According to a new report by market research firm Omdia (owned by Informa in the UK ), SD-WAN revenue remained on track with forecasts reaching $3.6 billion in 2021. Edge computing, an increased use of machine learning (ML) and artificial intelligence (AI), and growth in IoT are also increasing demand for SD-WAN services, Omdia said. The SD-WAN market exceeded $1 billion in total revenue for Q4 2021, up 24% year-over-year. Amongst SD-WAN vendors, VMware led in 2021 with 18% market share for Q4, followed closely by Versa Networks (17%) and Cisco (13%). Both VMware and Cisco got to the top through various SD-WAN acquisitions. More importantly, SD-WANs (with application aware routing and an overlay network) seem to have totally replaced classical SDN based WANs (with strict separation of Data and Control place, centralized Network layer routing, and NO overlay networks) as we don’t hear anything about that previously ultra-hyped “pie in the sky” technology.
Omidia says that vendors which managed their supply chain, shipping, logistics or relied heavily on uCPE hardware fared the best in 2021. Power management integrated circuits (PMIC) remain the biggest bottleneck for server vendors; interface integrated circuits (ICs), microcontrollers and networking application-specific ICs (ASICs) are among the components in short supply impacting SD-WAN vendors, said Omdia. There are also growing opportunities for vendors and service providers to work together on delivering SD-WAN as a managed service as customer demand trends away from DIY (do it yourself) SD-WAN.
“There is a new opportunity for vendors and CSPs as the market transitions from providing optimization of application packet streams on single links with WAN optimization appliances to agility and cost savings enabled by virtualizing the WAN across multiple link types with SD-WAN,” added Omdia.
The SD-WAN market has also benefitted from increased deployment of cloud and multi-cloud services as a result of enterprise efforts to support a more distributed workforce. Omdia cites adoption of 5G as another driver for SD-WAN demand to “help deploy and manage network capability, connectivity and security cost-effectively.”
“Service providers are beginning to look to SD-WAN to provide traffic steering over 5G LTE links for use cases such as the Industrial Internet of Things (IIoT),” said Omdia. Security is also front-of-mind to protect remote workers but is frequently viewed more as “an additional layer than a priority when selecting an SD-WAN provider,” Omdia added.
SD-WAN deployments in the healthcare industry have also experienced significant growth due to increased reliance on mobile health devices and telehealth services.
Over the next two years, Omdia predicts that SD-WAN vendors will further integrate services to provide vendor interoperability for enterprise customers, and that AI automation technology will be added to SD-WAN software for automated real-time analysis and network optimization for application traffic.
By 2026, the SD-WAN market will reach $6.7 billion in revenue, according to Omdia’s forecast. That’s up from $3.6 billion revenue in 2021 and results in a CAGR of almost 20%.