Wayra Germany, the corporate innovation hub and early stage investment arm of Telefónica, has taken a minority stake in open source SD-WAN startup flexiWAN, the company said this week.

Telefónica started collaborating with flexiWAN in June. In December, the carrier announced plans to test flexiWAN's SD-WAN technology on white-box customer premises equipment (CPE) for businesses that require throughputs ranging from 50 Mbit/s to 1 Gbit/s of encrypted traffic. The beta version of flexiWAN's SD-WAN software was released July 31 and is now generally available.

"Our work with flexiWAN so far is the seed for more ambitious plans in the following months. We envision flexiWAN as the tech base to strengthen our B2B networking portfolio with differential products," said Juan Campillo, Connectivity Innovation Director at Telefónica, in the announcement.

FlexiWan has taken a novel approach to SD-WAN with an open source, "freemium" model – anyone can install the software on up to three sites at no charge. Amir Zmora, CEO and co-founder of flexiWAN, says pricing is based on a monthly contract and by site – he says competitors are pricing based on bandwidth and multi-year contracts.

Zmora says many SD-WAN customers end up paying for features they're not using, but touts flexiWAN as a modular architecture that meets customers' needs ranging from a centrally managed IPsec tunnel to a full-blown SD-WAN service. He adds that flexiWAN's "sweet spot" in the SD-WAN market is targeting small to midsized enterprises (SME) and retail customers.

"We're not trying to say we're on par with Cisco Viptela or something like that feature-wise," says Zmora. "At the end of the day, there are features everyone needs and then there are niche features."

The SD-WAN market has remained crowded for the past few years with over 30 vendors who, at times, have struggled to differentiate themselves. It's challenging for enterprises to narrow down their top choices in such a crowded market. This is one of the factors contributing to the popularity of co-managed SD-WAN, where enterprises work directly with a service provider for SD-WAN services.

"We're at the intersection of two revolutions – the open source and SD-WAN revolutions. Companies want open source. It's not that they want to manage everything themselves – many don't want to – but they want to know that it's open source," says Zmora.

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— Kelsey Kusterer Ziser, Senior Editor, Light Reading