Aryaka Chief Marketing Officer Gary Sevounts sees further consolidation in the SD-WAN space and a growing gap between the top SD-WAN vendors and the rest of the field.
Sevounts said in an interview with FierceTelecom the SD-WAN market is splitting into two sectors: SD-WAN appliance vendors and SD-WAN-as-a-service companies. With more than 50 vendors in the SD-WAN space, Sevounts also forecasts another round of consolidation on the heels of Cisco's acquisition of Viptela and VMware's deal to buy VeloCloud last year.
"I think there's definitely got to be consolidation, and I also think there's going to be very clear separation," he said. "We're seeing clear separation of the market into SD-WAN appliance providers and SD-WAN-as-a-service vendors and it's getting bigger and bigger. We see that separation more and more every month."
Sevounts pointed to VeloCloud, Viptela, Riverbed and Silver Peak as SD-WAN vendors that make software that runs on appliances. Those solutions, some of which have been deployed by service providers, have replaced Cisco routers in branches and enabled some cloud connectivity, he said.
"Then, on the other side you have companies, like Aryaka and Cato Networks, that offer SD-WAN as a service, which is a good fit for global companies," Sevounts said. "The first case (appliance SD-WAN vendors) is more fit for regional companies because they are utilizing MPLS or internet. SD-WAN as a service operates on private network companies like a hybrid network, but its purpose developed network. It's not internet and it's not MPLS.
"(Aryaka's network) is a purposed developed network that can significantly improve application performance, and it has SD-WAN, it has run optimization, it has visibility, it has security, it has all the key components built into that."
According to IHS Markit's first-quarter SD-WAN report, VMware/VeloCloud led Aryaka by 1% for market share and revenues. VeloCloud had $31.6 million in first-quarter revenue, while Aryaka finished with $29.1 million and Silver Peak posted $20.2 million. Overall, IHS Markit said the SD-WAN market would reach $861 million in revenue worldwide this year
"The SD-WAN market is red hot and we definitely expect some major consolidation," Sevounts said. "Some of them are going to be acquired by bigger companies and maybe some of the telcos will make the transition from managed SD-WAN to the SD-WAN-as-a-service model."
Aryaka has been public about its IPO ambitions, which could take place as soon as next year, but Sevounts didn't go into specifics of when an IPO might take place. To date, Aryaka seems to be the only SD-WAN vendor openly discussing an IPO.
"We're definitely looking into it," he said. "That's one of the potential directions for the company. If the IPO happens next year, that's fantastic. If it happens the year after that, it's great, but right now our focus is on delivering value and the best service to our customers."
According to Futuriom's "2018 Growth SD-WAN Outlook" report that came out last month, at least three SD-WAN and network-as-a-service vendors could exceed $100 million in annual revenue this year. The vendors with the best chance to reach that amount are VMware/VeloCloud, Aryaka and Silver Peak.
Customers want better application performance
With the recent addition of a point of presence (POP) in Toronto, Aryaka has 30 software-defined POPs with customer sites in 70 countries. Aryaka's customers include Emirates Airlines, HMSHost, Air China and Samsung.
Sevounts said the biggest request he hears from Aryaka customers, which are mostly medium-sized businesses and large enterprises, is for better application performance. Product applications weren't designed for MPLS models while the internet doesn't work for global applications, according to Sevounts.
"Application performance is absolutely one of the biggest things that companies are looking for SD-WAN to solve so that's really where we are seeing the trend going towards," he said.
In an addition to better application performance, SD-WAN-as-a-service customers also want better agility, simplicity and more cost reductions.
Sevounts said Aryaka was also working with cloud providers, such as Microsoft Azure and Amazon Web Services, because "they're realizing the internet itself is not the right solution for global enterprises."
"They're looking into building or partnering with SD-WAN providers to create that SD-WAN as a service," he said. "Again, the market is moving from SD-WAN appliances to SD-WAN as a service and cloud providers are starting to see that and there is a lot of interest on their side as well."