Gartner predicts: SD-WANs to replace routers, but which SD-WAN is the question

Gartner WAN expert says enterprises had better check vendors' balance sheets twice before selecting an SD-WAN player

That SD-WANs will replace routing was not the most important message from last week’s Gartner webinar with Gartner vice president and distinguished analyst Joe Skorupa.

No, the biggest message came in some startling statistics. Half the market revenue is held by just two startups, which begs the question: With 30-plus vendors in the SD-WAN space, are you sure the SD-WAN vendor you’re considering has the cash for the long haul?

No more routing

Back in September, we wrote about the argument for replacing routing with SD-WANs. It’s a message we've been thinking about for some time, listening to the frustrations of many of our enterprise customers. It’s also a trend that Skorupa's market data supports—and for good reason.

For years, software has been replacing what was formerly the province of dedicated hardware. Watches, calculators, even phone infrastructure and seismometers are all being subsumed into software-directed multipurpose platforms. SD-WANs are going to do the same to conventional routing. 

Switching to SD-WAN brings enormous savings. A single router, good for just one campus, can cost thousands of dollars. SD-WAN technology uses simpler hardware yet provides flexibility and reliability at an unbeatable price (see “An SD-WAN and MPLS Pricing Scenario”). It can even provide connectivity through a regular internet connection, greatly simplifying connectivity from far-flung branches. These benefits have led retail franchises, financial service companies and healthcare providers to be the leading adopters of SD-WAN technology. 

+ Also on Network World: IDC: SD-WAN market to hit $6B by 2020 +

Skorupa pointed to one unnamed retailer that chose SD-WAN to reduce WAN costs and complexity. The change, though, yielded some unexpected benefits: Installation was fast, there was no capital expenditure, and operational expenditures were cut by half.

"Total equipment costs are now less than half of what we were paying for maintenance,” Skorupa quoted the company as saying.

And the retailer isn’t alone. Currently, there are more than 2,000 commercial SD-WAN paying customers. More than 50,000 branches are deployed based on a single SD-WAN product. Gartner expects that by 2020, SD-WAN sales will be worth about $1.25 billion, representing a 15 percent compound annual rise.

At the same time, router sales are expected to drop by 23 percent, and branch office router sales by more than 60 percent by 2020, as 50 percent of all enterprise routers are replaced by SD-WAN.

Too few SD-WAN choices?

As with any young market, vendor sourcing can be an issue and that’s definitely true for SD-WANs. While there are more than 30 SD-WAN startups of one kind or another, not all of them are showing substantial sales. Skorupa did not identify specific vendors and market share, but he did say that of the estimated $130 million in sales during 2016, 50 percent of revenue is coming from just two startups.

This suggests that some of the other 28 SD-WAN companies lack SD-WAN substantial sales. Enterprise buyers need to be careful about suppliers that don't have the pockets for the long term. The last thing any IT manager wants is to see the SD-WAN supplier crash and burn in the next year.

Nearly as bad is to unwittingly become the testing ground upon which a startup learns enterprise IT processes and procedures. Buyers always ask for balance sheets before making a purchase, but with substantial market share concentrated in the hands of so few vendors, concrete evidence of revenue generating customers (not just named references) is even more important. 

With existing vendors, you'll want to be sure claimed SD-WAN sales are, in fact, using their SD-WAN technology. Some vendors will dress up existing customers as adopters of the newest and greatest technology. Identifying true SD-WAN deployments is important in validating the company's SD-WAN expertise and the future of the product line. 

Usually, change occurs gradually. Standards are slow to change, and few companies are willing to invest in a complete overhaul of their most vital systems. SD-WANs eschew that complexity, providing companies with a more flexible, more dynamic WAN architecture—today. But picking a winning technology architecture will do you little without a winning technology vendor.

Catch the replay of the Gartner webinar here.


Copyright © 2016 IDG Communications, Inc.

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