AT&T took the top spot in a ranking of managed SD-WAN service providers, according to a new report from Vertical Systems Group.
The Dallas-based carrier was followed, in order, by Hughes Network Systems, with Verizon making up the top three providers based on installed carrier managed SD-WAN customer sites at the end of 2018, according to Vertical Systems Group, which did not publicly disclose the service providers' market share percentages. Windstream garnered fourth place, while CenturyLink took the five-spot, the research firm determined. In sixth place came Aryaka, trailed by Fusion Connect. Comcast rounded out the list of eight, Vertical Systems Group said.
"Providers in the Carrier Managed segment of the SD-WAN market have emerged as the best choice for delivering large scale, complex and resilient SD-WAN services end-to-end," said Rick Malone, principal of Vertical Systems Group, in a statement. "We believe that network operators with deep experience in MPLS, Ethernet and IP are most favorably positioned to support enterprise customers as they transition their networks to SDN."
The "challengers," which placed below the leaders and were ranked alphabetically, include Bigleaf, GTT, Masergy, Meriplex, Sprint and TPx, the researcher wrote.
These providers and more are targeting a managed SD-WAN services market worth more than $282 million in revenue last year, according to a separate Vertical Systems Group study. With the increasing adoption of virtualization and SaaS by both providers and enterprises, managed services also are growing in popularity as a way to reduce corporate opex associated with hiring or training staff; adopt SD-WAN's plug-and-play benefits without the management complexities; eliminate vendor lock-in; get closer to edge computing, and off-load traffic from internal resources to the Internet or less expensive bandwidth.
"For WAN environments it gets very complicated based on the network environment you have and the use cases, the configurations you have," he said. "We decided to launch a product that was a fully managed SD-WAN service. We believed that the right client experience is a fully managed offering where we help them with design upfront, installation and 24x7 support and monitoring on the back-end to get a lot of clients or enterprises comfortable getting to the SD-WAN environment, because the SD-WAN market is still very much in its infancy."
In the second half of 2018, providers began generating revenue from US carrier-grade managed SD-WAN services, Malone said. This year, the research firm predicted a "major boost in revenue" as network operators ramped up initiatives to sell, support and deliver managed SD-WAN services, he added.
"Moreover, a key driver for managed services is the growing appreciation that migration to SD-WAN is considerably more complex than the promise of ‘easily deployed’ plug-and-play DIY solutions," Malone noted.
In fact, managed SD-WAN services will grow at a CAGR of 65% between 2019 and 2025, Global Markets Insights predicted in February 2019. That adds up to $17 billion by 2025 from $700 million this year, the research firm said.
The good news for service providers should continue, said Josh Bancroft, senior analyst, DC and enterprise SDN, Networked Services at IHS Markit. Last year, SD-WAN software vendors began working more closely with multiple telcos, managed service providers and systems integrators, he wrote in a blog.
"Telcos want to utilize the high speeds and network-slicing capability of 5G, along with the application-traffic steering capability of SD-WAN, to support the industrial internet of things and other new edge applications," Bancroft wrote. "The telcos view SD-WAN as a key way to ensure various traffic types are automatically steered to the appropriate links. It can also guarantee IoT traffic is prioritized over 5G, and other applications are automatically routed over broadband."
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