There are a ridiculous number of SD-WAN vendors running around out there–and the list is growing.
In normal conditions, having as many as 20 companies chasing the same dollars would be unsustainable, so I’ve been waiting for consolidation—that is, for the market to coalesce around a handful (three? four? five?) companies that will emerge as winners after Hunger Games-like forces of capitalism eliminate the other tributes.
But after meeting with at least a half dozen of these companies at Interop, I’m of the opinion that consolidation is a long way off.
Grow Baby Grow
Why? Market growth. IDC estimates the SD-WAN market will hit $6 billion by 2020, with a compound annual growth rate of 90% between 2015 and 2020! That kind of steep curve means more vendors can stick around longer than would otherwise be possible.
This torrid growth rate is especially beneficial to startups because it enables them to win customers. And while customers mean revenue, even more important is that customers demonstrate growth, because growth attracts additional investment.
To get VCs to fund you beyond an A round, startups don’t have to make a profit—they just need to show that they’re growing. And in a lively market like SD-WAN, there’s enough growth to go around, which means investors will continue to support a multitude of startups.
Meanwhile, established vendors can bankroll their own SD-WAN investments because they’ve already got a revenue pipeline from existing products, and they can sell to their existing user base, which will help to keep customer acquisition costs down.
A Platform Play
SD-WAN vendors are also positioned to be able to offer additional features and services beyond essential SD-WAN capabilities.
Because the hardware or virtual appliances become the demarcation point for branch connectivity, it’s easy to see them become a platform for spinning up security services such firewalls and malware inspection, or adding fee-based capabilities around network and application performance monitoring and management.
These adjacent functions will offer additional revenue sources for SD-WAN vendors, which may help sustain an unusually large number of players.
Too Many Choices?
Generally speaking, the majority of SD-WAN products out there all do essentially the same things: support a mix of connection types, identify applications and apply policies, select paths based on performance, and provide low-touch deployments.
Yes, there are differences in capabilities, implementation, and features, and vendors will amplify these differences in an effort to differentiate themselves. But this also puts a burden on potential customers who need to parse the significance of these differences to see if they matter.
On the positive side, it also means that with some searching, you’ll probably be able to find a product that’s the right fit for your needs. Just be prepared to go down a lot of rabbit holes.