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Microsoft's move into SSE is making waves. The news is driving down cyber stocks.
As someone who's covered SASE & $MSFT's security suite, I enjoy tackling this topic.
I'll go over some advantages that $MSFT has in SSE/SASE, but explain why $PANW, $ZS, $FTNT will remain leaders:
Let's talk about areas where $MSFT has an edge in SSE.
1/ Over recent yrs, they've rapidly improved their identity product, especially workforce identity (eating $OKTA).
This gives them an edge in delivering zero-trust network access (ZTNA) features which is a key part of SASE.
2/ Similarly, thru Microsoft's Defender for Cloud Apps, they've built a strong cloud access security broker (CASB) product for protecting SaaS apps.
CASB is another key SSE component; Gartner acknowledges their strength here (Although, not clear if it's inline or forward proxy)
3) Global Infrastructure: They can easily leverage their large global presence of data centers to deliver quick access and verification.
This gives pricing + margin advantage over existing SSE players since many vendors like PANW depend on hyperscalers to deliver their SASE.
4) They have a large ecosystem of partners and system integrators.
If their product becomes successful (BIG IF) and they get all the technology pieces right, they can easily leverage their channel to sell when the product is GA.
I have doubts here which I'll explain shortly.
To summarise the pros, $MSFT is delivering their SASE product from an identity lens. They have a couple of product features, infra and ecosystem available to help them.
Why would they struggle:
1/ Lacking network security essentials: $MSFT has never had strong network security features like $PANW over an enterprise network.
No robust Secure Web Gateway (SWG) or Firewall As A Service (FWaaS) that's able to protect a wide range of web traffic that's needed for SSE
2/ Light product features: Their launch lacked product depth. They don't have the core SD-WAN capabilities needed to deliver single-vendor SASE.
They're focused on SSE due to their weak area in enterprise networking. This limits the types of companies that'll adopt their product
3/ Pricing & GTM: Microsoft's recent success can be credited to the cost-savings they provide around bundling smaller security features for SMBs, which make up a good chunk of their install base. As a result, a large part of their install base are SMBs.
However, SSE is a large contract and implementation product that's expensive.
Except their goal is to sell a smaller form of SSE service for medium-sized businesses (maybe <500 employees), they'll struggle to sell to larger enterprises that require more sophistication.
4/ Vendor lock-in & neutrality: This will always be an issue, especially for the larger enterprises that run mostly on Azure or M365. Alternatively, regulated companies that require a good third-party validation security over their products.
5) Timing: Although the SASE/SSE is still emerging and promises to be the next largest market in cloud network security, $MSFT's product won't GA until 2024.
This is the nature of SSE. It's not a product that can be bought & installed IN A WEEK or DAYS, IT TAKES MONTHS + YEARS!
While MSFT tries to get the product fully developed and ready to market, likely mid-2024.
The current leaders like $ZS, $PANW, Netskope, $NET$FTNT are investing aggressively in their GTM. They have large contracts locked down with the largest F500 cos.
When will $MSFT get in?
Tl;dr:
Microsoft will struggle here. SASE/SSE is a different beast compared to Identity or Endpoint security markets where they've historically been successful (albeit some news about their product constantly getting breached).
Open to thoughts/varying opinions.