A new report from IHS Markit found that in the fourth quarter of 2018 the SD-WAN market grew 26 percent from the previous quarter to reach $359 million. This number includes appliance, control, and management software.

According to this most recent Data Center Network Equipment Market Tracker from IHS, VMware led the SD-WAN market in the quarter, with a revenue share of 20 percent. VMware’s worldwide SD-WAN revenue reached $73.2 million in Q4. It is followed closely by Cisco, at 14 percent with $48.8 million in revenue, and Aryaka at 12 percent with $41.2 million in revenue.

Also trailing behind the top three are Silver Peak, Nuage Networks, Fortinet, and Huawei (in that order). Each of these vendors continues to see growth in the market.

InfoVista was the only vendor that lost share in the quarter, with its SD-WAN revenue dropping 5 percent from the previous quarter to $9.7 million, this is a 21 percent decrease from the same quarter in 2017. According to Josh Bancroft, senior research analyst at IHS, InfoVista indicated that the decline was a result of prospects waiting for an update to its Ipanema SD-WAN, due for release this month.

[caption id="attachment_77767" align="alignleft" width="974"] Source: IHS Markit[/caption]

IHS Markit said during this quarter that SD-WAN vendors were beginning to see the rewards of their partnerships with managed service providers, systems integrators, and telcos. In addition, the research firm saw a rise in the size of deals and the continued rise of enterprise sites deploying SD-WAN.

“Partnerships are helping SD-WAN vendors gain sales momentum, as they provide access to new enterprise customers in a variety of countries,” said Bancroft in an email to SDxCentral. “Having partners who can offer these services ultimately ensures enterprise-WAN maintenance needs are still met by the partner, while using the SD-WAN vendors’ technology.”

And, SD-WAN deployment is being driven mainly by improved application performance and simplified WAN management, he said. This information was based off of a survey IHS published last month. IHS surveyed 292 network professionals in North America for the report.

This survey also found that while network professionals currently prefer deploying SD-WAN with self-managed on-site hardware and software, or as a standalone managed service bundled with connectivity. However, Bancroft noted that this is already changing.

By 2019, this will shift to bundling SD-WAN as a managed service with additional NFV services and connectivity options. Bancroft attributed this to organizations wanting to further reduce the WAN operational burden for their internal IT teams.

One of the ways that this is coming to fruition is through universal CPE equipment. This allows enterprises to consolidate networking functions such as SD-WAN and routing, firewall, and acceleration.

As 5G and IoT come to fruition, there is some opportunity for SD-WAN vendors to jump in on these markets as well.

Bancroft noted that telcos in particular want to be able to benefit from the different capabilities of 5G, SD-WAN, IoT, and other edge applications.

“The telcos view SD-WAN as a key way to ensure various traffic types are automatically steered to the appropriate links. It can also guarantee IoT traffic is prioritized over 5G, and other applications are automatically routed over broadband,” he said.

One way for SD-WAN vendors to jump on the IoT bandwagon is to add IoT-specific features to their SD-WAN appliances. This could be application identification and prioritization and protocol translation functionalities.

Some vendors have already began to see the benefit of adding 5G links.

At last month’s MWC Barcelona both Cisco and VMware announced partnerships with Verizon and AT&T, respectively, to combine 5G and SD-WAN. While the option to enable 5G on their SD-WAN appliances is dependent on the launch of both carriers’ 5G networks, it is still an option worth exploring according to Bancroft.

“It was great to see a large number of telcos announce at MWC19 in Barcelona their intent to partner with SD-WAN vendors, enabling them to create new service offerings for when 5G is rolled out,” he said.