SD-WAN: Welcome to the Boomtown

No matter how you slice it, SD-WAN will continue its torrid pace over the coming years.

A recent Telco Transformation poll asked which flavor of SD-WAN would reap the most revenue this year. The winner, at 41%, was "cloud-based subscriptions from vendors."

Tied for second in the poll were "Hybrid services from vendors" and "Offerings from service providers" at 26%. Coming in dead last was "Enterprises re-selling SD-WAN" with 7%.

The availability of more cloud-based services and the desire by enterprises to provide optimized services to multiple branch locations are driving SD-WAN in the short term, but expect further disruptions in the Wide Area Market (WAN) over the coming years, according to a recent report by Gartner Inc.

According to the Gartner report (registration is required), by next year more than 40% of WAN edge infrastructure refresh projects will be based on software-defined WAN (SD-WAN) appliances and/or x86-based virtualized customer premises equipment (vCPE) platforms versus traditional routers.

By 2020, more than 60% of enterprises will have deployed direct Internet access in their branch offices, up from less than 30% last year.

Last year, IHS Markit said in a report that SD-WAN revenue was projected to reach $2.9 billion by 2021. Last year, SD-WAN reached $87 million in revenue, with $31 million of that total coming in the fourth quarter. (See Report: SD-WAN to Top $2.9B by 2021.)

With more 40 SD-WAN vendors in play today, there's sure to be more consolidation as some of the smaller VC-funded companies are bought up by bigger vendors. (See Orange's Isch: Consolidation of SD-WAN Vendors 'Inevitable'.)

SD-WAN will also evolve. Today SD-WAN is viewed as a way to reduce the reliance on more costly MPLS services. With SD-WAN, enterprise customers can either use private MPLS circuits for their mission critical traffic, or the public Internet for less critical and time-sensitive material.

SD-WAN vendors can be broken down into three basic types: cloud-based, premises-based and virtual-based. In order to provide premises-based or cloud-based SD-WAN offerings, some service providers, such as AT&T and Verizon, have opted to deploy more than one SD-WAN solution to meet their customers' needs. (See AT&T Boards SD-WAN Bandwagon, and Cisco Snaps Up Viptela.)

While enterprises are reaping the short-term benefits of SD-WAN, service providers, such as CenturyLink, see it as one element of their overall NFV architectures. (See Barrett: SD-WAN Another Brick in CenturyLink's NFV Wall.) Due to NFV build outs and "alternative delivery models" the report by Gartner predicted there would be at least at least five waves of overlapping disruption in the WAN space over the next three years.

— Mike Robuck, Editor, Telco Transformation