- 1 Definition / Scope
- 2 Market Overview
- 3 Key Metrics
- 4 Market Risks
- 5 Top Market Opportunities
- 6 Market Drivers
- 7 Market Restraints
- 8 Industry Challenges
- 9 Technology Trends
- 10 Other Key Market Trends
- 11 Market Size and Forecast
- 12 Market Outlook
- 13 Technology Roadmap
- 14 Distribution Chain Analysis
- 15 Competitive Landscape
- 16 Competitive Factors
- 17 Key Market Players
- 18 Strategic Conclusion
- 19 Further Reading
- 20 Appendix
Definition / Scope
Software Defined Wide Area Network continues to grab the attention of Enterprises eager to leverage the business benefits offered by the technology for example faster deployment of branch sites, cost savings from using public and private networks, optimized cloud connectivity, and Application Aware Routing.
The North American Managed SD-WAN market is estimated to be worth USD 490 Million in 2018 and is expected to reach a market size of USD 2.016 Billion in 2023 growing at a CAGR of 32.7%.
Based on offering, the SD-WAN market is classified into solution and service, the SD-WAN solution category occupied the major market share accounting for more than 77% of the total revenue in 2018 and expected to garner major market share in the forecast period 2018 to 2023. Further the SD-WAN solution offering is classified into WAN infrastructure and SD-WAN control and overlay, between the two WAN Infrastructure held a major revenue share in 2018.
SD-WAN service category includes communication service provider (CSP) SD-WAN Managed and cloud-managed SD-WAN, where CSP SD-WAN Managed services generated 75% of the revenue in the SD-WAN service market .It is also projected to be the fastest growing segment in the forecast period 2018 to 2023.
SD-WAN market is classified into virtual, physical and hybrid appliances based on appliance type, Virtual SD-WAN appliance accounted for larger revenue share in 2018 and are poised to become the largest revenue generator in the forecast period 2018 to 2023.
On the implementation type SD-WAN market is classified into in-house and outsourced implementation services, of which in-house SD-WAN implementation type held the major market share and is expected to grow at a rapid CAGR of 59.5% in the forecast period 2018 to 2023.
|Base Year||2018||Researched through internet|
There is no standard regulating the implementation of SD-WAN technology as a result of which there exists penetration of sub-standard implementation being made. Also the uncertainty and lack of clear policy implementation affects the investments that are set to enter into the domain.
Impact of Increasing Competition
The SD-WAN market is in the transition from infancy to growth stage, as a reflection of which new entrants are trying to enter into the SD-WAN market which fuels the competition. As a result of increased competition the Enterprises tend to implement competitive strategies such as cutting costs, lowering price and reducing spend on R&D. these factors directly affects the business performance as cut in costs tends to be factored by cutting headcount which affects the efficiency in the implementation process, while lowering price affects the profitability of the business, and reduction in the spend on R&D affects the technological advancement of the Enterprise. These factors directly influence the profitability which arises as a result of lowering prices and also affects the competitive edge as a consequence of reduction in the spend on R&D.
Top Market Opportunities
Hybrid Cloud Connectivity
The capacity to integrate private and public cloud solutions in a hybrid WAN and ability to make real-time changes to routing based on pre-defined policies is of immense value to enterprises in the cloud networking space. The proliferation of various cloud services (on premise private cloud, hosted private cloud, public cloud, bare-metal and SaaS) in the enterprise IT environment has given rise to hybrid IT Architecture. The need to provide features such as agility, cost-effectiveness and application performance, the networks connecting the hybrid IT environment should keep pace with the IT infrastructure. As with the choice of cloud for enterprise applications, the networks connecting the various IT models do not have to be one type. For example MPLS based WANs can be used for ERP Applications in a hosted private cloud, for reasons including security and compliance. Internet links could suffice for a less critical SaaS application. The pre-defined business policies in a SD-WAN solution specify which cloud application needs to be connected to the internet versus backhauled to a hub site. A physical or virtual SD-WAN appliance, deployed at the cloud service providers data center, communicates with the SD-WAN appliance installed at the customer site to ensure that the internet links meet the SLAs (Service Level Agreement) for the given application.
Mobility, Internet of Things and Big Data
The new work environment is highly mobile and requires IT resources to be available 24/7 so that it enables business continuity dispersed across teams of employees, partners and customers. Mobile resources are using their own smartphones and tablets to access corporate resources. Further IoT and Big data distributed across cloud and on-premise data centers, are putting pressure on WAN bandwidth, which MPLS cannot itself manage in a cost-effective manner. The traditional WAN with traffic flowing back and forth from remote sites into central data centers and back via MPLS does not work well in distributed deployments. In contrast SD-WAN enables remote offices or nodes to connect directly to the Internet via high-speed broadband, while ensuring that the links are adhering to Qos and compliance requirements defined by the controller corporate policies.
Offering of Policy-based Routing
With growing network complexity and data congestion on network ends, the demand for policy-based routing solutions in the IT industry to assign path to their traffic, based on source, destination or specific application is increasing. The SD-WAN solutions offer intelligent path control by steering traffic, based on application, IP addresses, quality of service (QoS), and time of day.
Improved data transport independence
While the availability and maintenance of bandwidth is costly, enterprises are heading towards new technology solutions for economical bandwidth expansion. The SD-WAN solutions provide businesses with independence and flexibility of transport by aggregating all available bandwidth, and maximizing its usage while ensuring high network performance, manageability and reliability.
Rising popularity of 5G networks
The main factor contributing to the growth of the Managed SD-WAN market is the rising popularity of 5G Networks. The technology is expected to support further SD-WAN adoption as it offers high bandwidth and low latency in locations, where a fixed-line operator may not be available. The rollout of 5G networks will raise the need for solutions to handle the massive network traffic. To handle this, various small cells known as base stations are installed to provide customers with reliable & fast connectivity. As these small cells are critical to the 5G deployment, the network operators will need SD-WAN solutions to get the most out of the small-cell powered 5G networks. SD-WAN solutions will bring improved support to wireless technology by allowing the efficient allocation of network services to satisfy users’ demands.
Upsurge in Cloud Computing Services
The increasing migration of enterprises from WAN based infrastructure solutions to cloud based solutions is driving the adoption of Software defined Wide Area Network. SD-WAN allows network virtualization through a single controller over cloud based networking. It eliminates configuration of single switches, routers and other network hardware. As cloud computing is adopted across all business and domestic sectors for a wide range of applications, such as the need for latest version of applications, supporting mobility and BYOD services for virtualized computing resources and others. Therefore cloud computing acts as a positive factor influencing the growth of the Software Defined Wide Area Network market.
Complex Network Traffic Management
SD-WAN assists in managing complex and rapidly changing network traffic patterns and provides flexible network traffic management solutions. SD-WAN offers centralized management of complex networks and facilitates effective decision-making regarding network traffic for network operators. It facilitates customization of networks and allows metered usage for customers. Thus it is one of the prominent factors boosting the adoption of SD-WAN solutions.
Rising Demand for Mobility Services
The adoption of mobile devices is rampant in the recent years leading to increasing need for efficient data networks across private and public sectors. This in turn fuelling the growth of Software Defined Wide Area Network Industry. Business have widely adopted mobility which boosts their productivity, optimize mobile workforce performance and others. The adoption of SD-WAN in organizations would cater to the growing need for mobility. SD-WAN controller provides a central access point to distribute security and policy information consistently throughout the enterprise and solving complex issues such as securing mobility services in BYOD devices, providing centrally manageable network, customized use of data by customers in the telecom sector, minimizing the use of network hardware devices and others.
Unanticipated Execution Risk and Expenses
SD-WAN promises for seamless and risk-free technology upgradation, however with outdated network infrastructure and limited expertise, there may be a risk of execution failure. Such unanticipated executions are very high in cost and even may affect the business processes. Also the cost associated with the upgradation from traditional systems to newer implementation of SD-WAN solutions are typically high and hence affects the adoption of SD-WAN solutions.
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 slower data speeds and overall poor performance. Bandwidth requirements are also increasing, especially for applications featuring high-definition video. It can expensive and difficult to expand SD-WAN capability, with corresponding difficulties encountered in terms of network management and troubleshooting. This is expected to challenge the growth of the global SD-WAN market.
Effects of Technological Substitution
The Availability of Cheaper and more efficient alternatives such as MPLS (Multiprotocol Label Switching) and VPN (Virtual Private Network) affects the adoption of SD-WAN. The factors such as high-speed and efficient bandwidth usage by enabling high performing traffic flows and the offering of improved quality of Service (QoS) particularly in case of applications such as VoIP (Voice over IP) fuels the preference of MPLS over SD-WAN.
Lack of Technical Expertise
As SD-WAN technology is an evolving technology and it is in its nascent stage in case of market penetration, there exists a shortage of skilled labour as there is a lack of funding for training employees from the employers. Also there is a lack of interest being expressed by the employees for upskilling on the SD-WAN technology.
Cloud Security Services
Cloud Security Services are gaining prominence, becoming a simpler and cost-effective alternative to deploying and continually maintaining complex next-gen firewalls at all branch locations. SD-WAN edge platforms enable enterprises to fully automate security services and implement various types of security services such as on premise, data center and cloud security services on an application-by-application basis.
The easiest and efficient way for enterprises to implement SD-WAN solutions into existing WAN edge architecture has been to implement it in-house. However as IT decision-makers evaluate their long-term WAN strategy, it becomes evident that it takes time and effort to create application and user-specific policies thus some are of the view to outsource to third-party provider manage the underlying SD-WAN infrastructure solutions while leaving the policy creation and management to in-house staff. SD-WAN as-a-Service providers can manage everything up from circuit up/down/degraded statuses to manage the routing protocols running between corporate and remote offices. The IT staff is left with the task to build policy based on what data flows are important for the business.
Other Key Market Trends
SD-WAN Market Consolidation
SD-WAN market is expected to get consolidated with few players innovating and leading the way forward. Enterprises will begin to realize that they need more than basic SD-WAN solutions to address their evolving requirements at the WAN Edge. Consolidation will force out the vendors that have added a handful of basic features in an effort to participate in the SD-WAN Market. This will reduce the market noise and confusion and accelerate SD-WAN deployments globally.
Market Size and Forecast
North-America is expected to hold the major market share in the global SD-WAN market during the forecast period (2018 to 2023). The US has emerged as the largest country for the SD-WAN in terms of market size, due to the large scale implementation of SD-WAN solutions by service providers and enterprises in the country. The US is home to large CSPs such as AT&T, Sprint, T-Mobile, CenturyLink, and Verizon. In addition verticals such as finance, retail, manufacturing and healthcare are implementing SD-WAN solutions in their core network to reduce CAPEX and streamline network operations.
USA SD-WAN Market Size
- USD 269.5 Million – The estimated market size of the US SD-WAN Market in 2018
- 32.3% - The CAGR growth rate of the US SD-WAN market in the forecast period 2018 to 2023
- USD 1.09 Billion- The expected market size of the US SD-WAN Market in 2023
Canada SD-WAN Market Size
USD 188.65 Million – The estimated market size of the Canadian SD-WAN Market in 2018 32.7% - The CAGR growth rate of the Canadian SD-WAN market in the forecast period 2018 to 2023 USD 776.27 Million- The expected market size of the Canadian SD-WAN Market in 2023
Mexico SD-WAN Market Size
USD 150.92 Million – The estimated market size of the Mexican SD-WAN Market in 2018 33.3% - The CAGR growth rate of the Mexican SD-WAN market size in the forecast period 2018 to 2023 USD 635.18 Million- The expected market size of the Mexican SD-WAN Market in 2023
The North American Managed SD-WAN market is estimated to be worth USD 490 Million in 2018 and is expected to reach a market size of USD 2.016 Billion in 2023 growing at a CAGR of 32.7%.
The Virtual Appliance sector is set to grow at a CAGR of 70% in the forecast period 2018 to 2023 clocking a market size of USD 137.2 Million in 2018 and is expected to reach a market size of USD 1.94 Billion in 2023.
Integration and maintenance services held the maximum of the market share of 44% in 2018 holding a market size of USD 215.6 Million in 2018 and expected to reach a market size of USD 1.92 Billion in 2023 growing at a CAGR of 55% in the period 2018 to 2023
The hybrid cloud deployment model of the SD-WAN market is projected to witness the highest CAGR growth rate of 62% owing to the fact that it offers Enterprises the liberty to use cloud-resources and to test new-capabilities in-house in a high performance environment.
On the sector wise IT & Telecom dominated the market with traction of 30% market share in 2018 holding a market size of USD 147 Million in 2018 and expected to reach a market size of USD 1.27 Billion in 2023. The penetration of Smartphones has fuelled the usage of bandwidth intensive applications. This has catapulted strain on telecom operators that face inflexible MPLS, bandwidth constraints. To address this issue they are investing on cloud-based SD-WAN solutions that allows them take advantage of broadband to provide high-quality services.
The U.S. is expected to show the growth rate of more than 55% over the forecast period due to the increase in investments in the broadband infrastructure in the country.
5G as an attractive SD-WAN transport option
In 2019, initial pockets of 5G deployment will be witnessed. Until recently 4G technology has been used as a backup to higher broadband internet connectivity because of its low capacity and high cost per bit. 5G Wireless access will provide higher throughput rates and if its priced appropriately it will become an attractive transport option for SD-WAN which includes broadband, DIA and MPLS. 5G could deliver a combination of fast deployment, diverse connectivity and high bandwidth that accelerates the adoption of broadband SD-WANs
Integration of SD-WAN and UCaaS
Real-time SaaS services such as cloud hosted voice and video will increasingly become a key-driver in SD-WAN deployments. As enterprises transition to broadband, they will expect the quality, availability and reliability meets or exceeds the traditional telephony requirements. SD-WAN and UCaaS providers will partner together to deliver robust high-quality services over broadband.
Distribution Chain Analysis
The SD-WAN supply chain constitutes the entire ecosystem of people, activities, information, technology and resources. This includes the planning and management of all application delivery infrastructure and activities involved in sourcing, procurement, deployment and logistics. For carrier neutral SD-WAN to be successful the integration and management of the SD-WAN’s supply chain’s functional operations becomes important. The business processes, policies and controls that create a fully managed and high-performing SD-WAN service are dependent on factors such as streamlined logistics, reducing the time to market and simplifying complexity. SD-WAN service offerings are not created equal. Some are proprietary, with the network owned and operated by the traditional carrier. Others are carrier-neutral solutions, that are designed and built to each customer’s specification. This is where the entire SD-WAN supply chain becomes critically important, as it includes the planning and management of all application delivery infrastructure involved in sourcing, procurement, deployment and logistics. The provider of SD-WAN manages everything as a single point of contact. A global SD-WAN supply chain includes SD-WAN edge appliances, multi-carrier network procurements and negotiated contracts and multi-carrier administration of financing and billing. To accomplish this, a global SD-WAN supply chain requires robust internal systems, tools, and processes to coordinate and optimize relationships among hundreds of suppliers.
The SD-WAN market is expected to witness an intense competition as the companies will focus more on product innovations, improvements in security, routing, and management functionality. For instance, in October 2018, Huawei launched next-generation SD-WAN routers, which use a unified platform and integrate branch services such as routing, firewall, voice, and Wi-Fi to simplify service deployment. Some of the companies, including Cisco and VMWare have adopted strategies such as acquisitions and new product developments to strengthen their leadership in the market. For instance, in December 2017, VMWare acquired VeloCloud for USD 610 million. With this acquisition, VMWare integrated VeloCloud SD-WAN into its product suite and strengthened its position as a leader in the SD-WAN market.
The communication services providers are also entering into strategic partnerships with cloud service providers to leverage cloud capabilities to deliver new services. For instance, in September 2018, Epsilon partnered with Cato Networks to expand its global SD-WAN capabilities. Under the partnership, Epsilon offered high-performance cloud-based SD-WAN services that help to improve network performance and security.
Some of the major companies operating in the SD-WAN market are Aryaka Networks, Inc., Barracuda Networks, Inc., Berkshire Partners LLC (Masergy Communications), Cato Networks, Cisco Systems, Inc., Citrix Systems, Inc., CloudGenix Inc., Ecessa Corporation, Elfiq Networks, FatPipe Networks Inc., Huawei Technologies Co., Ltd., Infovista, Nuage Networks, Oracle Corporation, Peplink, Riverbed Technology, Inc., Silver Peak, Versa Networks, Vmware, Inc., and ZTE Corporation.
Some of the Competitive Factors in the Managed SD-WAN Market include:
The SD-WAN Services requires answering the rising demands during peak hours. Enterprises encounter fluctuations in voice call volume and demand for data services. The business can encounter massive spike in inbound customer service calls anytime now. Regardless of whether the same demand is encountered the SD-WAN provider must scale to meet demands is important. The Service Providers that offer scalable solutions are the front-runners in the Sector.
Reliability and Availability
SD-WAN must be reliable in order to deliver the utmost in user productivity. If SD-WAN Services is expected to play a major role in increasing user productivity it has to be reliable, dependable and consistent in its delivery. This is no easy task. When SD-WAN is down, productivity is down, and users and enterprise customers are dissatisfied. The unreliable delivery of SD-WAN services will damage the reputation of SD-WAN. It will be harder to regain the user's confidence to return to the SD-WAN functions than it was to convince the user to try SD-WAN in the first place. Technology vendors and providers often throw around the term five nines (99.999%) availability when discussing their products or services, and the SD-WAN Services market is no different. The term is used so often that the average technologist doesn't think twice about it. First of all, five nines does NOT refer to reliability. It refers to availability. Availability is the probability that a device or service will be working when you go to use it. Thus the Service Provider offering higher reliability and availability are set to dominate the market.
Key Market Players
The Key Market Players in the North American Managed SD-WAN Market includes:
Cisco Systems (USA) Pte. Ltd. designs, manufactures, and sells Internet protocol (IP) based networking and other products related to the communications and information technology. The company offers analytics and automation software, application networking services, cloud and systems management, collaboration endpoints, conferencing, connected safety and security, and customer collaboration. The company provides data center analytics, hyper converged infrastructure, interfaces, modules and cards, jabber, networking software (IOS & NX-OS), and optical networking. It also offers routers, security, servers - unified computing (UCS), service exchange, services support, storage networking, switches, telepresence, unified communications, video, webEx, and wireless.
Citrix Systems, Inc. provides workspace, networking, and analytics solutions worldwide. The company offers workspace services, including Citrix Virtual Apps and Desktops, a cloud-enabled app and desktop virtualization solution that gives customers the flexibility to deliver desktops and applications as a service from cloud and on-premises datacenters; and Citrix Virtual Apps that allows Windows and Linux applications to be remotely delivered to Macs, PCs, thin clients, and Android/iOS mobile devices from any cloud, on-premises datacenter, or both. Its workspace services also comprise Citrix Endpoint Management enterprise mobility management solutions; and Citrix Workspace Suite, which provides apps, desktops, branch networking and WAN, enterprise mobility management, and data people need for business productivity. In addition, the company offers networking products comprising Citrix ADC, a software-defined application delivery controller designed for organizations undergoing digital transformation; and Citrix SD-WAN that enhances applications delivered from the legacy data center, cloud, or SaaS. Further, it provides content collaboration offerings that include Citrix Content Collaboration, a cloud-based file sharing and storage solution, which provides enterprise-class data services on various corporate and personal mobile devices for businesses. Additionally, the company offers support, hardware maintenance, professional consulting, and product training and certification services. It markets and licenses its products through resellers, distributors, systems integrators, independent software vendors, original equipment manufacturers, and service providers
Silver Peak Systems, Inc. provides broadband and hybrid WAN solutions that allow enterprises and service providers to connect users to their applications. The company offers Unity EdgeConnect, a software-defined WAN that enables customers to move to a broadband WAN at their own pace whether site-by-site or via a hybrid WAN approach that leverages MPLS and broadband Internet connectivity; Unity Orchestrator, orchestration to power a business-first networking model; and Unity Boost, optimization performance pack to accelerate application performance. It also offers WAN optimization solutions for branch offices, data centers, and the cloud to accelerate application performance over distance that include VX Virtual WAN Optimization Appliances, a WAN optimization performance and virtualization flexibility solution; NX Physical WAN optimization appliances for WAN optimization performance and scalability; router replacement; cloud app performance; WAN edge security; WAN optimization; voice and video broadband services; and multi-cloud networking. In addition, the company offers replication acceleration solutions that include VRX Virtual Appliances, a software to optimize offsite replication; NX Appliances, a solution for data acceleration performance and scalability; and compatible data protection products. Further, it offers support services.
Viptela Inc provides software-defined wide area network (SD-WAN) technology that allows global companies to build carrier agnostic, policy-controlled, and cost-effective WANs. The company offers secure extensible network solution that includes vSmart Cloud-based SDN-WAN Controller, which manages routing, policy, security, segmentation, and authentication of all devices on the overlay network; vManage Network Management System, which enables centralized configuration and management of Viptela Secure Extensible Network solution and provides a real-time dashboard on the health of the network; and vEdge Routers, which provides secure data connectivity over any transport. It also provides Viptela Fabric, a single platform that supports multiple use-cases, including SD-WAN, cloud networking, Network-as-a-Service, and AppUX; and Viptela Cloud onramp, a part of Viptela Fabric that enables organizations to seamlessly connect users and sites to the cloud, including infrastructure services (IaaS) and SaaS applications.
Talari Networks is a San Jose, CA-based manufacturer of networking equipment that allows businesses to combine private wide area networks (WANs) with less expensive broadband connections such as DSL or cable. It was founded in 2007 and launched its initial beta product in early 2008. The company was acquired by Oracle Corporation in 2018.
FatPipe, is the inventor and multiple patents holder of software-defined wide area networking (SD-WAN), reliability, security, and WAN Optimization products, specializes in providing solutions that transcend Wide Area Network (WAN) failures to maintain business continuity for thousands of customers including numerous Fortune 1000 customers over the last 12 years, and has the largest installed base of customers in software-defined network WANs.
VeloCloud Networks, Inc. designs and develops cloud based networking solutions. The Company provides centralized enterprise-wide configuration and real-time monitoring, as well as orchestrates the data flow through the cloud network.
The North American Managed SD-WAN market is forecast to grow at a CAGR of 32.7% from USD 490 Million in 2018 to USD 2.016 Billion in 2023.
The major challenges pricking the growth of the North American Managed SD-WAN market includes Lack of Technical Expertise and Effects of Technological Substitution
The growth of the market is restrained by factors such as Bandwidth Provisioning and Unanticipated Execution Risk and Expenses
The growth of the North American Managed SD-WAN market is augmented by Drivers such as Rising popularity of 5G networks, Upsurge in Cloud Computing Services, Complex Network Traffic Management and Rising Demand for Mobility Services
- SaaS - Software-as-a-Service
- ERP - Enterprise Resource Planning
- MPLS - Multi-Protocol Label Switching
- SLA - Service Level Agreement
- IoT - Internet of Things
- BYOD - Bring Your Own Device
- CAPEX - Capital Expenditure
- OPEX - Operational Expenditure
- QoS - quality of Service
- VoIP - Voice over IP
- CSP - Communication Service Provider
- UCaaS - Unified Communication-as-a-Service
- DoS - Denial of Service
- DNA - Digital Network Architecture
- IP - Internet protocol
- SD-WAN - Software Defined Wide Area Network
- CAGR - Compounded Annual Growth Rate
- USD - US Dollar
- R&D - Research and Development