Will Software-Defined WAN Vendors Consolidate Or Be Consumed?

It is hard to have a software defined networking (SDN) conversation without discussing Software-Defined WAN (SD-WAN). SD-WAN is the leading SDN use case for businesses breaking free from the chains of traditional Wide Area Networks (WANs) from the likes of Cisco Systems or Riverbed Technology. A WAN is a connection between two networks and an SD-WAN is an overlay on top to better manage that connection. The promise of SDN is to remove networking barriers which still create a highly manual, complex process. The complexity of networking and network security leads to deployment delays, holding your company back while trying to move quickly to take advantage of new opportunities. With virtualization, servers can be deployed in minutes, but the network and security then takes weeks, if not months. This limits business opportunity and puts a clamp down on profit upside from new ideas.

SDN gets a lot of press time because it’s sexy (or as sexy as IT can be). But all of that attention does not translate into a lot of deployments yet, because SDN deals with the network which is mesh of thousands of endpoints; touching that mesh impacts everything. WAN connections, on the other hand, are point-to-point connections between two networks (usually the HQ and remote offices or cloud providers), making them easier to change because they are a single connection. As companies look for more agility through modernizing their network, this is an easy place to start. Thus all of the SDN focus on SD-WAN as it is easier and can bring more immediate benefits to the business.

One of the first things that every SD-WAN brings is connection diversity: the ability to add another connection (like broadband internet or cellular) to supplement the traditional multiprotocol label switching (MPLS) circuits. Diversity reduces costs and brings failover capabilities. Typically, a WAN is connecting two networks, and you will have a router on each end—usually manually configured (which is why it always seems to take so long for your IT department to bring a remote location online). By definition the WAN is running over some outside connection, meaning security is paramount as this is an entrance point to your network not only by the remote office but also by potential hackers.

SD-WANs can be deployed in a variety of ways.


(Image Source: John Fruehe)

  • Traditionally routed: An overlay to your existing WAN connection (i.e. the plumbing remains and the software sits on top to manage that circuit)
  • Appliance-based: A dedicated device or appliance on each end from your SD-WAN provider connects both ends
  • Virtualized: A virtualized function runs in a VM on a host server at each end
  • Network as a Service (NaaS): Routing is connected through a cloud-based service

SD-WAN is like a hamburger: everyone has a different approach. You think you know what a hamburger is, but when you drill down into burgers you start to see fast food, free range beef, burgers with an egg on top, veggie burgers and even gourmet burgers. All are hamburgers, but with different approaches. SD-WAN is no different with companies like Arkaya, Citrix Systems, Cloudgenix, Cradlepoint, Ecessa, Glue Networks, Nuage, Silver Peak, Talari, VeloCloud, vIPtela and many others joining the traditional vendors like Cisco Systems and Riverbed Technology in the WAN space. Each company has a different approach to tackling WAN problems. I have recently worked with two: Glue Networks, who addresses the operational challenges by brining DevOps methodologies to the WAN space, and Silver Peak, who addresses performance through application acceleration to the WAN. But with everyone else jumping into the SD-WAN pool, do we have more vendors than the market needs? Time will tell.

Every week it seems like I receive a call to be briefed on another SD-WAN company. Each one swears they have the “secret formula” for SD-WAN success. But now that everyone is rushing into the space, the competition will heat up and you’ll see things start to consolidate, as every market does when there are too many choices.

There are only four possible outcomes for all of these vendors in an oversupplied market. First, they could go big, get customers and go public, becoming a “traditional vendor”. Second, those with momentum can merge with other like-minded rivals to create a more robust competitive suite to take on the big guys. Third, they could have unique IP that a traditional vendor could acquire in their pursuit of building an SD-WAN suite. Or fourth, they could run out of runway before they get to a critical mass of either revenue or customers.

With more than a dozen companies fighting for market share and more joining every day, it will be interesting to see who ends up going down which path. While everyone seems to have their niche today, the long-term market will want a more comprehensive suite, not a series of niche products, so option two or three is the most likely long-term play for most of the companies.

Some companies will not make it unless they can effectively differentiate from a crowded field and drive their value proposition. The stakes are high, and not everyone gets to move forward. This is normal as market forces adjust and the market matures over time. It should be an interesting ride, especially as the big guys like Cisco Systems and Riverbed Technology try to figure out how to deal with all of these new players disrupting the market: do they conquer or consume?