The latest IHS Markit report on the SD-WAN market found that VMware, Cisco, and Aryaka continued to dominate the space, though there was a shakeup outside the top three. Overall, the research firm observed a 23% sequential increase in appliances and control and management software sales.

The report tracked revenue in U.S. dollars for appliances and software, but did not take into account WAN connectivity revenues, service and support, product maintenance, managed services, or professional services. It found VMware, Cisco, and Aryaka retained the top three positions from July, while Fortinet displaced Silver Peak to take the No. 4 spot aided by a large security appliance refresh.

According to the report, sales were driven by enterprises entering a router replacement phase, with many taking the opportunity to upgrade to SD-WAN compatible hardware.

“In our discussions with vendors, it has become apparent that most recognize SD-WAN as a mainstream technology,” said Josh Bancroft, senior research analyst at IHS Markit, in a statement. “As a result, larger enterprises have begun to refresh their legacy, router-centric WANs with SD-WAN."

As vendors have capitalized on the rising demand for SD-WAN routing hardware, the company reports a change in the SD-WAN landscape.

The report also indicated that a rise in remote and mobile workers leveraging SD-WAN has become an important driver of appliance sales. This has been especially true in the medical industry where IHS estimates that as many as 200 SD-WAN appliances were installed in radiologists’ homes in North America during the second quarter.

“In the future, we anticipate further deployments of SD-WAN appliances in the homes of remote employees, with either compact or more traditional appliance form factors being used,” Bancroft said.

However, the report noted that most of these appliances continue to be large enterprise solutions despite clear advantages and cost savings associated with compact hardware. Bancroft explained in an email to SDxCentral that most SD-WAN vendors are focused on medium- to large-scale enterprises where compact appliances don't make as much sense.

"I think we will see deployments of this type build momentum, but the focus for vendors will continue to be targeting enterprises with a large number of sites," Bancroft wrote.

IHS is also reporting that the adoption of 4G LTE-based appliances will see increasing investment from vendors, especially as autonomous vehicle development gains speed.

“A number of vendors are also in discussions with car manufacturers, preparing for autonomous vehicle deployments,” said Bancroft in a statement.

Looking to the future, IHS is forecasting SD-WAN vendors will rake in $4.4 billion in revenues by 2023.