6 key trends redefining the XDR market – Source: www.csoonline.com

The extended detection and response (XDR) market is experiencing significant growth, driven by escalating cybersecurity threats and the need for enterprises to integrate disparate security technologies into one platform.

By integrating technologies such as endpoint detection and response (EDR), network detection and response (NDR), security information and event management (SIEM), and threat intelligence into unified XDR platforms, businesses gain the ability to detect and respond to threats faster and more efficiently.

XDR platforms are designed to provide unified, end-to-end threat detection, investigation, and response across an organization’s entire IT infrastructure. The technology draws in huge volumes of security data from multiple sources, including endpoints, servers, network traffic, cloud, and identity systems before correlating this data.

The technology then consolidates related alerts into incidents, providing security analysts with a unified view of potential attacks. XDR also offers automated response, such as the ability to isolate potentially compromised devices.

Market estimates vary, with Business Research Insights predicting the XDR market will enjoy a compound annual growth rate of 14% to reach $5 billion by 2033. Grand View Research estimates the market will expand by 20.7% every year to exceed $3.4 billion by 2030.

Experts quizzed by CSO said that complexity and lack of standardization are hindering wider adoption of XDR technologies despite their promise as a threat mitigation technology. In response, XDR-as-a-service has emerged as an option.

Market consolidation and the integration of AI technologies into XDR platforms are also driving the evolution of the market, according to industry analysts and security vendors.

The shift toward unified platforms vs. best-of-breed

The main challenge for enterprises is that XDR technologies can be expensive and complex to implement compared to legacy EDR platforms but this disadvantage can be outweighed by the benefits that flow from security tool consolidation.

Joe Turner, global director of research and business development at Context, tells CSO that the “move toward unified XDR platforms is largely a response to customer ‘fatigue’ from managing too many fragmented tools.”

Building security stacks around best-of-breed solutions like EDR, NDR, SIEM, etc., has created complexity for customers, especially SMBs, which don’t have large security operations centers (SOCs), Turner says.

By contrast, some vendors contend that XDR platforms are unwieldy and suitable only to meet the needs of large enterprises.

“XDR was originally envisioned as a way to simplify security by consolidating detection and response across endpoints, networks, identities, and cloud environments,” argues Nisarg Desai, director at managed detection and response vendor Huntress. “However, in practice, it often adds more complexity than it removes, especially for organizations without fully staffed security operations centers.”

Most XDR solutions are “unmanaged by default, require significant tuning and expertise,” and were largely built for “large enterprises that already have the in-house people, processes, and infrastructure in place to support them,” Desai claims.

Attempts to bolt on managed detection and response (MDR) services on top of their existing XDR platforms can lead to a “fractured ecosystem with poor signal correlation, slow response times, and increased operational overhead,” Desai says.

XDR-as-a-service on the rise

A fully staffed SOC is out of reach for many organizations and that’s why the rise of XDR-as-a-service reflects growing demand for managed, scalable security capabilities.

“With stretched teams and expanding attack surfaces, many organizations are turning to trusted providers to deliver round-the-clock detection and response,” says Santiago Pontiroli, lead security researcher at cybersecurity vendor Acronis. “This model allows organizations to benefit from integrated threat visibility and faster incident response without the overhead of building and maintaining the infrastructure themselves.”

Demand for XDR-as-a-service is booming, driven by two main factors, according to Context’s Turner: Many SMBs can’t afford to stand up their own SOCs, and MSPs and MSSPs seek recurring revenue and scalable service delivery.

“XDR-as-a-service is enabling MSPs to resell managed detection and response capabilities without needing to build the entire stack themselves,” Turner says. “Distributors are increasingly offering XDR-as-a-service bundles via cloud marketplaces, which come with pre-integrated licences and usage-based billing.”

AI and machine learning make their mark — and add noise to the market

Artificial intelligence and machine learning play a critical role in making XDR systems more scalable and effective.

“These technologies help identify patterns, reduce false positives, and surface high-fidelity alerts from vast volumes of data,” says Acronis’ Pontiroli. “Also, ML models can learn from behaviors across multiple layers, like endpoint, network, and user activity, allowing the detection of threats that don’t rely on known signatures.”

Pontiroli adds: “AI is also increasingly being used to enrich alerts with context and drive automated or semi-automated response actions, making it easier for lean security teams to keep up with sophisticated attacks.”

Cybersecurity vendors in general are heavily investing in AI technologies. For XDR specifically, AI can assist in functions such as alert triage, behavioral analytics, and anomaly detection but the finer points of this product development are often missed by buyers amid a blitz of AI-focused cybersecurity product marketing.

“The main challenge we are hearing from partners is in differentiation,” Context’s Turner says. “Practically every vendor is now marketing their platform as AI-driven.”

M&A activity continues to consolidate the market

For the past few years, the XDR market has experienced significant consolidation through mergers and acquisitions, shaking up the competitive set.

“EDR vendors are acquiring NDR or SIEM players to build their own XDR vision,” Context’s Turner says. “Some examples being SentinelOne acquiring Attivo, CrowdStrike expanding into identity, whilst others like Palo Alto and Microsoft are building broad portfolios through integration rather than acquisition.”

Turner adds: “Some traditional SIEM or EDR [vendors] now compete with each other post-acquisition.”

Important XDR vendors include CrowdStrike, Sophos, SentinelOne, Trend Micro, and others.

Jerry Mancini, senior director for the office of the CTO at network security tools vendor NetScout, tells CSO: “Large security vendors are actively pursuing mergers and acquisitions with the aim of not only building out their comprehensive XDR offering but also creating closed XDR solutions where all security can be provided by a single vendor, including managed services.”

Partnerships and open architectures fill the gaps

Despite increased M&A activity, few — if any — security vendors have the capacity to provide a comprehensive service, prompting a parallel development in the XDR market: the growth of partnerships

“Despite mergers and acquisitions, there are often missing pieces that XDR vendors need to bring in to serve the demands of buyers who require a best-of-breed approach to their security portfolio,” NetScout’s Mancini explains. “Partnerships are a vital way of filling those gaps and demands, allowing XDR providers to integrate with existing security solutions, and enabling data producers to input their information into XDR platforms.”

Mancini added: “This ensures a collaborative ecosystem in which vendors must support open architectures.”

The cross-country Open XDR approach involves building using open-source frameworks — such as Elasticsearch, Apache Kafka, and Fluentd for data collection and processing — or designing platforms to be vendor-neutral. The approach enables integration with existing security tools (SIEM, etc.) and the possibility of building a modular security stack with the downside of increased complexity compared to proprietary platforms.

Managed XDR makes waves

As opposed to XDR-as-a-service, which typically means access to an XDR platform in the cloud, managed XDR goes a step further, offering a fully operated service, including 24/7 monitoring and increased automation. The model has increased in popularity of late, according to industry observers.

The managed XDR model enables organizations to significantly improve their ability to detect and respond to threats — including sophisticated attacks such as account takeover and ransomware — without needing multiple security solutions or investing in specialized cybersecurity staff.

“Automation plays a critical role in detection and response, but it’s the presence of a mature SOC behind the scenes that truly elevates managed XDR, ensuring threat detection remains accurate, rules are continuously tuned, and incidents are investigated in depth,” says Yaz Bekkar, consulting solutions architect for XDR in the EMEA region at Barracuda Networks. “Automation without human oversight can lead to blind spots.”