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AT&T, which is building a portfolio of managed network services delivered through customer premises equipment, or CPE, has added software-defined WAN to the mix.
AT&T said this week it would offer VeloCloud Networks Inc.'s cloud-based SD-WAN service. AT&T announced the deal a couple of days after it introduced FlexWare, the new name for AT&T's CPE and the services that run inside. AT&T will deliver VeloCloud services through FlexWare, formerly called Network Functions on Demand, starting next year.
VeloCloud provides a cloud-based WAN that combines T1 lines, MPLS links and other enterprise network connections with broadband, DSL and 4G consumer links. AT&T plans to host VeloCloud in its cloud platform, which is built on OpenStack.
By offering VeloCloud, AT&T joins rivals CenturyLink, Masergy Communications Inc. and Verizon in reselling an SD-WAN service from other vendors. AT&T and the other service providers are competing in a market that is growing 90% a year and is expected to reach $6 billion by 2020, according to IDC.
At AT&T, SD-WAN is just one of a handful of managed network services companies can choose to have delivered as virtualized software that runs on an AT&T-branded x86 server built by Juniper Networks Inc. Other subscription-based services available through the CPE include Brocade, Cisco or Juniper routers; Fortinet or Palo Alto Networks firewalls; and Riverbed Technology software for WAN optimization.
AT&T plans to add services from other vendors, including VeloCloud competitors, as it expands FlexWare's global availability. Today, FlexWare is available in 150 countries.
AT&T managed services strategy
AT&T's strategy is to eventually sell connected services, so SD-WAN, for example, can take advantage of the vendor's virtualized routing, load balancing and firewalls. "It's more about differentiating with value-added services on top of the SD-WAN connection," said Akshay Sharma, an analyst at Gartner.
AT&T manages and troubleshoots its services remotely to meet service-level agreements signed with customers. Its offering is likely to appeal to small and medium-sized businesses and large companies opening branch offices, Sharma said.
AT&T and other network service providers are selling an alternative to buying from a vendor that offers similar services in systems dependent on proprietary hardware. Industrywide, revenue from the latter is falling, because companies are turning to more flexible software for network services. Revenue from software-defined WANs, switches, controllers and other networking technology rose 82% year over year in 2015 to $1.4 billion, according to research firm IHS Inc., based in London.
Pure-play SD-WAN service vendors have had little choice but to partner with companies like AT&T to remain competitive. For example, Viptela has partnered with Verizon; Versa Networks has a reseller deal with CenturyLink; and Silver Peak has a similar agreement with Masergy.
Long term, SD-WAN service vendors will have to provide integration with many suppliers' network services. "The point solutions, while they're OK for a given deployment, longer term, they'll have to become more ecosystem-friendly," Sharma said.
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