Observability Makes Major Moves with Cisco Announcing Plans to Acquire Splunk

Global Observability Market Expected to Approach $15B in 2027

The last few months have been hectic for the Observability market. Cisco announced the company’s plans to purchase Splunk for $28B, with the deal expected to close in CY 2024. New Relic announced its plan to be acquired by Francisco Partners and TPG for $6.5 B. At the same time, Cribl was named to the Forbes Cloud 100 list.

Enterprises entered 2023 with several unique challenges that will put NetOps, DevOps, and SecOps front and center. Almost all enterprises operate in a hybrid and multi-cloud world. During 2023, they will adjust workloads and employees as supply chains return to normal and organizations move workloads to where they want them, not where they had to deploy during the COVID-19 pandemic due to resource limitations. They will now have to plan for vendor integration from acquisitions in 2024.

We expect robust growth in the Observability market as enterprises seek help to democratize the NetOps, DevOps, and SecOps silos and get the needed observability data inside hybrid-cloud applications. Enterprises need to know what each packet is and if the application has an unknown security hole.

In terms of features, we expect more feature introductions in 2023. For example, we can expect Deep Observability to embrace AI directly in the offerings and as a data set to larger AI models. In addition, we expect vendors to rapidly enhance their cloud offerings (GCP, AWS, Azure cloud), enhance encryption support, and roll out new features.

Cisco, New Relic, and Splunk account for nearly 50% of the Observabitly revenue in calendar 2022. Our forecasts show that the Observability market will grow by nearly $5B and approach $15 B by 2027, well above some of the underlying networking markets. Besides the regular Observability market, we also track two main sub-segment markets in the Deep Observability Market and Observability Pipeline Market.