We have been touting the idea that 5G will help disrupt the cybersecurity industry for better, which is currently fragmented with "too many vendors, too many tools, too many alerts, and too much manual labor." 5G enables the digital transformation for the global economy: fast-speed and low-latency will support more mobile use cases that will require computing power not only in the center cloud but also more on edges. More devices (e.g. industrial IoT) and more mission-critical applications (e.g. telesurgery) will need an always-on connection to the core networks. However, a lot of these potential "security holes" are not (sufficiently) patched by traditional security solutions. On the other hand, hackers become more sophisticated: attacks are automated and look for vulnerabilities, with intelligence, often way beyond "core networks". Case in point, a fish tank could help hack a casino, successfully.

To deal with new dynamics, we've seen many emerging cybersecurity concepts in the past years. We use the product strategies/roadmap at Palo Alto Networks (PANW), a leading cybersecurity vendor, to showcase the evolution of the industry and the potential market opportunities brought by new security paradigms.

• PANW is a market leader in the (traditional) firewall offering, which is the backbone of securing enterprise networks. The company has been building a significant moat in firewall and uses it as a solid foundation to transform itself into a comprehensive security platform.

• Securing the cloud requires new architecture and new thinking (e.g. secure access service edge, SASE) in the product, but also brings the most upside potential. It's delivered through Prisma Cloud/Access product suites.

• The last pillar, Cortex, is enabling the automation of security operations by applying AI/ML techniques.

Palo Alto Networks Product Strategies

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Palo Alto Networks Product Strategies

PANW reported the earnings for the first quarter of FY 2020 on November 26, 2019. The growth of Next Generation Cloud Security well exceeded the consensus but the core firewall business fell short, which caused the negative reaction from the market. The company also announced the acquisition of Aporeto to continue building up/improving its offering in the Next Generation Cloud Security. That said, PANW has generally remained ahead of its peers in acquiring best-of-breed technologies to expand its platform. We summarized the major strategic acquisitions of PANW in the table below. We cannot discount the company's determination to building in-house innovation either: PANW's R&D expenditure has been staying way above that of peers for many years.

Palo Alto Networks M&A history

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Palo Alto Networks M&A history

Palo Alto Networks R&D Spending

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Palo Alto Networks R&D Spending