SD-WAN Market Overview
The global SD-WAN market was valued at $676.9 million in 2017 and is forecasted to witness a CAGR of 54.1% during 2018–2023. The demand for cost effective WAN management solutions, increasing adoption of cloud technologies, and the need for simplified network architecture as well as end-to-end network security and visibility are driving the market growth globally.
GLOBAL SD-WAN MARKET SIZE, BY IMPLEMENTATION TYPE, $M (2013-2023)
Based on offering, the SD-WAN market is classified into solution and service. Of these, the SD-WAN solution category accounted for more than 77% of the market revenue in 2017 and will continue to contribute larger revenue during the forecast period as well. Further, SD-WAN solutions are categorized into WAN infrastructure, and SD-WAN control and overlay; between the two, WAN infrastructure held a larger revenue share in 2017. This can be attributed to the advantageous features of WAN infrastructure, mainly advanced management and monitoring of customer-oriented network infrastructure on a larger scale through protocols, routing technologies, optimal performance measures, traffic control and device reporting.
SD-WAN service category includes communication service provider (CSP) SD-WAN managed and cloud-managed SD-WAN; where CSP SD-WAN managed services generated over 75% revenue in the SD-WAN service market in 2017. It is also projected to be the faster growing category during the forecast period, as it provides improved security, smooth interoperability, and increased visibility in traffic, which is essential for telecommunications providers who transport their information electronically.
Based on appliance, the SD-WAN market is categorized into virtual, physical, and hybrid appliances. Virtual SD-WAN appliance accounted for largest revenue share in 2017 and is expected to be the largest revenue generator during the forecast period. SD-WAN vendors provide virtual and physical appliances, which are placed in large offices, small branch offices, data centers, and cloud platforms such as amazon web services (AWS).
Based on implementation type, the SD-WAN market is classified into in-house and outsourced implementation services; out of these, in-house SD-WAN implementation held a larger share in 2017. During the forecast period, outsourced implementation type is expected to witness faster growth, with a CAGR of 59.5%, due to increasing demand for outsourced implementation as it reduces the risk of failure and complexity associated with in-house solution deployment.
Based on industry, the SD-WAN market is segmented into IT and telecom, BFSI, government, healthcare, and others (defense, retail, and manufacturing). The IT and telecom industry was the largest user of SD-WAN solutions in 2017. This can be ascribed to the increase in advancements in telecommunications and information technology, and demand for greater bandwidth for high performance applications.
SD-WAN Market Dynamics
Growth in demand for WAN optimization as a service, increase in managed service offerings, rise in adoption of hybrid cloud connectivity are some of the major trends observed in the SD-WAN market. Globally, IT organizations are in need of WAN optimization solutions to overcome the challenges of network performance and lower the ongoing WAN cost. SD-WAN solution providers are continuously developing and upgrading their physical and virtual WAN optimization product portfolio to provide industries with accelerated application performances.
With network management complexity being a top concern with respect to branch network security, enterprises are considering to replace their traditional WAN architecture with managed software defined WAN, as it is a simple and cost-effective alternative of the former. In addition, the increasing trend toward hybrid cloud connectivity is escalating the adoption of SD-WAN solutions, which caters to demand of agile, cost-effective, and reliable IT environment from enterprises.
Rise of cloud computing, need for cost-effective network management, simplified network architecture, and increasing need for network security and visibility are some of the major factors driving the SD-WAN market.
The increasing migration of global enterprises from traditional WAN infrastructure to cloud-based solutions, is driving the adoption of SD-WAN. Due to high maintenance cost and network complexity, enterprises are in need of affordable pricing, reliable security, and ease of WAN management. The growth of data intensive applications with the emergence of cloud technology is making SD-WAN a promising solution for geographically distant offices, which need reliable and faster bandwidth.
Bandwidth provisioning and unanticipated execution risk and expenses are expected to challenge the global SD-WAN market in the coming years. Also, concerns regarding secure access to cloud and SaaS may hinder the market growth.
With continuous increase in devices or applications connected to the network globally, there may be an intense competition for using the available bandwidth which may result in slow data speeds and overall poor performance. This is expected to challenge the growth of the global SD-WAN market. Also, SD-WAN promises for seamless and risk-free technology up gradation; however, with outdated network infrastructure and limited expertise, there may be a risk of execution failure. Such unanticipated execution failures are very high in cost and may even affect the business processes. Thus, the above-mentioned factors hinder the market growth.
Intelligent pathway control and improved data transport independence are some of the key factors offering immense growth opportunities to the SD-WAN market.SD-WAN solutions have immense growth opportunities with their dynamic path selection capabilities, which allow IT administrators to set up performance threshold for various types of traffic. This ensures that critical data and applications always use the best path, based on latency, jitter, and loss over the available VPN tunnel in the network.
Moreover, all data transport protocol options are different and yet incur the same cost, therefore, due to virtualization of WAN, any transport protocol can be rendered to combine the available transport options such as 3G, 4G LTE, internet, MPLS, serial, Wi-Fi or ethernet, and provide maximum benefit with lower wastage and cost. This will create a huge growth opportunity in the SD-WAN market.
SD-WAN Market Competitive Landscape
Players in the SD-WAN market are focusing on developing simplified network architecture with enhanced features such as privacy and visibility which will help in monitoring and measurement of network traffic, providing deep visibility to IT department into WAN, and allowing them to quickly pinpoint a security attack.
Some of the key players operating in the SD-WAN market are Cisco Systems Inc., Citrix Systems Inc., Silver Peak Systems Inc., CloudGenix Inc., Ecessa Corporation, Viptela Inc, Riverbed Technology Inc, Mushroom Networks Inc., VeloCloud networks Inc., Glue Networks Inc., Elfiq Inc.