SD-WAN market forecast reports from Dell’Oro Group and IDC

The sales of Software Defined Wide Area Network (SD-WAN) technologies will grow at a compounded annual growth rate of 35 percent over the next five years reach $2.2 billion in 2022, Dell’Oro Group said.
SD-WAN market growth
SD-WAN solutions comprise software and networking hardware technologies that assist enterprises to adapt their WANs to the new world of Cloud services.

Research firm IDC in its report said that the global SD-WAN infrastructure market will grow at 40.4 percent CAGR from 2017 to 2022 to reach $4.5 billion.

Revenue from software components, including controller and virtual network functions, will grow almost twice as fast as the hardware components. SD-WAN software revenue will grow at 41 percent CAGR compared to 21 percent for customer premises equipment (CPE) hardware over the next five years, Dell’Oro Group said.

SD-WAN software components are the key differentiators of vendors’ offerings. Controller and virtualized network functions software revenue will account for the large majority of the market size.

“Software innovation will drive the SD-WAN market while hardware will increasingly be commoditized,” said Shin Umeda, vice president at Dell’Oro Group.

Sales of SD-WAN solutions to Enterprises will account for the largest portion of the market over the next five years.

Service Provider SD-WAN deployments for the purposes of managed services will grow at an average annual rate over 40 percent over the next five years.

The large majority of SD-WAN revenue will come from enterprise customers that deploy and manage solutions on their own, or use a value-added reseller (VAR) or system integrator to assist them. However, implementations by service providers (SPs) that offer SD-WAN as a managed service will increase at a faster rate.

SD-WAN vendor Cisco acquired Viptela and VMware bought VeloCloud as part of their strategy to bolster revenue.

“These two acquisitions have caused a slowing of the market as prospective customers delay purchases while they wait for clarity and proof-points on technology integration and delivery,” Dell’Oro Group said.

SD-WAN infrastructure revenues rose 83.3 percent in 2017 to $833 million, IDC said in its August 8 report.

“Organizations are modernizing their Wide Area Networks to provide improved user experience for cloud-enabled applications,” said Rohit Mehra, vice president, Network Infrastructure, IDC.

Cisco is the leader in the SD-WAN infrastructure market, powered by its routing portfolio that is used in SD-WAN deployments, as well as its Meraki offering and its August 2017 acquisition of Viptela.

VMware, which in December 2017 purchased VeloCloud, holds the second largest market share in the SD-WAN infrastructure market.

Silver Peak, Riverbed, Aryaka, Nokia and Versa are the other top technology companies in the global SD-WAN market.

Both US and global enterprise IT decision makers are looking to use SD-WAN appliances with integrated routing and WAN optimization functions while keeping existing CPE-based solutions at other sites until maintenance contracts expire, according to a survey by research firm Frost & Sullivan — sponsored by SD-WAN supplier Silver Peak.

“What is surprising is the businesses’ mindset regarding various WAN functions while evaluating SD-WAN, especially their intent to replace CPE routers with an SD-WAN appliance with integrated routing functionality,” Roopa Honnachari, Business Communication Services & Cloud Computing Services Industry Director at Frost & Sullivan, said.

Baburajan K

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