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Network Encryption Market: Information by Development Type (On-Premises, Cloud), Component (Hardware, Solutions and Services), Organization Size, and Region — Forecast till 2030

Market Snapshot
Study Period:
2020-2030
Base Year:
2021
Fastest Growing Market:
Asia Pacific
Largest Market:
North America
CAGR:
9 %
Key Players
Thales Trusted Cyber Technologies

ATMedia Gmbh

Atos SE

Juniper Networks Inc

Certes Networks Inc

Senetas Corporation Ltd

The global network encryption market size was valued at USD 4 billion in 2021, expected to reach USD 8 billion by 2030. The market is anticipated to register a CAGR of 9% during the forecast period (2022–2030). The process of encrypting or encoding data and messages exchanged or communicated across a computer network is known as network encryption. It is a comprehensive procedure that entails a variety of tools, strategies, and standards to ensure that communications are unreadable while in transit between two or more network nodes.

 

Market Dynamics

Drivers

  • Increasing Number of Network Security Breaches to Augment Demand for Global Market of Network Encryption

With the volume of data traffic handled by network infrastructure expanding at an unprecedented rate in recent years, network security has become an essential part of the currently linked landscape. Data breaches have been progressively affecting businesses across industries, with significant breaches such as those at Equifax and Uber costing both organizations millions of dollars.

High-capacity networks today require far more than just high-capacity bandwidth. They need a security policy to safeguard all vital data at rest and in flight, as it travels around the globe over the metro, regional, long-haul, and undersea distances.

A Taiwanese electronics and computer manufacturer, Acer, was hit by a ransomware attack in March 2021, with the hackers demanding USD 50 million, the highest known ransom to date. According to Bleeping Computer, hackers gained access to Acer documents such as financial spreadsheets, bank balances, and bank correspondence by exploiting a Microsoft Exchange server vulnerability and accessing the company's network.

The REvil organization attacked Acer's network, according to Intel's powerful Andariel cyber intelligence platform. It was also discovered that the security breach was tied to one of Microsoft Exchange's vulnerabilities.

Data breaches affect an organization’s bottom line and reveal customer information. According to global Ponemon research, every data breach exposes around 25,500 records, putting the cost of a single violation in the millions and the unfathomable loss of customer trust and brand image harm.

According to this report, the average overall cost of a data breach in the United States in 2019 was USD 8.19 million. Also, the cost per record lost varies by industry; the cost per record lost is nearly double in the healthcare industry. However, even as the threat of a breach grows, the network's traffic flow grows.

As bandwidth demands rise, a network that can gracefully adapt to serve higher capacities while reducing operational complexity is required. Furthermore, given the increasing sophistication and frequency of data breaches, no firm is immune to the ever-present threat of hostile attacks to obtain sensitive and private information.

 

Restraint

  • High Implementation Cost to Hinder Market Growth of Global Market of Network Encryption

Data security has never been more critical with the rising frequency of cyber-attacks on personal and public computer systems. Ransomware assaults, in which sensitive data is held hostage or even disclosed to the public eye, have become a special concern for today's internet users.

Encrypting sensitive data is one of the best practices businesses can do to keep it safe. HIPAA, HITECH, and PCI are all regulations that mandate companies in specific industries to protect sensitive data, with encryption being the de facto protection method.

Even though encryption is efficient at securing data, many businesses choose not to use it because it is pricey and complicated. The majority of solutions demand that the company set up an encryption server and handle the keys.

Additionally, the costs of implementing and maintaining encryption across numerous settings, use cases, and applications can soon add up. It's not just about the expense of licenses but also about getting them functioning.

The pricing model for network security is determined by the approach used. The cost of a license varies depending on the number of users, the number and appearance of devices, and the availability of a linked package.

If included in a full-range network security cost, the license adds USD 1,000-2,000 to the bill. At the same time, if users want to license only specific functions, the price might be substantially lower — for example, network security software for an email program costs only USD 30. Compliance with ITAR and HIPAA standards, on the other hand, increases the complexity of the safeguard – and its cost.

 

What Are Future Key Opportunities in Global Network Encryption Market?

Lucrative Opportunities in the Network Encryption Market as Adoption of Cloud Technologies Grows

Cloud use has been rising as businesses across regions transition digitally, bringing regulations like BYOD to the forefront in numerous industries. Companies may now access files and other data from anywhere, thanks to the increased use of cloud computing tools. As a result, more gadgets are connected to an enterprise, which means hackers will have more opportunities to infiltrate enterprise networks.

LogicMonitor, a leading provider of SaaS-based performance monitoring tools, estimates that 83% of enterprise workloads will be in the cloud by 2020. By the same time, it is expected that over 70% of workplaces would have adopted BYOD, with the majority of organizations preparing ahead of time to streamline integration.

Given these trends, networked devices will continue to increase, and as businesses migrate their workloads and apps to the cloud, network traffic will increase, making it a tempting target for espionage hackers looking to steal private information from companies. The relevance of network encryption has grown vital and increasingly significant as the number of assaults against networked systems grows.

The retail, finance, and industrial industries were among the first to adopt cloud computing, with many organizations reporting that they are in the trial and testing phase. Greenhouse data conducted a poll in which 72% of IT professionals said they were using various cloud providers (as of June 2019) and cited the following reasons for doing so: 33% wanted to avoid vendor lock-in, 31% needed specific capabilities only available from one platform, 25% cited compliance or security, 25% thought multi-cloud would improve performance, and 22% wanted to cut expenses.

According to the Right Scale Annual State of the Cloud Report for 2019, 91% of people used the public cloud, 72% used the private cloud, and 69% used the hybrid cloud. As more businesses go to the cloud, they must also invest in cloud computing cybersecurity through improved encryption solutions.

 

Impact of COVID-19 on the Market

Governments and militaries were confronted with significant new issues, such as ensuring that staff has secure access to sensitive or classified information that keeps nations safe.

Covid 19 Impact On Market

Viasat is providing a network encryption solution designed to help government employees, first responders, elected officials, and warfighters securely access data from any location equipped with a personal, public, or private broadband network to help government and military personnel working from home (WFH) and other remote areas.

The COVID-19 pandemic, according to Viasat, posed a significant threat to people around the world and took every measure to safeguard the population's safety. During this challenging time, the company was dedicated to keep government customers connected and informed by providing secure communications to classified and sensitive data through its leading remote access network encryption solution.

 

Segment Wise Insights

Based on segments, the global network encryption market share is divided into Deployment Type, Component, Organization Size, End-User Industry

By deployment type, the market is divided into on-premises and cloud. The cloud type accounted for the largest shareholder in the market and is anticipated to grow at a CAGR of 9%, generating revenue of USD 4 billion by 2030.

Various vendors from cloud solutions ensure that confidential data is encrypted end-to-end during transmission across a computer network. Modern cryptography is being applied at numerous locations along the web to give reliable security against complex attack tactics. The increasing interchange of data over networks, combined with expanded networking, has provided tremendous growth potential for the sector under consideration.

Vendors are pursuing various growth strategies to handle the increased competition in the market, such as new solution creation, updates to current products, partnership & collaboration, and so on, in response to the dynamic demand for cloud solutions. For example, Rohde & Schwarz, a leading IT security company, announced the debut of R&S SITLine ETH NG, a new generation of high-speed network encryptors, in November 2020. The German Federal Office for Information Security (BSI) has authorized the solution, which may provide transmission rates ranging from 10 Mbit/sec to 40 Gbit/sec.

The global network encryption market is divided into solutions, services, and hardware by component. The solutions and services segment dominated the market and is projected to grow at a CAGR of 9% generating a revenue of USD 5 billion by 2030.

As it frequently exists in a shared or multi-tenant environment, where hardware and software license costs are cheaper than the old model, SaaS can save high costs. It can also be one of the trends for the rise of solutions, services, and network encryption platforms.

The market is segmented into small and medium-sized enterprises and large-sized enterprises by organization size. The large-sized enterprises hold the largest share in the market of network encryption and are estimated to grow at a CAGR of 9%, generating a revenue of USD 6 billion by 2030.

Protecting client personal information is a significant reason for large businesses to encrypt data to maintain brand loyalty and customer retention, which is critical for large businesses to leverage their brand awareness. This could be one of the driving forces for their network encryption, which safeguards data as it travels and is kept on a network storage device or computer.

 

Which Network Encryption End-User Industry Will Bring High Revenue Growth?

By end-user industry, the global network encryption market is divided into telecom and IT, BFSI, government, media and entertainment, and other end-user industries. The BFSI segment dominated the global market of network encryption by end-user industry and is expected to grow at a CAGR of 9% generating a revenue of USD 3 billion by 2030.

Due to the high rate of network automation and the largest investment in encryption technologies, banking, finance, and insurance (BFSI) are some of the biggest investors and adopters in the global network encryption market. Some of the major factors driving network encryption adoption in the BFSI industry include increased internet and mobile banking usage, a high rate of adoption of private networks, growing adoption of cloud and digital technologies, and growing network security concerns due to increasing cyberattacks.

 

Region-Wise Insights

Which Regions Account for Significant Market Growth?

Based on region, the global network encryption market share is divided into North America, Europe, Asia-Pacific, Latin America, and Middle East & Africa.

The North American region dominated the global network encryption market, with revenue valued at USD 3 billion by 2030 at a CAGR of 9%. The United States, being one of the key countries in cybersecurity solutions, contributes to North America's largest market share.

End-to-end encryption has been a major point of contention between huge tech corporations and law enforcement in the United States. To combat this, three Republican senators presented a bill in June 2020 requiring tech companies to provide a backdoor to end-to-end encrypted communication.

Even though companies like Apple have always claimed that they are incapable of doing so because they do not have access to data that uses this type of encryption, the bill targeted companies that refused to cooperate with law enforcement to help recover encrypted data, even when presented with a lawful warrant.

The Aisa-Pacific region accounts for the second-largest share of the global network encryption market, at a CAGR of 10%, expected to generate USD 2 billion in sales by 2030.

With such large networks with encryptions being developed in Asia-Pacific, it is expected that awareness of the same benefits would spread to other countries, leading to a rise in demand for network encryption in the region.

Encryption, such as optical encryption, is becoming more popular as the demand for managing data center traffic grows. According to the knowledge center space per user, China's internet data centers are expected to rise to at least twenty-two times that of the United States or ten times that of Japan. The internet industry contributes to the most important demand for data center traffic in China, thanks to the continued rise of e-commerce, gaming, and online streaming.

 

Key Market Players

List of Top Key Network Encryption Market Companies

  • Thales Trusted Cyber Technologies
  • ATMedia Gmbh
  • Atos SE
  • Juniper Networks Inc.
  • ertes Networks Inc.
  • Senetas Corporation Ltd
  • Viasat Inc.
  • Raytheon Technologies Corporation
  • Securosys SA
  • Packetlight Networks
  • Rohde & Schwarz Cybersecurity GmbH

 

Recent Developments

  • May 2022- TAtos and VMware, Inc. (NYSE: VMW) announced that their strategic alliance will be extended by working together to create an integrated set of technologies to help accelerate the development of "Data Spaces." Data Spaces are platforms that enable more data interchange, collaboration, and monetization between businesses or industries while maintaining data sovereignty and interoperability, regardless of the underlying infrastructure.
  • May 2022- Black Box Limited (previously AGC Networks Ltd), a renowned IT solutions provider, today announced that its collaboration with Juniper Networks, a leader in secure, AI-driven networks, has been upgraded to Elite Plus.
  • December 2021- Thales and Google Cloud announced a strategic partnership to co-develop a French hyper-scale cloud product. It will be run by a joint venture with Thales as the primary shareholder, and it will meet the French 'Trusted Cloud' standards. With this new service, French businesses and government agencies will have access to all of the power, security, flexibility, agility, and sovereignty that the two organizations’ respective technologies have to offer.

 

Global Network Encryption Market: Segmentation

By Deployment Type

  • Cloud
  • On-premises

By Component

  • Hardware
  • Solutions and Services

By Organization Size

  • Small and Medium-sized Enterprises
  • Large-sized Enterprises

By End-User Industry

  • Telecom and IT
  • BFSI
  • Government
  • Media and Entertainment
  • Other End-user Industries

By Region

  • North America
  • Europe
  • Asia-Pacific
  • Latin America
  • Middle East & Africa
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