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SD-WAN Goes Mobile, as Revenue Expands 8% in Q1

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7/14/2019

LONDON -- Software-defined wide area networking (SD-WAN) market revenue, including appliance and control and management software, rose 8 percent quarter-over-quarter in the first quarter of 2019. VMware led the SD-WAN market with a 20 percent share of revenue, followed by Cisco at 13 percent and Aryaka at 12 percent, according to the Data Center Network Equipment Market Tracker from IHS Markit.

During the first quarter, vendors continued to reap the rewards of partnering with multiple telcos, systems integrators and managed service providers. Within the financial vertical, deal sizes rose, with some deployments with a single customer reaching 800 sites in North America and 3,000 sites in the Europe, Middle East and Africa (EMEA) region.

"In our discussions with vendors, it's becoming apparent that financial enterprises are rearchitecting their legacy WANs with SD-WAN to utilize traffic-routing segmentation features," said Josh Bancroft, senior research analyst at IHS Markit. "This ensures that traffic containing sensitive customer data is separated from other network traffic, increasing data security and aiding in demonstrating payment card industry (PCI) compliance."

Moreover, the rise of remote and mobile workers will continue to be an important growth driver for the compact SD-WAN appliance form factor. The compact SD-WAN appliance is a form factor that is designed for use in a home office environment with a weight of about 500 grams and is fanless. Despite being designed for home office use, these appliances have also been placed into a backpack and under battery power the appliance then provides connectivity to SaaS applications by bonding differing LTE links.

In the IHS Markit Edge Connectivity Strategies North American Enterprise survey in February 2019, respondents indicated that in 2018, 43 percent of employees were remote and mobile workers, and they expect this to rise to 51 percent by the end of 2019.

"Enterprises want to ensure that employees who are remote or mobile still have high levels of connectivity for SaaS-based applications," Bancroft said. "Application traffic is required to traverse over multiple links to ensure failover for voice and video sessions where constant connectivity is essential, such as for home office-based customer service agents or medical first responders. If SD-WAN vendors have not added compact appliances to their offerings already, they should continue to invest in compact SD-WAN appliance development to ensure they seize this market opportunity."

Additional data-center network market highlights include:

  • Application delivery controller revenue declined 6 percent quarter-over-quarter and 9 percent year-over-year in the first quarter.
  • Virtualized and software-only ADC appliances comprised 24 and 11 percent respectively of ADC revenue in the first quarter.
  • F5 Networks' revenue declined by 1 percent quarter over quarter in the first quarter, but the company still garnered 49 percent of application delivery controller (ADC) market share. Citrix followed F5 with 25 percent, and Radware came in third with 8 percent.

Data Center Network Equipment Market Tracker

With forecasts through 2023, the IHS Markit Data Center Network Equipment Market Tracker provides quarterly worldwide and regional market size, vendor market share, analysis and trends for data center Ethernet switches by category and market, application delivery controllers by category, and software-defined WAN (SD-WAN) appliances and control and management software. Vendors tracked include A10, ALE, Arista, Array Networks, Aryaka, Barracuda, Cisco, Citrix, CloudGenix, CradlePoint, Cato, Dell, F5, FatPipe, Fortinet, HPE, Huawei, Hughes, InfoVista, Juniper, KEMP, Nokia (Nuage), Radware, Riverbed, Silver Peak, Talari, TELoIP, VMware, Versa, ZTE and others.

IHS Markit, Technology

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