Software-defined wide area networking has emerged as one of the fastest growing and hotly contested segments in all of IT. In fact, VMware CEO Pat Gelsinger at the recent VMworld 2018 conference noted that NSX SD-WAN by VeloCloud is the hottest product in the entire VMware portfolio. VMware is trying to leverage that demand in a way that positions its NSX network virtualization software as the central mechanism for administering policies across distributed SD-WANs.
Of course, VMware is only one of dozens of vendors competing within this space. Rivals such as Silver Peak, Riverbed, Versa Networks, and Aryaka are all gaining ground as a flood of demand for simpler, more cost-effective ways to manage wide area networks (WANs) lifts all proverbial boats. Silver Peak recently revealed it now has over 1,000 customers using its SD-WAN platform.
A new survey of 200 senior IT and networking managers conducted by Sapio Research on behalf of Teneo, a provider of IT services, makes it clear how fierce that competition is across the channel. The survey notes that in terms of preferred SD-WAN suppliers global networking vendors were the most likely choice of partner (39 percent). But 24 percent also cited want a telecommunications provider, and 24 percent regard a management consultancy as the preferred supplier. Another eight percent of respondents are looking for a specialist SD-WAN vendor, three percent are seeking a specialist integrator of SD-WAN and three percent say they will rely on multiple partners.
Slugging it out for dominance of the network edge
In many cases, managed service providers (MSPs) rooted in IT and telecommunications are once again slugging it out for dominance of the network edge. The survey notes half of companies questioned say that deploying and managing networking infrastructure is time-consuming. Respondents estimate that these tasks take up 36 percent of their overall IT budget. One third of the survey (33 percent) sat that they had used some form of an ‘as-a-Service’ model delivered via an external provider to handle those tasks.
Forecasts for SD-WAN growth range anywhere from $2.5 billion to $8.05 billion by 2021 depending on whether the analysis includes those services or not. Of course, all these networking advances may prove to only be a means to a much larger end for MSPs. As the network essentially becomes flatter it becomes more viable for MSPs to set up virtual customer premise equipment (vCPE). Rather than selling customers IT equipment, the cost of the IT infrastructure is absorbed by the MSP. The customer pays to access that equipment as part of larger managed service. This vCPE segment of the services market is forecasted to experience a 46 percent compound annual growth rate through 2022 to reach a valuation north of $3 billion. But the best thing about that model from an MSP perspective is the number of application and security services that can be delivered going forward is almost infinitely extensible.
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