are already selling. This route to market is a distinct advantage for telecom operators over specialist security companies -- whether selling hardware or software solutions.
Overall, the tracker forecasts a revenue upside, with SMB managed security revenues for telecom operators growing at around 25% to 35% year-over-year for SMB and consumer segments until the end of the forecast period in 2022, compared to year-over-year growth of around 6% to 8% for the large-enterprise-related segment over the same time.
Those kinds of numbers are getting serious attention from more network operators. What's needed now is some serious effort to capture market share.
— Danny Dicks, Contributing Analyst, Heavy Reading