SD-WAN market to exceed $4B by 2023 – report

The SD-WAN tools and software market is predicted to jump to $4.6 billion by 2023 as enterprises increasingly move their IT and networking services to a cloud infrastructure, according to a new report by Futuriom.

In the nearer term, Futuriom's founder and principal analyst, Scott Raynovich, expects a market growth rate of 34% CAGR to hit $2 billion this year and reach $2.85 billion in 2021 as more enterprises demand "agile, high-performance, and secure connections to cloud applications."

In April, Omdia released similar predictions for the SD-WAN market, reporting that SD-WAN revenue reached $2 billion in 2019, up from $1.1 billion in 2018. Omdia predicts SD-WAN revenue will hit $4.8 billion in 2024.

While the COVID-19 pandemic slowed SD-WAN market momentum in the first half of 2020, Raynovich forecasts a pickup in the market in the second half of 2020 and into 2021 as more enterprise employees are working from home and require secure, remote access services.

"Enterprises aren't going to pay for people to have MPLS in their home, it's too expensive. SD-WAN is serving its role as a quick, secure VPN for work-from-home situations. That's a driver of growth," Raynovich told Light Reading. SD-WAN is continuing to reduce dependence on MPLS and is becoming "one of the go-to solutions to work from home where there is no alternative," he said.

IT and networking professionals cited "improved security tools and orchestration" (64%) as the top benefit of utilizing SD-WAN in their networks, according to a Futuriom survey of 100 networking and cybersecurity professionals. About 55% of respondents also cited improved management/automation/agility; better utilization of bandwidth/lower cost; and higher performance of cloud applications as the primary benefits of SD-WAN. As network security is a top priority for enterprises, the majority of SD-WAN vendors have added cloud security and next-generation firewall products from security suppliers such as Check Point, Zscaler and Palo Alto, according to the report.

Figure 1: Graph courtesy of Futuriom

"The bottom line is that the current business environment is driving IT and networking departments to look at more efficient ways to deliver secure and efficient cloud connectivity, a challenge that SD-WAN technology solves," says Raynovich in the report. "As a result, SD-WAN is likely to be key to managing networking, cloud connectivity, and security for the foreseeable future."

Looking ahead, Raynovich predicts the SD-WAN market will continue to consolidate, and companies such as Aryaka, Cato Networks, FatPipe, Silver Peak and Versa Networks are ripe for M&A or IPO. Earlier this year, Palo Alto announced plans to acquire SD-WAN supplier CloudGenix for $420 million.

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— Kelsey Kusterer Ziser, Senior Editor, Light Reading