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Companies using enterprise routers and traffic acceleration technology in the wide area network today are likely to replace them over the next five years with a software-defined WAN product.
The need for the legacy technologies will fade, as their functionalities get folded into SD-WAN products, according to a recent IDC report. "If I am doing full-blown SD-WAN, and I have the capabilities that give me routing, as well as WAN optimization, my need for buying those individual point products will obviously go down," said Rohit Mehra, analyst at IDC.
Product consolidation is one of the several benefits of SD-WAN. Others focus on the ability to replace or enhance dedicated WAN circuits with less expensive internet-based broadband links.
IDC predicted companies taking advantage of the cost savings will drive SD-WAN market growth of more than 90% annually to $6 billion in 2020. IDC's projection includes sales of hardware, software and managed services.
The market disruption caused by SD-WAN adoption will be dramatic. Within three years, more than half of WAN edge infrastructure refreshes will be based on SD-WAN versus traditional routers, according to Gartner. That compares to less than 2% of upgrades handled by SD-WAN providers today. During the same time frame, router sales will fall 16%, from $3 billion a year to $2.5 billion.
Disruption time frame for SD-WAN products
Router and WAN optimization vendors will feel the effect of SD-WAN on traditional product categories this year, Mehra said. Sales of WAN optimization products will decline this year, while enterprise router sales will fall gradually over the next several years.
"We're going to see early signs of that coming cannibalization this year," Mehra said. "But if you take a three- to five-year view, then certainly a more significant cannibalization can be expected."
To counter weakening sales, major vendors are introducing SD-WAN products. Established vendors joining the SD-WAN evolution include Cisco, Riverbed Technology, Silver Peak, Juniper Networks, Citrix and Nokia's Nuage Networks.
Vendors that navigate the technology transformation successfully will grow revenue, Mehra said. While the delivery model will change, the need for WAN optimization and branch-to-branch and branch-to-data center routing will continue to rise. Both capabilities are critical to the growing number of enterprises moving applications to the cloud and building out the edge of the network to connect to more devices springing up from employees and the internet of things.
"WAN spend can only increase," Mehra said.
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