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Moving toward a healthier SD-WAN ecosystem

A recent report from IHS Markit observes that in the fourth quarter of 2018 the SD-WAN market grew 26 percent from the previous quarter to reach USD 359 million. This number includes appliance, control, and management software.

VMware led the SD-WAN market in the quarter, with a revenue share of 20 percent. VMware’s worldwide SD-WAN revenue reached USD 73.2 million in 4Q. It is followed closely by Cisco, at 14 percent with USD 48.8 million in revenue, and Aryaka at 12 percent with USD 41.2 million in revenue.

Also trailing behind the top three are Silver Peak, Nuage Networks, Fortinet, and Huawei (in that order). Each of these vendors continues to see growth in the market.

InfoVista was the only vendor that lost share in the quarter, with its SD-WAN revenue dropping 5 percent from the previous quarter to USD 9.7 million, which is a 21-percent decrease from the same quarter in 2017. According to Josh Bancroft, senior research analyst at IHS, InfoVista indicated that the decline was a result of prospects waiting for an update to its Ipanema SD-WAN, due for release soon.

During this quarter SD-WAN vendors were beginning to see the rewards of their partnerships with managed service providers, systems integrators, and telcos. In addition, the research firm saw a rise in the size of deals, and the continued rise of enterprise sites deploying SD-WAN. Partnerships are helping SD-WAN vendors gain sales momentum, as they provide access to new enterprise customers in a variety of countries. Having partners who can offer these services ultimately ensures enterprise-WAN maintenance needs are still met by the partner, while using the SD-WAN vendors’ technology.

SD-WAN deployment is being driven mainly by improved application performance and simplified WAN management, while network professionals currently prefer deploying SD-WAN with self-managed on-site hardware and software, or as a standalone managed service bundled with connectivity. However, this is already changing.

This is shifting to bundling SD-WAN as a managed service with additional NFV services and connectivity options. This may be attributed to organizations wanting to further reduce the WAN operational burden for their internal IT teams.

One of the ways that this is coming to fruition is through universal CPE equipment. This allows enterprises to consolidate networking functions such as SD-WAN and routing, firewall, and acceleration.

The CPE rift in SD-WAN. CSPs are looking to take control of edge boxes, replacing proprietary CPEs from NEPs with universal white boxes in the SD-WAN space. As part of the NFV and SD-WAN movement, edge functions would be virtualized and run as virtual network functions (VNFs) on these white boxes. CSPs want to swap in different VNFs as needed to provide flexibility to their customers and to prevent lock-in by the NEPs.

Early SD-WAN adopters are updating their first-generation deployments. First-generation SD-WAN solutions often used SD-WAN vendor hardware since that was most expedient, but CSPs want the next generation to be based on universal CPEs that relegate SD-WAN to being just one of many VNFs. Simultaneously, CSPs are driving open orchestration and API standards so that they can swap SD-WAN vendors whenever they need to.

Again, CSPs are trying to wrest control and power from these SD-WAN NEPs. As an end goal, it makes a lot of sense – drive open white-box universal CPEs everywhere and reduce costs and increase flexibility. However, some of these initiatives are running into issues.

A collaborative NFV approach required. Perhaps all parties involved in the NFV ecosystem – the NEPs, including SD-WAN vendors, the white box manufacturers, CSPs, and potentially system integrators – need to come together and understand the appropriate roles they can play in this game. NEPs should be accorded the value that they bring and not be framed as the bad guys out to make a quick buck at the expense of the poor and struggling CSPs.

If the other parts of the telco ecosystem, including the CSPs, resolve to incentivize the NEPs by working collaboratively with, instead of against them, perhaps we can all move faster to a flexible, software-centric agile world. In this model, each player in the chain should be able to capture the appropriate financial value for the role that they play.

SD-WAN for 5G, IoT. As 5G and IoT come to fruition, there is some opportunity for SD-WAN vendors to jump in on these markets as well. Telcos, in particular, want to be able to benefit from the different capabilities of 5G, SD-WAN, IoT, and other edge applications. The telcos view SD-WAN as a key way to ensure various traffic types are automatically steered to the appropriate links. It can also guarantee IoT traffic is prioritized over 5G, and other applications are automatically routed over broadband.

One way for SD-WAN vendors to jump on the IoT bandwagon is to add IoT-specific features to their SD-WAN appliances. This could be application identification and prioritization and protocol-translation functionalities.

Some vendors have already begun to see the benefit of adding 5G links.

At MWC Barcelona, held end-February 2019, both Cisco and VMware announced partnerships with Verizon and AT&T, respectively, to combine 5G and SD-WAN. While the option to enable 5G on their SD-WAN appliances is dependent on the launch of both carriers’ 5G networks, it is still an option worth exploring. Despite the vendors putting elements like 5G and mobile networks into their marketing-architecture diagram it does not mean it will magically happen. As in the past, we may see the vendors marching toward unified networking as a vision and then come to realize that domain-specific approaches might be more realistic. In all probability, we will end up with domain-specific networks with constrained span of control and a set of interoperating APIs that federate between them (at least for policy and control). That is not the ultimate, but getting to that somewhere is better than an eventual nowhere.

Roy Chua

“The issue we will all have – and are already having – with SD-WAN is the perceived lack of differentiation between one vendor and the next. I expect that in the next six months to a year, we will find the term SD-WAN not useful and new terms will emerge that will attempt to differentiate vendor products with hopefully more granularity. Perhaps SD-Branch or SD-LAN? I am not sure those terms quite fit the bill though.”

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