Fueled in part by deals in the financial sector, SD-WAN revenues grew 8% sequentially in the first quarter of this year, according to IHS Markit.
With the financial vertical, SD-WAN deals, which included appliance and control and management software, increased in size, with one customer reaching 800 sites in North America and 3,000 sites in the Europe, Middle East and Africa (EMEA) region.
“In our discussions with vendors, it’s becoming apparent that financial enterprises are rearchitecting their legacy WANs with SD-WAN to utilize traffic-routing segmentation features,” said Josh Bancroft, senior research analyst at IHS Markit, in a statement “This ensures that traffic containing sensitive customer data is separated from other network traffic, increasing data security and aiding in demonstrating payment card industry (PCI) compliance.”
IHS Markit's research said that the rise of remote and mobile workers would continue to be an important growth driver for the compact SD-WAN appliance form factor. IHS defined a compact SD-WAN appliance as a form factor that is designed for use in a home office environment with a weight of about 500 grams without a fan. The same appliances have also been placed into a backpack and by using battery power the appliances can provide connectivity to software-as-a-service (SaaS) applications by bonding differing LTE links.
The IHS Markit Edge Connectivity Strategies North American Enterprise survey in February 2019, found that in 2018, 43% of employees were remote and mobile workers, and they expected the percentage to rise to 51% by the end of this year.
“Enterprises want to ensure that employees who are remote or mobile still have high levels of connectivity for SaaS-based applications,” Bancroft said. “Application traffic is required to traverse over multiple links to ensure fail-over for voice and video sessions where constant connectivity is essential, such as for home office-based customer service agents or medical first responders. If SD-WAN vendors have not added compact appliances to their offerings already, they should continue to invest in compact SD-WAN appliance development to ensure they seize this market opportunity.”
VMware still tops in SD-WAN market
VMware continued its dominance as the top SD-WAN vendor with a 20% market share, according to IHS Market. Cisco/Viptela was second at 13%, while Aryaka was third at 12%, according to IHS Markit's Data Center Network Equipment Market Tracker. Silver Peak came in fourth at 8.7%.
After coming in seventh overall for fourth quarter revenue, Huawei leapfrogged Nuage Networks and Fortinet to place fifth in first quarter revenue at 6%. Also of note, after buying Talari Networks last year for an undisclosed sum, Oracle made IHS Markit's list for the first time with 2.2% of the market revenue, which placed it 12th overall.
In a recent column for FierceTelecom, Scott Raynovich founder and chief analyst of Futuriom, wrote that Aryaka Networks, Cato Networks, CloudGenix, FatPipe, and Silver Peak are the most likely acquisition candidates this year.
Companies that could be shopping for an SD-WAN vendor include traditional networking vendors, such as Ericsson or Juniper, or enterprise cloud service providers such as Google or Microsoft, according to Raynovich.