How Zscaler finally topped Cisco in the SASE revenue race

According to a recent report from Dell'Oro Group, Zscaler has taken the top spot in revenue in the secure access service edge (SASE) market for the first time since the firm started monitoring the industry in the first quarter of 2019. Zscaler has outpaced Cisco in the first quarter of 2023, as noted by the report.

Zscaler's SASE Approach: The Switzerland Of Cybersecurity

According to Zscaler, they offer a top-notch SASE security package which includes their security service edge (SSE) solution. This solution combines cloud access security broker, data loss protection, secure web gateways, and zero-trust capabilities. Additionally, they team up with many of the top SD-WAN providers. They were acknowledged for being one of the top players in the SSE market.

Until now, the company has concentrated solely on the SSE market and has not yet provided SD-WAN services, said Mauricio Sanchez, the Research Director at Dell'Oro Group. He explained that numerous other businesses in the industry are integrating both networking and security in their SASE range of products. Check Point Software Technologies, HPE/Aruba, and Netskope are examples of vendors that have established themselves as SASE providers.

Zscaler is now facing the push to conform to these changes. According to Sanchez, some of Zscaler's customers are worried about the company's current networking abilities, such as its restrictions in IP architecture and encountering certain difficulties when transmitting traffic to or from Zscaler. This is the reason why the company is striving to simplify the process of introducing traffic to its cloud.

According to him, we cannot continue to depend on the networking devices to handle the on-ramp as there are numerous exceptional circumstances to consider. It is not a simple and straightforward solution. If Zscaler were to incorporate the device into a larger family, similar to CPE, with the intention of catering to the integrated service router access router, then I would view them as an SD-WAN vendor.

However, Zscaler is confronted with a dilemma. If they start offering networking services, it could create competition with their current SD-WAN partners, leading to a contentious relationship. Additionally, a substantial portion of Zscaler's SASE sales depend on their collaboration with networking partners. As Sanchez stated, it is a classic case of being stuck between a rock and a hard place.

Cisco Chooses Hybrid SASE And SSE Approach

Alternatively, Cisco has gained recognition as a sole-source SASE supplier with offerings in both SD-WAN and SSE. Their product, Cisco+ Secure Connect Now, is a combination of Meraki SD-WAN and Umbrella security features.

Sanchez commented that at present, both Cisco and Palo Alto Networks are well-matched SASE companies, with comparable achievements in both SD-WAN and SSE. In the first quarter, the latter surpassed Broadcom (Symantec) to attain the No. 3 spot for overall SASE earnings.

At the beginning of the month, Cisco unveiled its SSE offering, called Cisco Secure Access. This solution can be integrated with clients' current SD-WAN for a SASE framework.

Nonetheless, this item is not going to be available until October. According to Sanchez, "From my perspective, they made an early announcement to halt any further loss or uncertainty in the minds of potential Zscaler investors, whether they should invest immediately or wait for the arrival of Cisco's latest product."

According to him, SSE is a bigger market and Zscaler has a chance to experience significant growth and revenue because of Cisco's sluggish implementation of SSE technology.

However, Sanchez noted that the success of Zscaler's neutral approach towards the SASE market is uncertain in the future since this industry is still developing. He expressed his anticipation by saying, "I am prepared with my popcorn to witness what happens."

SASE Market Revenue Still Rising

According to the report from Dell'Oro Group, the revenue generated from the SASE market has increased by over 30% in the past five consecutive quarters, and it is close to reaching a whopping $2 billion.

A thorough SASE package usually brings together network edge abilities, particularly SD-WAN, and a collection of SSE abilities that are centered around cloud technology. These abilities include a secure web access gateway, a cloud access security broker, and zero-trust network access.

According to the report, revenue for both SSE and SD-WAN increased by over 30% compared to the previous year. Additionally, unified SASE solutions, which is a combination of SD-WAN and SSE technologies in one stack, reached over $200 million for the third time in a row, signifying growth of more than 140%.

According to Sanchez, it seems like we're still in the initial phases of SASE. The growth rate depends on how we view the market and the size of the customer utilizing it. There's still a lot of fresh perspectives and ideas coming about. SSE has succeeded in making conventional secure web gateways irrelevant, and now it's venturing into replacing the firewall category.

Next, the capabilities added to the SASE system are growing rapidly. With the inclusion of various features onto the cloud platform, there seems to be no limit to the possibilities. Even now, individuals are conceptualizing more functions to enhance the system, such as better visibility or utilizing artificial intelligence for any feasible application," he stated.