SD-WAN and Real Time Communications: Voice of Reason?

November 12, 2018

By Shrey Fadia, Analyst & Consultant

There is no question the SD-WAN market is red hot, and earlier this month, Dell’ (News - Alert)Oro Group reaffirmed this with its new forecasts showing sales of this technology (which can eventually replace MPLS) will rise above $2 billion by 2022.

This represents a 35 percent CAGR, and the impact appears to improve sales up and down the stack, including Session Border Controllers (SBCs) and Virtual Network Functions (VNFs), which Dell’Oro says will grow twice as fast as hardware elements, estimating software revenue will grow at a 41 percent CAGR during the next five years, with hardware revenue growing at 21 percent.

Enterprises and large organizations (including governments) will continue to account for the majority of SD-WAN adoption, across a number of business models.

Some companies and agencies are choosing to deploy and manage their own SD-WAN, while others are counting on resellers and systems integrators (SIs) in their transformations, which, without question, will reduce their overall spending, including for real-time communications services, of which VoIP will continue to be a large part.

That said, SD-WAN via Communications Service Providers (CSPs) is expected to grow faster than enterprise or channel and SIs implementations.

“A major dynamic is the SD-WAN consolidation happening now,” according to Kevin Isacks, VP SaaS (News - Alert) Solutions Engineering, Ribbon Communications. “Cisco’s $610 million purchase of Viptela, VMware’s purchase of VeloCloud and other smaller deals are causing decision makers to slow down, so they can fully assess what will happen going forward from both an economics and quality of service perspective.”

Ribbon has been active in the consolidation, with its acquisition of Edgewater Networks announced earlier this year.

With this transaction, Ribbon has strengthened its position in the enterprise SBC (e-SBC) market while also delivering application-specific solutions to companies including Microsoft (News - Alert) with its increasingly popular Office 365 Teams solution that provides media bypass to ensure media remains within the enterprise and over private IP networks, potentially leveraging SD-WAN.

While Dell’Oro makes it clear that as the landscape becomes clearer and enterprise CIOs and IT decision makers can contract services under reasonable terms, often through CSPs, another industry analyst firm has also weighed in with massive growth forecasts for SD-WAN. In fact, IHS (News - Alert) Markit is considerably more bullish than Dell’Oro, predicting a year ago (November 2017) that the SD-WAN market would top $3.3 billion in revenue by 2021.

So – Dell’Oro says $2B by 2022, against IHS $3B+ a year earlier? What’s a billion here or there? The fact is, the argument for SD-WAN is simply too logical for entities to resist.

“Disruptive technology works when the software works, and the economics also work,” Isacks said. “Where we’re excited about the potential for SD-WAN value creation is in the dramatic improvement and security of voice systems, and the advancement of the quality, flexibility and reliability of VoIP.”

Isacks also explained that SD-WAN goes beyond being an MPLS replacement, while also being a very cool way to migrate in a practical way from MPLS to SD-WAN over time.

“SD-WAN comes in many varieties these days, so no one definition of the technology does it justice,” Isacks said. “At a high level, SD-WAN is a network that separates underlying data services from the rest of the protocol stack. It’s often touted as the perfect replacement for enterprise MPLS because of its ease of management and cost savings, but that alone severely limits the reach of the up and coming technology. Internet Access networks continue to improve and, with them, so does the potential of SD-WAN.”

SD-WAN technology creates new revenue stream opportunities for service providers by using software-defined capabilities to improve service and increase profits by providing higher quality VoIP services.

Ribbon serves CSPs and enterprises, with its enterprise business primarily delivered in partnership with service providers, to which Ribbon sells its technology (hardware and software, but primarily the latter, according to Isacks).

“If you’re a VoIP provider you are highly tuned in to quality issues that accompany any infrastructure design, whether you have complete control over the transport network or not,” Isacks said. “With the right architecture, however, no matter what the connection is, SD-WAN makes life better through simplified interfaces, bi-directional prioritization, more resilience, and traffic shaping.”

Ribbon, following the acquisition of Edgewater Networks (News - Alert), is deploying smart edge technologies to deliver visibility and control over communications traveling over the public Internet.

“Our CSP customers appreciate the economics and ease of SD-WAN, as it’s simply easier to manage, and extends their footprint” Isacks said. “Instead of requiring implementation of a cloud-based controller for prioritization, the capabilities are already built into our solution. They no longer have to worry about the collapse of MPLS revenues, knowing they can be the trusted partner to transform VoIP for their customers with an evolution of services, rather than waking up one morning to find their customers are going elsewhere to get out of onerous contracts which are no longer feasible today.”

The benefits of SD-WAN, real uses cases, and the market’s future will all be part of the discussion at the 2nd SD-WAN Expo in Fort Lauderdale, Florida, January 30-Fenruary 1, 2019.  Take a moment today to register today and ensure you have the latest information to make the best decisions for your business.

Edited by Erik Linask

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