The confluence of applications being hosted in the cloud and end users accessing them via mobile devices is accelerating advancements in wide area networking technologies.
A new report issued today by research firm IDC predicts those factors will drive what was a relatively nascent software defined WAN (SD-WAN) industry, worth a mere $225 million last year, to grow at a more than 90% compound annual growth rate for the next five years to become a $6 billion industry by 2020.
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Software defined networking (SDN) has become a valuable tool for creating a more agile data center, but thus far the WAN has not seen the same network innovations as inside the data center. Fundamentally, SD-WAN is the idea of bringing SDN-type technology to the wide area network.
A precursor to SD-WAN has been hybrid WAN, which is the idea of aggregating multiple types of network connections into branch offices (MPLS, broadband, 3G/4G, etc.). SD-WAN takes that concept a step further by incorporating a centralized application policy controller, a software overlay and analytics features.
“SD-WAN offers compelling value for its ability to defray MPLS costs, simplify and automate WAN operations, improve application traffic management, and dynamically deliver on the cost and efficiency benefits associated with intelligent path selection,” IDC analysts Rohit Mehra, Brad Casemore and Nav Chandler write in the report.
Any business that’s significantly using SaaS applications (like Office 365 or Salesforce.com) or Unified Communications (UC) services, has a substantial number of branch office locations or a large number of mobile workers could be a candidate for SD-WAN to improve network connectivity back to the campus and to cloud-based applications.
“SD-WAN provides the complementary capstone for hybrid cloud application delivery,” Mehra says. A survey of enterprise communications professionals found that 30% plan to migrate to SD-WAN within two years.
SD-WAN offerings typically include a bundle of routing and WAN optimization infrastructure combined with policy controller and overlay network software, which enable applications to customize the network characteristics they need. For example, an SD-WAN could ensure that an MPLS virtual private network (VPN) or UC services always have first priority for network connectivity, while giving secondary priority for high-bandwidth traffic like video and social media.
Providers such as VeloCloud, Viptela, CloudGenix, Cybera, Versa, and Talari are some of the venture-backed startups in the SD-WAN market. There are also hosted SD-WAN offerings from communication service providers (CSP) and cloud providers. This year and next, IDC predicts that 15 to 20 CSPs could launch SD-WAN services atop their existing MPLS offerings. Cable providers like Comcast Business and Charter are also likely to offer managed SD-WAN as an alternative to MPLS.
Router vendors, such as Cisco and Alcatel-Lucent's Nuage (now owned by Nokia) and established players in WAN optimization such as Riverbed Technology, Silver Peak and Citrix will all play in this market.
IDC expects SD-WAN sales to approach $600 million this year. By next year they will more than double to $1.4 billion, and almost double the year after to $2.6 billion by 2018.