Even in the midst of the pandemic, revenues from SD-WAN grew 18.5 per cent from 2019 to 2020, and is expected to grow another 26.5 per cent this year, according to IDC.
In the research firm’s forthcoming Worldwide SD-WAN Infrastructure Forecast, IDC projects compound annual growth of 18.9 per cent through 2025, when total revenues will top US$7 billion.
“We expected to see a significant drop due to the pandemic, dragging the growth rate down to at least single digits,” said Brandon Butler, Senior Research Analyst, Enterprise Networks at IDC, but the rise of cloud computing and the need to connect enterprises to cloud-based resources including video conferencing applications offset the slowdown caused by a newly remote workforce.
That’s testament to the versatility of the technology, which is typically deployed as a more affordable alternative to pure MPLS networks and that can provide greater flexibility, efficiency, and resilience.
Recognising this potential, vendors from startups to the largest networking providers have been investing in SD-WAN technology for years. By their diverse nature, their products offer different levels of innovation and completeness, given the disparity of resources each has. The larger companies with deeper pockets have been able to buy up some of the smaller ones, resulting in marked consolidation.
Here’s a look at how the SD-WAN landscape came to its current state, and who the biggest players are as well as some notable smaller ones.
SD-WAN buying spree
When HPE acquired SD-WAN vendor Silver Peak in September 2020 for US$925 million and then Juniper acquired 128 Technology in October 2020 for US$450 million, these were only the latest in a string of high-profile acquisitions that are consolidating the SD-WAN market.
Cisco (Viptela), VMware (VeloCloud), Oracle (Talari Networks) , and Palo Alto Networks (CloudGenix) have all acquired SD-WAN startups in their efforts to deliver the cloud-centric, secure networking services that enterprises demand. This consolidation means customers can buy SD-WAN services from the same their trusted network infrastructure vendors, which can pay off in tighter integration and additional features.
From a connectivity standpoint, SD-WAN, is helping drive networking efficiencies, but to simplify IT management overhead for distributed organisations, more features will need to be consolidated and eventually automated, Butler said.
That means that not only are networking and security coming together, but enterprises are also seeking to centralise visibility, management, analytics, policy enforcement, and other related functions. “The LAN and the WAN are already starting to come together,” Butler said. “As that trend continues, organisations will seek to simplify network functions from the LAN through the WAN and out to the edge.”
Those drivers give the big networking vendors an edge for certain customers. For example, Hewlett Packard Enterprise (HPE) is rolling out Silver Peak technology under the umbrella of Aruba, an HPE company, creating a unified solution for WLAN, LAN, SD-WAN, and security.
Providing a choice of how they consume networking, routing, Wi-Fi, security, edge, and other related services was a major advantage of integrating Silver Peak’s SD-WAN into Aruba’s Edge Services Platform, according to David Hughes, Chief Product and Technology Officer at Aruba.
But a comprehensive networking strategy that integrates SD-WAN isn’t right for all enterprises.
BP turns to an SD-WAN startup for edge efficiencies
As part of a company-wide digital transformation effort, energy giant BP sought ways to reduce connectivity costs to offices around the world while also seeking to boost security and centralise network management, according to Alaa Nasser, BP’s Chief Architect, Network Services.
“We believe that SD-WAN will be the standard of enterprise connectivity going forward. Features will be incorporated into SD-WAN, rather than the reverse,” Nasser said. With that prediction in mind, BP wanted an SD-WAN-native solution, not a retrofit tacked on to existing infrastructure, which meant that SD-WAN startups remained strong contenders.
BP also wanted a tool that would enable it to begin collapsing related networking functions, such as security, visibility, and management, while also offering a clear roadmap to newer use cases. These included delivering connectivity to the expanding enterprise edge, which, for BP, often encompasses industrial settings and other constrained environments.
After investigating several options including consolidated solutions from top incumbents, BP selected startup Versa’s Secure SD-WAN solution. So far, the rollout has rolled back expenses, Nasser said.
“We have successfully driven down costs, but we also benefit from cost avoidance, especially as we begin to push into more constrained industrial use cases,” he said. For instance, in traditional office settings, Versa SD-WAN’s firewall capabilities may be used to augment other security tools, but in industrial environments, Versa’s security features may be enough by themselves.
Besides Versa, other well-funded startups that are still successfully competing in the SD-WAN market include Aryaka with US$186 million in backing, and Cato Networks with US$332 million.
6 top-selling SD-WAN vendors
The following six companies have more than 5 per cent market share among SD-WAN vendors, according to the IDC Worldwide SD-WAN Infrastructure Forecast, 2020–2024.
After acquiring Dou Security in 2018, Viptela in 2017, and Meraki back in 2012, Cisco has built the market’s number-one SD-WAN solution by revenue. Cisco captured 38 per cent of the SD-WAN infrastructure market in 2020, and the networking giant claims to now have 20,000 SD-WAN customers, including 70 per cent of the Fortune 100.
Cisco offers a range of SD-WAN options. These include Meraki SD-WAN appliances, which connect to branch offices and public clouds via auto-provisioned IPsec VPNs; SD-WAN Cloud OnRamp, a SaaS offering that connects branches, colocation centers, and various clouds; and SD-WAN security, which provides embedded SSL decryption, enterprise firewall, intrusion prevention, URL filtering, and malware sandboxing.
VMware is a distant number two in the market, capturing 10 per cent in 2020. The server-virtualisation pioneer became a serious SD-WAN contender with the acquisition of VeloCloud in 2017.
VMware’s SD-WAN is a SaaS offering comprised of three main components: VMware SD-WAN Orchestrator, the central management platform; VMware SD-WAN Gateways, which are deployed at more than 3,000 points of presence around the globe; and VMware SD-WAN Edge, on-premises appliances that connect to the VMware global network.
Founded in 2012 and backed by US$196 million in funding, Versa has captured roughly 9 per cent of the market. It has landed major customers such as BP and Capital One, and it has inked strong channel partnerships with carriers and service providers, including Comcast and NTT Communications.
Versa’s Secure SD-WAN is now part of its Secure Access Service Edge (SASE) portfolio, which adds a set of security services. Secure SD-WAN provides a range of capabilities, including sub-second packet steering across multiple WAN interfaces, packet loss reduction, and poor-performing-link avoidance. Versa SD-WAN also acts as a DNS proxy with SD-WAN traffic steering, MP-BGP route exchange with SDN controllers, link aggregation, hierarchical QoS, per-tunnel QoS, and overlay encapsulation options (VXLAN, IPSec).
HPE rocketed into the SD-WAN market with the acquisition of Silver Peak in 2020, joining it with Aruba, which it had acquired back 2015. Now, HPE commands 8.2 per cent of the SD-WAN infrastructure market. The combined Silver Peak/Aruba SD-WAN Edge Services Platform can provide an all-in-one WLAN-to-WAN-to-edge option.
The HPE SD-WAN offering, EdgeConnect, can create virtual WAN overlays for various classes of traffic. After being set, application performance, security, and routing policies are automatically distributed to all sites. Other capabilities include real-time monitoring of network and application performance, automated remediation in the event of an outage, integrated firewall, and WAN optimisation.
EdgeConnect is integrated with the broader Aruba platform, which includes a range of switches, gateways, and controllers.
According to IDC, Fortinet was nearly tied with HPE in 2020, with an 8.1 per cent market share. Fortinet acquired startup Opaq in 2020 and has started to pivot from SD-WAN to the closely related SASE approach. Fortinet’s hardware is based on its own proprietary chips, and with the addition of Opaq’s SASE capabilities, its already robust security capabilities have been strengthened.
Fortinet Secure SD-WAN consolidates routing, SD-WAN, and next-generation firewall into one platform. Other features include built-in threat protection, SSL inspection, and centralised management and orchestration.
Palo Alto Networks
When Palo Alto Networks acquired CloudGenix in 2020, the security giant immediately became a serious SD-WAN/SASE contender, with CloudGenix having already captured 5 per cent of the market.
The CloudGenix SD-WAN offering starts with Instant-On Network (ION) devices deployed at both branches and central sites. CloudGenix’ AppFabric consolidates WAN resources (MPLS, broadband, cellular), giving enterprises the ability to create policy-based connectivity for each application and site. ION devices automatically establish secure connectivity among sites and continually monitor the health and performance of WAN links and applications, dynamically choosing the best performing path.
Other notable SD-WAN providers
These five SD-WAN vendors are notable for either being established tech giants that recently acquired SD-WAN startups (Juniper, Oracle), being startups that have raised more than US$100 million in venture funding (Aryaka, Cato), or for being accused by Western nations of committing international espionage (Huawei).
IDC found that Huawei captured just over 4 per cent of the SD-WAN infrastructure market in 2020. However, that may end up being Huawei’s high-water mark, due to company’s struggles after bans during the Trump administration cut into its sales of carrier and consumer products. “Our aim is to survive," said the company's Chairman Eric Xu in a recent statement, according to Bloomberg.
Juniper is a notable SD-WAN alternative due to two recent acquisitions. In late 2020, Juniper acquired 128 Technology, after previously acquiring Mist in 2019. The combined 128-Mist SD-WAN solution offers enterprises an AI-driven SD-WAN/Edge option with strong security features.
Oracle is worth considering for enterprises already heavily invested in the Oracle ecosystem. It entered the SD-WAN space in a big way with the acquisition of Talari Networks in 2018, with Talari bringing along 500 customers in 40 countries.
An early mover in the space, Aryaka was founded by the team that sold Speedera to Akamai in 2005. Backed by US$184 million in VC funding, customers include SAP and Calypso Technology.
Founded in 2015, Cato Networks has raised US$332 million in funding. Its named customers include Boyd CAT and RingCentral.
(Jeff Vance is an IDG contributing writer and the founder of Startup50.com, a site that discovers, analyses, and ranks tech startups. Follow him on Twitter, @JWVance, or connect with him on LinkedIn.)