Wednesday, June 19 2024

Acquisition Aims to Boost Cloudflare One’s Capabilities Amidst Growing SASE Market Competition

Cloudflare has acquired BastionZero, a zero trust infrastructure platform, in a move aimed at enhancing its Cloudflare One secure access service edge (SASE) offering.

The acquisition underscores Cloudflare’s commitment to expanding its presence in the growing SASE market. Cloudflare reported first-quarter revenue of $378 million, a 30% increase from the previous year. Despite its impressive growth and a market cap of $23 billion, Cloudflare still trails behind competitors like Zscaler, Fortinet, and Palo Alto Networks. The BastionZero acquisition is seen as a strategic effort to close this gap.

Cloudflare One has evolved to address the increasing demand for SASE networks. By integrating BastionZero, Cloudflare aims to enhance access to core IT systems and provide robust Zero Trust controls for its existing infrastructure. Additionally, Cloudflare plans to leverage BastionZero’s capabilities to strengthen its VPN replacement solution, extending security beyond applications and networks to infrastructure resources.

Modernizing Security for Remote and Hybrid Work

Cloudflare stated traditional VPN security setups are becoming obsolete, arguing that developers and system architects currently have excessive access to sensitive systems. Cloudflare CEO and co-founder Matthew Prince highlighted the need for updated security measures in remote and hybrid work environments. “Employees expect to work effectively from anywhere,” Prince said. “There’s no reason why teams managing an organization’s most critical systems can’t have the same flexibility. Integrating BastionZero into Cloudflare One provides IT teams secure access to vital systems, regardless of location.”

Sharon Goldberg, founder and CEO of BastionZero, stated that the acquisition would benefit both companies and their customers. Goldberg noted that by acquiring BastionZero rather than developing a similar solution in-house, Cloudflare could reduce security risks and operational costs. “This acquisition allows us to integrate BastionZero’s unique cryptographic approach for passwordless infrastructure access into the world’s largest SASE network,” Goldberg said.

Future Growth in the SASE Market

A Gartner report projects the SASE market will grow to $25 billion, with a compound annual growth rate of 29%. The report also estimates that by 2026, 85% of organizations will integrate SASE networks, with 45% prioritizing advanced data security features.

Cloudflare aims to increase its market share with the BastionZero acquisition, making its SASE offering more attractive. However, competitors such as Cisco, Fortinet, Netskope, Broadcom, Zscaler, and Palo Alto Networks are also advancing their SASE solutions. Cloudflare hopes BastionZero will differentiate Cloudflare One by enhancing security, compliance, and control while simplifying the network.

Details of the transaction have not been disclosed, and the market reaction was tepid. Cloudflare’s stock price fell from $75.13 on May 29, before the acquisition announcement, to $67.57 on June 3. It remains to be seen whether integrating BastionZero’s capabilities into Cloudflare One will make the product more appealing to users.

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