The latest research from IHS Markit finds that VMware (after its VeloCloud acquisition) leads the SD-WAN market with 19 percent share of first-quarter 2018 revenue, according to its Data Center Network Equipment market tracker early edition.

In May, Futuriom discovered in Securities and Exchange Commission documents that VMware paid $449 million for VeloCloud. That sale was completed in the fourth quarter of 2017.

Of the price VMware paid for VeloCloud, Scott Raynovich, principal analyst with Futuriom Research, said, “It’s a healthy valuation. It’s not low by any means. Some people think these valuations are high given the revenue in the SD-WAN space so far, but it’s clear that networking giants such as Cisco and VMware have to aggressively enter this space to build strategic platforms for the future.”

Cliff Grossner, senior research director and advisor for cloud and data center at IHS Markit, said that after the $449 million figure was discovered, there was a lot of discussion about VeloCloud’s $44 million in contracts, another figure that was documented in the SEC filings.

“There was a lot of misinformation around that $44 million; some people thought it represented all of VeloCloud’s revenues,” said Grossner. But based on his discussions with VMware, the purchase price for VeloCloud also included future considerations, which have not been itemized.

“That $44 million is about contracts that VMware assumed, and it doesn’t even reflect the total value of the contracts,” said Grossner. “You can’t use it as a barometer of the actual VeloCloud revenues. The ultimate price for VeloCloud – we don’t really know.”

VMware’s purchase of VeloCloud compares to the $610 million that Cisco paid for Viptela, which it acquired in August 2017. Some considered the $610 million to be a good deal for Cisco considering Viptela was benefitting from the startup hype cycle at the time of its acquisition.

SD-WAN revenue reached $162 million in the first quarter of 2018, up 12 percent from the previous quarter, according to IHS Markit’s research. Compared to the first quarter of 2017, SD-WAN appliance, control, and management software revenue grew 2.3x year over year.

For Q1 2018, Aryaka was in second place with 18 percent revenue share, and Silver Peak rounded out the top three with 12 percent.

Asked why Huawei’s and InfoVista’s numbers took a nose-dive, Grossner said it is simply a reflection of quarterly variations that occur based on contracts. He didn’t think Huawei’s SD-WAN revenue drop of 45 percent year over year was connected to the company’s political problems in the United States. “Most of Huawei’s business is outside of the U.S.,” he said. “I don’t think the current discussions are material.”

IHS Markit predicts that the maturing SD-WAN market will reach revenues of $861 million worldwide in 2018, as early adopters of SD-WAN are expanding existing deployments, having proved the SD-WAN business case.

The research also found that many SD-WAN vendors have begun to incorporate analytics, utilizing rich telemetry data, into SD-WAN management platforms, enabling enterprises to monitor application traffic flow between multi-cloud environments.