The SD-WAN segment is forecasted to total $1.3 billion by 2020, pegging triple-digit growth above 90 % per year through 2020, according to a report from research firm IHS Markit.
The global revenue of data center network equipment - including data center Ethernet switches, application delivery controllers (ADCs), software-defined enterprise wide area network (SD-WAN) and WAN optimization appliances (WOAs) - totaled $3.1 billion in the second quarter of 2016 , growing 11% from a year ago.
Over 12,000 25 gigabit Ethernet (GE) ports shipped in the second quarter, and triple-digit growth rates are expected out to 2020.
Although growth continued in the data center network equipment market in the second quarter, the research firm anticipated a slowdown to 2018 followed by an increase out to 2020, as a broader transition to SD-WAN begins to take hold and data center and Ethernet switch revenue surges due to the growing adoption of 100GE.
The research firm further said SD-WAN is gaining ground with service providers and is anticipated to make up 71% of WAN optimization revenue in 2020.
Borrowing the SDN concepts of abstraction for the data plane with centralized control, SD-WAN delivers improved application performance for a fraction of the cost of traditional Multiprotocol Label Switching (MPLS) links, causing a significant shift in enterprise WAN architecture. SD-WAN control can be delivered by a cloud service provider (CSP) from an off-premises cloud, transforming the WAN optimization market in light of SDN.
SD-WAN vendors, too, are gaining traction. North American service providers continue to enter the market, including CenturyLink, which is using Versa Networks’ solution, and Verizon, which is partnering with Viptela and Cisco.