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Cybersecurity Demand: A Catalyst for Growth in the Networking Sector

September 20, 2024

Note: We reveal investment insights through the quotes of top business leaders.

Key Takeaways

  • Cybersecurity demand is surging, with 75% of companies expecting disruptions in the next 1-2 years, driving the need for advanced solutions across sectors.
  • Networking companies are integrating cybersecurity into their core strategies, emphasizing AI and collaboration to enhance resilience and streamline operations.
  • Customer spending on cybersecurity solutions is increasing, reflecting a strong commitment to addressing rising cyber threats and regulatory pressures.
  • Key players like Cisco and Palo Alto Networks are innovating with new technologies, positioning themselves for significant growth in the evolving cybersecurity landscape.
  • The integration of AI and 5G technology is projected to further accelerate growth in both cybersecurity and networking sectors.

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Current trends in cybersecurity threats reveal a significant rise in targeted ransomware and wiper attacks, with 75% of companies anticipating disruptions in the next 1-2 years. The evolving attack landscape necessitates comprehensive cybersecurity solutions, particularly in sectors like energy, as organizations adapt to these emerging threats.

"Hear the latest on #cybersecurity threat trends! 🔐 🚨 Dive into our recent threat landscape report with #FortiGuardLabs' Derek Manky and @SCMagazine as they discuss the evolving attack chain, new threat tactics, and the need for radical transparency." --- (FTNT, Twitter, 2024/06/03)

"Amid rising cyber threats, 75% of companies expect #cybersecurity disruption within the next 1-2 years." --- (CSCO, Twitter, 2024/04/02)

"Digital transformation in the energy industry continues to drive comprehensive cybersecurity solutions in the face of growing cyber threats." --- (PANW, press release, 2024/08/19)

"The latest semiannual report is a snapshot of the active threat landscape and highlights trends from July to December of 2023, including analysis on the speed with which cyber attackers are capitalizing on newly identified exploits from across the cybersecurity industry and the rise of targeted ransomware and wiper activity against the industrial and OT sector." --- (FTNT, press release, 2024/05/06)

"By investing in cybersecurity innovation and R&D, military organizations can stay ahead of emerging cyber threats, anticipate future challenges, and adapt to evolving cyber landscapes while maintaining a technological advantage in cyberspace." --- (CSCO, press release, 2024/04/05)

Networking companies' strategies for cybersecurity integration

Networking companies are prioritizing cybersecurity integration through various strategies. Microsoft emphasizes security in all operations, Cisco incorporates AI to enhance cybersecurity, HPE unifies IT and security processes, and Juniper focuses on secure network design. Collaboration with industry partners is also crucial for enhancing cyber resilience.

"We launched our Secure Future Initiative last fall for this reason, bringing together every part of the company to advance cybersecurity protection, and we are doubling down on this very important work, putting security above all else, before all other features and investments." --- (MSFT, earning call, 2024/Q1)

"We are integrating artificial intelligence (AI) into our product portfolios across networking, security, collaboration and observability to simplify how our technology is delivered, managed and optimized and to help customers maximize the business value of their technology investments and accelerate their digital transformation." --- (CSCO, sec filing, 2024/Q2)

"With the integration of the CrowdStrike Falcon cybersecurity platform and HPE GreenLake cloud and OpsRamp AIOps, organizations can seamlessly unify IT operations and cybersecurity in a single, unified process to securely accelerate AI innovation." --- (HPE, press release, 2024/06/18)

"Business and Market Environment Juniper Networks designs, develops, and sells products and services for high-performance networks to enable customers to build scalable, reliable, secure, and cost-effective networks for their businesses, while achieving agility and improved operating efficiency through automation." --- (JNPR, sec filing, 2024/Q1)

"Strengthening supply chain security and enhancing cyber resilience require collaboration with industry partners, supply chain stakeholders, and cybersecurity vendors to implement risk management practices, supply chain transparency measures, and resilience strategies." --- (CSCO, press release, 2024/04/05)

Customer spending on cybersecurity solutions is increasing significantly due to rising cyber threats and the demand for advanced security measures. Companies are adapting by enhancing their offerings and forming partnerships to meet specific customer needs, reflecting a strong commitment to cybersecurity across various sectors.

"The report said: "The cybersecurity market is witnessing significant opportunities, driven by the rising demand for advanced security solutions due to the increasing incidence of cyberattacks." --- (ORCL, press release, 2024/07/09)

"that capitalize on complementary capabilities and technologies. For instance, established cloud security vendors may seek partnerships with emerging start-ups specializing in niche areas of cybersecurity to enhance their product portfolios and address specific customer requirements more effectively." --- (IBM, press release, 2024/05/23)

"Our AI-powered agents are also helping customers develop better quality software, find insights from their data, and protect their organization against cybersecurity threats using Gemini. Software engineers at Wipro are using Gemini code assist to develop." --- (GOOG, earning call, 2024/Q2)

"Our customers appreciate that, we said to them, we feel so strongly about cybersecurity and what we can bring to you." --- (ORCL, conference, 2024/06/05)

"As the emphasis on cybersecurity in government and defence sectors continues to grow, the adoption of quantum communication technologies is expected to increase, driving market growth." --- (IBM, press release, 2024/06/06)

Regulatory impacts on cybersecurity investments

Regulatory impacts on cybersecurity investments are significant, as highlighted by IBM's emphasis on the necessity of addressing security risks for compliance. Cisco notes the increasing complexity of cyber threats and a talent shortage, which may drive regulatory changes and necessitate further investments in cybersecurity solutions.

"However, technologies and services built on infrastructures with security risks can make it almost impossible for governments and critical infrastructure operators to combat cyber threats." --- (IBM, press release, 2024/07/17)

"Securing today's complex, hyper-distributed digital landscape can no longer be done at human scale, as attacks become more sophisticated and nearly 90 percent of companies around the world say shortage of cybersecurity talent is a real issue, according to the 2024 Cisco Cybersecurity Readiness Index." --- (CSCO, press release, 2024/05/06)

"The transaction is expected to close by the end of 2024, subject to approval by HashiCorp shareholders, regulatory approvals and other customary closing conditions." --- (IBM, sec filing, 2024/Q1)

Future growth projections in cybersecurity and networking

Future growth in cybersecurity and networking is driven by advancements in AI solutions, new use cases in network security, and the integration of 5G technology. Companies like Cisco and Fortinet are focusing on these areas, projecting significant growth, particularly in the hyperscaler space.

"PALM BEACH, Fla., Sept. 16, 2024 (GLOBE NEWSWIRE) -- FN Media Group News Commentary -- The Artificial Intelligence (AI) in cybersecurity solutions is projected to continue to have significant growth in next several years." --- (PANW, press release, 2024/09/16)

"These forward-looking statements include, among other things, statements regarding future events (such as our ability to bring together networking, security, observability, and data to enable us to offer digital resilience to our customers, the stabilization of demand for our products, and the addition of Splunk to our product line as a catalyst for future growth) and the future financial performance of Cisco (including the guidance for Q4 FY 2024 and full year FY 2024) that involve risks and uncertainties." --- (CSCO, press release, 2024/05/15)

"We do see a company kind of growing, expanding in that area. So we see the new use case in the network security keeping expanding is about different than some of our competitor more focused on their current enterprise customer." --- (FTNT, conference, 2024/05/21)

"5G benefits + strong network security = future success. Check out this @Forbes feature, in which our SVP and GM of Network Security, @aoswal1234, discusses Industry 4.0 and the cybersecurity whirlwind stirred up by 5G. https://t.co/nEGk1TFn3A" --- (PANW, Twitter, 2024/05/22)

"And that's why I think it's important that I the stat that I gave you earlier, which is if you just break down that networking growth rate over the last 6 months, our growth in the hyperscaler space has been a little north of 30% over those last 6 months of the year." --- (CSCO, conference, 2024/09/10)

Impact of cybersecurity on networking innovation

Cybersecurity is driving significant innovation in networking, as companies like Cisco and HPE develop advanced solutions such as HyperShield and zero trust frameworks. These innovations enhance security measures and streamline operations, addressing the growing demand for robust cybersecurity across industries, as noted by NVIDIA's leadership.

"He then took over our security business and has really turned that around both by bringing the right level of talent in at the leadership level and being very innovative in things like HyperShield and building that into the fabric of the network." --- (CSCO, conference, 2024/09/10)

""In addition, as security teams increasingly rely on the network to deliver zero trust security solutions, HPE Aruba Networking is providing the ability to leverage a single access control policy for application resources, on-prem or off-prem, that customers can adopt to reduce overlapping and potentially confusing controls. Also, to accelerate threat response, HPE Aruba Networking Central combines attack detection with new policy recommendations to protect against threats by intercepting potential attacks." --- (HPE, press release, 2024/08/07)

"Security. And at the Black Hat Cybersecurity Conference earlier this month, we announced the availability of Talos Incident response for Splunk customers, enabling access to the full suite of proactive and emergency services to help prepare for, respond to and recover from a breach. We also continue to capitalize on the multi-billion dollar AI infrastructure opportunity." --- (CSCO, earning call, 2024/Q2)

"In addition, with HPE Aruba Networking Central, we're resolving Wi-Fi trouble calls 50 percent faster, reducing IT overhead while improving user experiences. Prior to its new Wi-Fi infrastructure, Blue Diamond began saving more than $250,000 annually vs Multiprotocol Label Switching (MPLS) by adopting HPE Aruba Networking EdgeConnect SD-WAN to gain a self-driving wide area network that serves as a foundation for zero trust and secure access service edge (SASE) cybersecurity." --- (HPE, press release, 2024/06/05)

""Enterprises across all industries are seeking the security that can protect them against ever expanding cyber threats," said Kevin Deierling, Senior Vice President of Networking at NVIDIA." --- (NVIDIA, press release, 2024/04/18)

Key players driving cybersecurity growth in networking

Key players driving cybersecurity growth in networking include Palo Alto Networks, which emphasizes platformization and competitive dynamics, Cisco highlighting the importance of multiple platforms, and Okta showcasing the urgency in upgrading identity security solutions. Fortinet also plays a role by promoting cybersecurity strategies through events.

"We have a growing team of our executives and sales leaders focused on these engagements worldwide. We expect platformization to be a key driver towards achieving our goal of $15 billion in NGS ARR in fiscal year 2030, and our Q4 performance bolsters our confidence in our ability to reach this goal." --- (PANW, earning call, 2024/Q4)

"And so that second one is a big growth driver as well because everyone has multiple platforms." --- (CSCO, event transcript, 2024/06/04)

"And I think that's one of the things about our product portfolio that will drive growth, even though in the past, we've seen security breaches happening more and more and identity-based security breaches happening more and more, yet, it hasn't really changed the speed and the urgency, which companies are upgrading their entire identity stacks like you would expect it would." --- (OKTA, earning call, 2025/Q2)

"ICYMI: Our recent #SecOps Summit is the key to unlocking the full potential of your #cybersecurity strategy." --- (FTNT, Twitter post, 2024/07/11)

"So, if you break it down to the 3 platforms, look at network security. 5 years ago, there was one player, something called Sassy, and it was winner takes all market at that point in time." --- (PANW, conference, 2024/06/04)

See also