The global software-defined wide area networking (SD-WAN) market, including appliances and control and management software, rose 23 percent sequentially in the second quarter of 2019 as corporations ramped up purchases to replace their installed base of routers with SD-WAN-enabled equipment.

During the second quarter, large enterprises began an effort to swap their existing routers with SD-WAN technology, according to IHS Markit | Technology, now a part of Informa Tech. These efforts have been extensive, with some deployments reaching as many as 5,000 sites for a single customer, as reported by the Data Center Network Equipment Market Tracker from IHS Markit | Technology.

“In our discussions with vendors, it has become apparent that most recognize SD-WAN as a mainstream technology,” said Josh Bancroft, senior research analyst at IHS Markit. “As a result, larger enterprises have begun to refresh their legacy, router-centric WANs with SD-WAN. Vendors are capitalizing on the refresh opportunities with customers that have large bases of aging router equipment.”

VMware continued to lead the SD-WAN market in the second quarter with the highest revenue share, followed by Cisco and Aryaka. Fortinet moved into the fourth position, benefiting from a large enterprise security appliance refresh that is underway.

The rising number of remote and mobile workers will continue to be an important growth driver for SD-WAN appliances. Despite that fact that compact appliances are the most cost-effective solution for home-office based deployments, traditional SD-WAN appliances are still being installed in home-office environments. Up to 200 appliances were installed in radiologists’ homes in the North America in the second quarter.

“In the future, we anticipate further deployments of SD-WAN appliances in the homes of remote employees, with either compact or more traditional appliance form factors being used,” Bancroft said. “Bonding LTE and broadband links ensure session failover for unified communications (UC) users. It also promotes the security of sensitive patient data through security policies that can be established at the device level by healthcare providers in orchestration portals.”

At the recent SD-WAN Summit in Paris, it was clear that SD-WAN vendors are continuing to invest in LTE appliances, performing constant traffic steering for applications delivered to mobile devices.

“During discussions and keynotes, vendors said they are already testing the performance of appliances bonding 4G LTE links from differing providers in vehicles,” Bancroft said. “A number of vendors are also in discussions with car manufacturers, preparing for autonomous vehicle deployments.”

Additional data-center network market highlights include:

• IHS Markit | Technology projects SD-WAN vendors’ revenue will rise to $4.4 billion in 2023.
• The Data Center Network Equipment Market Tracker has added coverage of the application-delivery as-a-service segment. Revenue for this area expanded by 3 percent quarter-over-quarter (QoQ) to reach $24 million in the second quarter of 2019.
• For application delivery controller vendors, hardware appliances decreased 2 percent QoQ, virtualized appliances grew 4 percent QoQ, and virtualized-software-only ADCs expanded by 23 percent QoQ.

SD-WAN defined

For SD-WAN revenue, IHS Markit | Technology tracks manufacturers' revenue in U.S. dollars for SD-WAN appliances. Unit shipment tracking includes modules (I/O interfaces, fabric cards, and processing modules), power supplies, and software (OS, service features, etc…) for revenue recognized during the calendar quarter.

The total does not include revenue from WAN connectivity, service and support, product maintenance, managed services and professional services. Where applicable and possible, revenue from re-branded products is attributed to the brand, and not the OEM

In terms of manufacturers' revenue for SD-WAN control and management software, we track software licenses provided for revenue recognized during the calendar quarter. IHS Markit does not include revenue from WAN connectivity, service and support, software maintenance, managed services, and professional services. Software licenses can be perpetual or available for a monthly fee. Where applicable and possible, revenue from rebranded products is attributed to the brand, and not the OEM.

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. The tracker also covers application delivery controllers by category, 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.