This three-part blog series looks at why MSPs need to aggressively engage in the exploding SD-WAN market, ongoing vendor consolidation, the competition from carriers, and how MSPs can partner to reduce their risks while speeding time to market.
Read Part 1>>
Fractured Market Has Network Incumbents and Carriers Under Siege
Managed Service Providers looking to choose an SD-WAN vendor partner are entering into a volatile competitive landscape.
By the end of 2018, more than 40% of WAN edge refresh initiatives will be based on SD-WAN appliances or virtualized CPE — up from 2% at the beginning of last year. (Gartner Competitive Landscape: WAN Edge 2017).
That’s bad news for router incumbent Cisco, whose base is now being targeted by over 40 niche, start-up and mainstream players. In response, Cisco acquired Viptela last year, quickly followed by VMware, who snapped up SD-WAN leader VeloCloud.
As SD-WAN reaches the mainstream, the market is pointing to convergence around a handful of players. According to research by IHS-Markit, leaders VeloCloud, Aryaka and Silver Peaks combined for almost 50% of the SD-WAN market in 2017, with VeloCloud leading the way with a 19% market share.
The still-crowded field offers a range of on-prem and cloud-enabled SD-WAN solutions but is ripe for further consolidation. As the field narrows, both vendors and technology will consolidate into a handful of viable options.
A Slow-Play by the Carriers
It’s no secret that carriers are reluctant to replace expensive MPLS circuits with cheaper, easily deployed SD-WAN broadband solutions. Still, almost all telcos have added SD-WAN to their toolkit, and are offering it to customers in select cases — for example, where price is a key consideration, or large numbers of branches have to be turned up quickly. Overall, the carriers appear to be defensively positioning SD-WAN to protect their base.
Still, the news is mixed for the telcos. A recent Gartner SD-WAN study states that while almost 60% of North American customers would prefer a managed SD-WAN solution over buying and operating their own, 67% have a strong preference for non-carrier managed SD-WAN services.
That leaves the door wide open for managed service providers. Those MSPs with customers looking for availability, performance and cost-savings in their branch networks have a unique opportunity to compete where the typical incumbents (Cisco and the carriers) may be at a disadvantage.
The challenge for MSPs, however, is not a simple one — how to navigate the shifting SD-WAN provider landscape while developing the sales and technical capabilities to be successful?