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Gartner: SD-WAN providers to disrupt edge router market

SD-WAN providers are building products that are replacing routers in the branch office. Gartner says half of WAN edge infrastructure refreshes will be based on SD-WAN by 2020.

Software-defined WAN is poised to make the edge router obsolete in the branch office, a research firm said.

By 2020, more than half of WAN edge infrastructure refreshes will be based on SD-WAN versus traditional routers, Gartner reported. That compares to less than 2% of refreshes handled by SD-WAN providers today. During the same timeframe, router sales will fall 16%, from $3 billion a year to $2.5 billion.

"That's a pretty radical shift," Gartner analyst Joe Skorupa told attendees of a webinar held this month.

Companies are deploying SD-WAN for an average subscription fee of $100 to $150 a month, rather than spending thousands of dollars on a WAN router, according to Gartner. The analyst firm has found more than 2,000 paying SD-WAN customers globally, including some using the technology to power large networks.

"We're certainly well beyond that early adopter phase," Skorupa said.

One SD-WAN user that would consider tossing its edge routers to cut costs is Sno-Isle Libraries, based in Marysville, Wash. In 2011, the network of 21 community libraries deployed SD-WAN appliances to replace its MPLS network with an assortment of standard internet connections. Sno-Isle's SD-WAN provider is Talari Networks.

"We've been using SD-WAN long enough now that when it comes time to do a product refresh, we might very well consider using an SD-WAN product to replace an edge router," said John Mulhall, IT manager for Sno-Isle.

One SD-WAN vendor hoping to replace the edge router is Riverbed Technology. In September, the company refreshed its SteelConnect product with router capabilities.

SD-WAN providers building technology for the cloud

Across enterprises, SD-WAN is gaining ground because traditional WAN architectures often break when trying to meet the quality-of-service demands for public cloud computing, Gartner said. SD-WAN, on the other hand, improves the performance of all applications, on premises and in the cloud.

We're certainly well beyond that early adopter phase.
Joe Skorupaanalyst, Gartner

SD-WAN's return on investment is expected to drive sales from $130 million this year to $1.25 billion in four years, Gartner said. More than 75% of SD-WAN revenue this year will go to startups. Two of them will account for more than half of the sales. Gartner did not name the vendors.

While the market is young, incumbent routing vendors, such as Cisco and Arista Networks, will have to move faster in developing products that can compete with the new breed of SD-WAN providers.

Indeed, Cisco reported this week that revenue in the quarter ended Oct. 29 fell 2.6% year over year to $12.35 billion. The company attributed the decline, in part, to a drop in switching sales to web companies and network operators.

Cisco blamed global economic uncertainties for the decline in customer spending. However, Glenn O'Donnell, an analyst at Forrester Research, said Cisco was also "facing some stiff competition" from smaller and more nimble networking vendors.

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