SD-WAN Analysis

Part
01
of nine
Part
01

Market Size and Growth - SD-WAN Market: Global

The global market size of the software-defined wide area network (SD-WAN) market size in 2020 is $1.761 billion. The market is expected to grow at a CAGR of 32.7% through 2023.

Market Size

  • According to MarketsandMarkets, the global software-defined wide area network (SD-WAN) market size was $1.0 billion in 2018.
  • At the expected CAGR of 32.7%, this would put the global market size of SD-WAN at $1.327 billion in 2019 and $1.761 billion in 2020.

Growth Rate

  • ReportLinker states that the expected global CAGR of the SD-WAN market between 2018 and 2023 is 32.7%.
  • At this growth rate, the global SD-WAN market size will reach $4.1 billion in 2023.

Additional Information

  • North America is expected to have the largest market share for the SD-WAN market because the region is "an eminent leader in adopting advanced technologies."
  • Specifically, the U.S. is a global leader in technology adoption and home to major communications providers that will be expanding the implementation of SD-WAN to all their "business verticals, such as finance, government, retail, manufacturing, education, and healthcare."

Research Strategy

The information was found through a formal research study conducted by MarketsandMarkets; however, the data was for 2018. Therefore, we calculated the 2019 and 2020 market sizes by multiplying the original amount ($1 billion) by the CAGR of 32.7% as follows.

2018 Market Size: $1 billion
2019 Market Size: $1.327 billion ($1,000,000,000 x 1.327)
2020 Market Size: $1.761 billion ($1,327,000,000 x 1.327)
Part
02
of nine
Part
02

Market Size and Growth - SD-WAN Market: North America

The market size of the software-defined wide area network (SD-WAN) in North America in 2020 is $850 million. The market is expected to grow at a CAGR of 49.47% through 2025.

Market Size

Growth Rate

  • According to Total Telecom, the North America SD-WAN market will reach $5 billion by 2025.
  • Using the 2018 and 2025 market size of the market, the CAGR of SD-WAN in the region is expected to be 49.47% over the forecast period of 2019-2025.
  • The US alone is expected to experience a growth rate of 55% over the forecast period of 2019-2025 because of the increased investment in the broadband infrastructure.

Research Strategy

Using the global SD-WAN data published by the by MarketsandMarkets, we were able to find the market size of North American region for 2018 (30/100 x $1.0 billion). We also estimated the 2019 and 2020 market size of the region using data published by Statista. To further calculate the CAGR of the market, which was not publicly available, we used 2018 and 2025 market size data to triangulate the projected growth through the CAGR calculator.
Part
03
of nine
Part
03

Market Size and Growth - SD-WAN Market: EU

The EU SD-WAN market size is $360.375 million in 2020. The market size is estimated to grow at 55% annually through to 2025. The research team was also able to find additional information on the factors driving the SD-WAN market growth and the major players in the European Union.

Market Size

  • The European Union market size of the software-defined wide area network (SD-WAN) was estimated at $150 million in 2018.
  • With a CAGR of 55% projected between 2019 and 2025, the market size was $232,500,000 in 2019 and $360,375,000 in 2020.
  • The market size of SD-WAN in the European Union is projected to be $3.22 billion by 2025.
  • Spain is projected to be the fastest growing region in the market between 2019 and 2025 due to positive government initiatives as well as cloud computing adoption. The country is projected to grow by 65%.

Factors Driving SD-WAN Market Growth in Europe

Major Players in the SD-WAN Market in Europe

Research Strategy

Following a comprehensive research, we were able to find the market size of the SD-WAN in the European Union as reported in 2018. According to a study published by Graphical Research, the market size was valued at $150 million at a CAGR of 55% between 2019 and 2025. In order to find the value of the market size in 2020 and projected market size in 2025, the research team multiplied the base market size in 2018 ($150 million) by the estimated CAGR of 55% for each year as shown below.

2018 EU SD-WAN market size: $150 million
2019 EU SD-WAN market size: $232.5 million ($150 million * 1.55)
2020 EU SD-WAN market size: $360.375 million ($232.5 million * 1.55)
2021 EU SD-WAN market size: $558.581 million ($360 million * 1.55)
2022 EU SD-WAN market size: $865.800 million ($558,501, 250 million * 1.55)
2023 EU SD-WAN market size: $1.34 billion ($865,800,937 * 1.55)
2024 EU SD-WAN market size: $2.08 billion ($1,341,991,453 * 1.55)
2025 EU SD-WAN market size: $3.22 billion ($2,08,086,752 * 1.55)


Part
04
of nine
Part
04

Market Size and Growth - SD-WAN Market: Asian

The Asian SD-WAN market size is estimated to be $307.2 million in 2020. The adoption of new technologies, rising economic growth rate, and growing investment in IT by Asian countries are some factors expected to drive growth in the market.

Market Size

Growth Rate

  • The Asia Pacific region is expected to register the fastest growth rate in the SD-WAN market, growing at a GAGR of 60%.
  • At this rate, the market size will grow to $1.258 billion in 2023.
  • Some factors that will drive growth in the Asia Pacific include the adoption of new technologies, rising economic growth rate, and growing investment in IT by countries such as China and India. Also, "favorable government initiatives to support digitization in India, China, and Southeast Asia" are also expected to spur growth in the Asian market.

Research Strategy

To provide the size and growth rate of the Asian SD-WAN market, we explored market researches conducted and published by reputable firms such as MarketsandMarkets, Graphical Research, and Prescient Strategic Intelligence Market Research, among others. We also consulted industry sources such as Global Market Insights, and media release reports such as Global Newswire but did both find any data specific to the Asian market even after hours of an extensive search. All the reports reviewed had information about the Asia Pacific (APAC) but not Asia as a stand-alone region. We, therefore, decided to calculate the market size for the Asia Pacific region and use the same as for proxy for the Asian SD-WAN market.

To calculate the market sizes for 2019 to 2023, we used the reverse CAGR formula; FA = SA * (CAGR / 100 + 1) n
Where FA = Final Amount/Future Amount
SA = Starting Amount
n = number of years the money is invested for

2018 market size = 120,000,000
CAGR = 60%
2019= (0.6 x 120,000,000) + 120,000,000= 192,000,000
2020=(0.6 x 192,000,000)+120,000,000=307,200,000
2021=(0.6 x 307,200,000) + 307,200,000=491,520,000
2022=(0.6 x 491,520,000) + 491,500,000=786,412,000
2023= (0.6 x 786,412,000) + 786, 412, 000=1, 258,259,200
Part
05
of nine
Part
05

Market Size and Growth - SD-WAN Market: United States

The market size of the United States software-defined wide area network (SD-WAN) industry in 2020 is about $520 million and is expected to reach $1.78 billion by 2023 at a CAGR of 50.3%.

The United States SD-WAN industry Market Size and Growth

Research Strategy

After a thorough and wide-reaching search through multiple, credible sources such as market reports and media, the current market size of the SD-WAN industry in the United States could not be located in the public domain, available in paid reports. Your research team, however, leveraged the projected market size and growth rate publicly available in a 2018 market report by Prescient & Strategic (P&S) Intelligence to triangulate a proxy for 2019 and 2020 market size.

The 2019 and 2020 market size was estimated using Omni calculator, $1.78 billion as the ending value (2023), 50.3% as the CAGR (from 2018 to 2023), and three years and four years as the number of periods for 2019, and 2020 respectively. The screenshot of this calculation is provided in the attached Google document.

Note, While there is variance in the size of the global SD-WAN industry reported by the various reports consulted due to variation in their research methodology, they all (MarketsandMarkets Research, PS Markets Research, TMR) stated that the US market is the global leader and account for the largest share. Also, we were unable to locate information (or data points to estimate a proxy) regarding the United States market from the reports (sources) used in completing the global market size.
Part
06
of nine
Part
06

Insights and Trends - SD-WAN Market: Global

Three global trends and insights in the SD-WAN market include the increase in bandwidth requirements, the implementation of more security features, and its adoption increase due to the growth of cloud and hybrid environments.

1. Increase in Bandwidth Requirements

  • Every day more organizations use 4G/LTE mobile networks to connect their employees, applications, and customers through the cloud to make the connection more practical and overcome geographic limitations from fixed lines. However, they've found that these networks, although they help to back up their WAN connections and SD-WAN, still lack in speed, security, and reliability, so they are turning for 5G next-generation mobile technology.
  • However, whether they move from 4G/LTE connection to 5G, or from fixed line to 4G/LTE, companies are looking to improve their network technology.
  • 20% of enterprises worldwide increase their network bandwidth every year.
  • Additionally, 89% of the companies consider the costs of increasing their bandwidth as one of their challenges in 2020, making it a driver to adopt SD-WAN to reduce operational costs.
  • According to Andrew Froelhich, president of West Gate Networks, "By combining separate paths using broadband/Wi-Fi and carrier wireless technologies such as LTE and 4G/5G, SD-WAN can be brought directly to the desktop for remote or at-home users [...] So it’s only a matter of time before SD-WAN can be deployed anywhere."

2. SD-WAN Adoption Increase due to Growth in Cloud and Hybrid Environments

  • Between 30% and 50% of the enterprises and data centers are moving their local WANs and network traffic to the cloud.
  • According to Forbes, 41% of the workload made by enterprises will be stored in the cloud by 2020, reducing on-premise traffic by 10% from its use in 37% to 27% of the companies.
  • Hybrid environments will also increase by 2%, from 20% to 22%, as some companies will continue to buy on-premise servers to prepare their information during cloud lock-ins.
  • This increasing demand and adoption of cloud and hybrid environments will empower server manufacturers to create new technologies, and attract to the market new key players like IoT devices, edge computers, and SD-WAN.
  • As more companies adopt hybrid and cloud networks, they will turn to SD-WAN to address challenges like security, compatibility between vendors and sites, guarantee bandwidth, geographical remoteness, awareness of critical traffic, and WAN orchestration.
  • Andrew Froelhich, president of West Gate Networks, also said that "First-generation SD-WAN platforms are being integrated into hybrid cloud computing strategies as well [...] As cloud ambitions grow, most IT departments find benefits from a performance, reliability and security perspective when they deploy their services throughout multiple cloud service provider networks [...] Now that multicloud strategies are a viable option, look for SD-WAN to begin creeping into the overall architecture by providing the same performance and latency benefits as they currently offer between corporate and remote offices."

3. More Security Features in SD-WAN

  • Network Security is the largest network challenge according to 71% of the largest companies, so this reason 62% of SD-WAN users consider this the main reason to implement it.
  • As SD-WAN allows companies to manage the security of their networks without the use of VPNs or firewalls, create IPSec tunnels, and separate traffic, companies are increasing their adoption of SD-WAN.
  • Corey Cohen, vice president of marketing for TBI, said that it is expected that in 2020, more vendors of SD-WAN will implement additional security features and more advanced security options to attract more customers.
  • Matthew Toth, president of C3 Technology Advisors, said that "By 2020, if SD-WAN providers don’t have a true firewalling capability, you might as well close up shop and sell your intellectual property to a firewalling company," he said. "Clients want [fewer] devices deployed on site, and the combining of SD-WAN and security onto a single device will greatly simplify implementing and managing both platforms."

Research Strategy

Each trend included was selected based on its repetition across different international sources, this guarantee that the trend or insight was one of the most important in the market and also that it was relevant on a worldwide level.
Part
07
of nine
Part
07

Growth Drivers - SD-WAN Market: Global

Three growth drivers in the global SD-WAN market are cloud adoption, network security, and remote work.

Growth Driver 1: Cloud Adoption

  • A survey found that cloud enablement tied for one of "the [two] top drivers of SD-WAN adoption, according to those who use the technology", as 35% of respondents stated so.
  • Companies are becoming ever-more reliant on services that are cloud based.
  • Companies are increasingly seeking "technologies that can help them to shift their sensitive data to cloud systems."
  • An article from VMware succinctly explained the connection between cloud adoption and growth of the SD-WAN market in stating the following: "Traditional multiprotocol label switching (MPLS) networks are insufficient to meet the connection capabilities that these types of bandwidth-intensive applications demand. As a result, many enterprises have turned to SD-WAN to allocate bandwidth effectively among multiple network links. Additionally, the zero-touch provisioning capabilities of SD-WAN drastically decrease the time it takes to bring cloud-based applications online for both company headquarters and branch offices."
  • Thus, there are an "increasing number of cloud-based solutions", which is fueling the market.
  • A January 2020 article stated that "[c]loud adoption is booming and SD WAN provides companies the capability to scale their networks in a more cost-efficient manner across a wider geographic breadth."
  • Cloud adoption was expressly described as a growth driver in the SD-WAN market by multiple, reputable sources, including T4 Labs, SD-WAN Resource, IDG Communications, and VMware.
  • International Data Corporation's (IDC) Vice President of Network Infrastructure, Rohit Mehra, discussed cloud adoption as a growth driver in the SD-WAN market (in a February 2020 article) in stating the following: "The growth of SD-WAN is a broad-based trend that is driven largely by the enterprise desire to optimize cloud connectivity for remote sites."

Growth Driver 2: Network Security

  • A survey found that better network security tied for one of "the [two] top drivers of SD-WAN adoption, according to those who use the technology", as 35% of respondents stated so.
  • Numerous sources concur that SD-WAN helps companies protect their enterprise data, including through employees accessing such.
  • An article from VMware discussed the connection between SD-WAN and better network security, in stating the following: "The attack surface of the network increases as it scales to meet the needs of more connected devices . . . [and f]or this reason, SD-WAN platforms often include built-in security capabilities and can integrate third-party tools. For example, SD-WAN solutions may come with granular visibility, which provides a holistic understanding of highly virtualized, complex environments. SD-WAN allows network administrators to put security policies in place, which determine what sort of threats should receive high versus low priority."
  • Aryaka's CTO/Founder, Ashwath Nagaraj, discussed network security as a growth driver in the SD-WAN market in stating the following: "Another benefit of an SD-WAN solution is that it can improve network security, by encrypting WAN traffic as it moves from one location to another and by segmenting the network so that if a breach occurs, the damage is minimi[z]ed. SD-WANs can also help IT administrators detect attacks more quickly by providing constant visibility into the amount and types of traffic on a network."

Growth Driver 3: Remote Work

  • The number of remote workers has been rapidly increasing worldwide, which has fueled growth in the SD-WAN market.
  • Companies are increasingly turning to SD-WAN as a way to technologically support their growing, remote workforces.
  • A November 2019 article from Fast Casual stated that the growing remote workforce "will continue to be an important growth driver for SD-WAN appliances."
  • Remote work was expressly described as a growth driver in the SD-WAN market by multiple, reputable sources, including SD-WAN Resource, Research and Markets, and Fast Casual.
  • IHS Markit's Senior Research Analyst, Josh Bancroft, discussed remote work as a growth driver in the SD-WAN market in stating the following: "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."
Part
08
of nine
Part
08

Challenges and/or Unmet Needs - SD-WAN Market: Global

Expertise for deployment and quality of service are two challenges in the global SD-WAN market.

The Challenge of Deployment

  • The expertise needed for deployment is one challenge the SD-WAN industry faces. As offerings of some SD-WAN vendors rely on "a single-pane-of-glass DIY installation and support approach," customers are tasked with provisioning the features correctly and paying meticulous "attention to security policies and traffic routing."
  • According to Frank Lyonnet, deputy chief technology officer for cloud infrastructure BU, Riverbed, while many customers want to increase their knowledge of SD-WAN, they have had no choice but to understand SD-WAN on their own because the channel is not ready and the service providers are sticking with their DIY stance. This dilemma implies that the full benefits of SD-WAN may not get to the customers.
  • Since the channels are not ready to provide proper managed services, some customers have been opting to insource their network management, while more recently, some customers are now looking at serious channels to outsource their network management.

The Challenge of Quality of Service (QoS)

  • Although there have been thorough discussions in the industry comparing MPLS (multiprotocol label switching) to SD-WAN, it is still important to consider QoS. Compared to a typical MPLS service provider offering, which has end-to-end QoS across six settings that assign applications into service-level categories, over the internet, SD-WAN does not offer end-to-end prioritization but offers "traffic treatment, path selection, and enhanced packet loss detection." SD-WAN traffic is, therefore, subject to network delay, and does not offer performance guarantees in the open internet.
  • As such, whether the debate is about adopting MPLS or internet-based SD-WAN, an analysis of latency and jitter service-level agreements between endpoints will determine whether the connection (not the technology) fits the purpose.
  • According to Song Toh, vice-president of product management, Tata Communications (a company that serves global enterprises), there are important areas where business internet is not quite fit for running business-critical applications on SD-WAN compared to the performance obtainable from MPLS.
  • In the same regard, Tim van Herck, director of technical product management, VMware, suggests bringing in "multiple service providers and access technologies" to de-risk the operation at that point.
Part
09
of nine
Part
09

Key Players - SD-WAN Market: Global

Nine key players in the global SD-WAN market include Aryaka Networks, VeloCloud, Silver Peak Systems, Viptela/Cisco, Infovista, Citrix, Talari Networks/Oracle, FatPipe Networks, and Fortinet. These companies are the largest software vendors based on their market share of the global SD-WAN market in 2018.

Aryaka Networks

  • The website of Aryaka Networks can be accessed via this link.
  • Aryaka is the largest software vendor based on its market share of the global SD-WAN market in 2018.
  • The company operates offices in the United States, the United Kingdom, India, China, and Singapore.

VeloCloud

Silver Peak Systems

  • The website of Silver Peak Systems can be accessed via this link.
  • Silver Peak Systems is the third-largest software vendor based on its market share of the global SD-WAN market in 2018.
  • The company operates offices in the United States, Singapore, Japan, Australia, the United Kingdom, and France.

Viptela/Cisco

Infovista

  • The website of Infovista can be accessed via this link.
  • Infovista is the fifth-largest software vendor based on its market share of the global SD-WAN market in 2018.
  • The company operates offices in the United States, Canada, Italy, Spain, Sweden, Switzerland, the United Kingdom, France, Germany, Australia, China, India, Japan, Malaysia, Singapore, the United Arab Emirates, and South Africa.

Citrix

  • The website of Citrix can be accessed via this link.
  • Citrix is the sixth-largest software vendor based on its market share of the global SD-WAN market in 2018.
  • The company operates offices in the United States, Switzerland, Singapore, Japan, and India.

Talari Networks/Oracle

FatPipe Networks

  • The website of FatPipe Networks can be accessed via this link.
  • FatPipe Networks is the eighth-largest software vendor based on its market share of the global SD-WAN market in 2018.
  • The company operates offices in the United States, India, the Philippines, Australia, Nigeria, and South Africa.

Fortinet

Other Key Players

"Other SD-WAN software providers included in the report are: 128 Technology, Arista, Array Networks, Adaptiv Networks, Aerohive Networks, Aruba, a Hewlett Packard Enterprise company, Barracuda Networks, BigLeaf Networks, Brain4Net, Brodynt, Cato Networks, Citrix NetScaler SD-WAN, Cisco Meraki, CloudGenix, Cybera, Inc., Ecessa, Edgewater Networks, a Ribbon Communication Company, Elfiq Networks/Martello, Evolving Networks, flexiWAN, Glue Networks, Gluware Inc., Huawei, Hughes Europe, Juniper Networks, LANCOM Systems GmbH, Lavelle Networks, Multapplied Networks, Mushroom Networks, Mode, Speedify, ZTE NTT Communications ( ex Virtela Technology ), Nuage Networks, a Nokia venture, Open Systems, Plover Bay Technologies, Reliance Communications, Riverbed Technology, Inc., Secucloud GmbH, Silver Peak Systems, SimpleWAN, Teldat, Zyxel, TELoIP Inc, Turnium Technology, Versa Networks, Vrayo Systems, Wanify, Zenlayer, ZeroOutages, a XRoads Networks Company, ZTE and others."
Sources
Sources

From Part 05
Quotes
  • "North America is projected to hold the largest market size during the forecast period. North America is an eminent leader in adopting advanced technologies."
  • "The US is home to big Communication Service Providers (CSPs), and as a global leader in technology adoption, it is expanding the implementation of Software Defined WAN to all its business verticals, such as finale, government, retail, manufacturing, education, and healthcare."
  • "The market is also linked to the increasing deployment of Software as a Service (SaaS) and Infrastructure as a Service (IaaS) services by businesses in the US, where Software Defined WAN provides them intelligent ways to automate the traffic routing to different branch sites."