VMware and Cisco acquire SD-WAN market share leadership, further consolidation expected: IHS Markit

Nov. 21, 2017

According to IHS Markit, vendors are making it a priority to include software-defined wide area network (SD-WAN) technology in their offerings. Some are doing so with the help of acquisitions, a consolidation trend the market research firm expects will continue. The first major merger in the SD-WAN market occurred when Cisco acquired Viptela. The Cisco acquisition was followed by VMware's acquisition of VeloCloud, the SD-WAN revenue leader in the first half of 2017, for an undisclosed amount.

The first major merger in the SD-WAN market occurred when Cisco acquired Viptela (see "Cisco to buy SD-WAN tech vendor Viptela"). The Cisco acquisition was followed by VMware's acquisition of VeloCloud, the SD-WAN revenue leader in the first half of 2017, for an undisclosed amount.

"VMware and Cisco have acquired the two SD-WAN market share leaders, making the SD-WAN market a two-horse race for the number-one spot," said Clif Grossner, IHS Markit senior research director and advisor for cloud and data center. "And we could see even more consolidation as vendors set out to add SD‑WAN to their capability sets, especially since the technology is key to supporting connectivity in the multi-clouds that enterprises are building."

According to IHS Markit's Data Center and Enterprise Data Center and Enterprise SDN Hardware and Software Biannual Market Tracker totaled only $137 million in the first half of 2017 (H1 2017), making it a small market. Global SD-WAN hardware and software revenue is forecast to reach $3.3 billion by 2021, however.

IHS Markit attributes this growth to service providers partnering with SD-WAN vendors to deploy overlay solutions, and virtual network function (VNF)–based offerings being combined with carrier operations support systems (OSS) and business support systems (BSS).

"Currently, the majority of SD-WAN revenue is from appliances, with early deployments focused on rolling out devices at branch offices," Grossner adds. "Moving forward, we expect a larger portion of SD-WAN revenue to come from control and management software as users increasingly adopt application visibility and analytics services."

The IHS Markit data center and enterprise SDN report alsodetails the following:

· Data center and enterprise SDN worldwide revenue for in-use SDN-capable Ethernet switches, SDN controllers, and SD-WAN grew 5.4% in H1 2017 from H2 2016, to $1.93 billion.

· In H1 2017, Cisco was the market share leader in the SDN market based on in-use SDN revenue, followed by Arista, White Box, VMware, and Hewlett Packard Enterprise.

· In the individual SDN categories in H1 2017, White Box had the leadin bare metal switch revenue, VMware led the SDN controller market segment, Dell had 45% of branded bare metal switch revenue, and Hewlett Packard Enterprise had the largest share of total SDN-capable branded Ethernet switch ports, both in-use and not-in-use.

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