Cisco Leads $1.4B SD-WAN Infrastructure Market: IDC

Cisco’s two SD-WAN solutions, one of which is powered by Viptela, is helping the tech giant take a big chunk of market share in the increasingly crowded SD-WAN market.

Cisco Systems came out ahead of the pack in the $1.4 billion SD-WAN infrastructure market last year, according to market research firm IDC.

The latest IDC market share report ranks Cisco in first place for 2018 market share worldwide for SD-WAN Infrastructure, which was up 64.0 percent last year. Cisco, according to the report, captured 46.4 percent of the total SD-WAN market last year or $637.7 million, an increase of 55.4 percent year-over-year.

Trailing Cisco was the "rest of market" segment, which included a mix of emerging SD-WAN players such as CloudGenix, Fortinet, and Versa Networks. The “rest of market” segment captured 20.8 percent of the SD-WAN market in 2018 or $285.9 million, up 86.1 percent year-over-year.

[Related: 6 Hot SD-WAN Technologies To Follow In 2019]

Rohit Mehra, vice president of network infrastructure for IDC and one of the report's authors, told CRN that Cisco's significant share in the SD-WAN space is thanks to its extensive routing portfolio it uses in SD-WAN deployments. Cisco is also bringing two SD-WAN solutions to the table: its flagship SD-WAN platform powered by technology it acquired from Viptela in August 2017 and a Meraki SD-WAN offering.

"Additionally, [Cisco] is able to leverage their large installed base of enterprise routers sold through VARs and telcos, all of which can now be upgraded with Viptela SD-WAN functionality," Mehra said.

Katalyst, a Charlotte, N.C.-based solution provider that is reselling Cisco SD-WAN, is also offering a white-labeled, managed SD-WAN services based on Cisco's offering. Katalyst made the choice to "go big" with Cisco in the SD-WAN space because of the tech giant's footprint in the market, and because security is about 40 percent of Katalyst's business today, said Jesse White, field CTO for the solution provider.

A Cisco Gold and Master security partner, Katalyst has been able to bundle SD-WAN and security into a managed service for its customers, White said.

"Cisco made some early integrations with cybersecurity with are included in SD-WAN," he said. "We've found harmony with our customers is in taking away devices -- so simplifying the IT environment and providing customers with a box that can do Layer 7 firewalling as well as all the SD-WAN benefits."

Cisco in June integrated its Viptela-powered SD-WAN offering with Cisco Umbrella, the company's cloud-based secure internet gateway. The combination is letting partners and end customers secure their SD-WAN from the cloud.

IDC this year predicted that the SD-WAN infrastructure market will grow to $4.5 billion by 2022. The combination of SD-WAN and security managed services, specifically, is a "massive" opportunity for the channel, according to Cisco's Senior Vice President and General Manager of enterprise networking Scott Harrell.

"It's not only a market where partners are distributing the classical WAN market, but they also have an opportunity to play for the security spend as well," Harrell said.

The Viptela acquisition, Katalyst's White said, has also been key in helping to boost Cisco's presence in the SD-WAN market.

"Viptela was by far one of Cisco's more strategic acquisitions," he said. "It has served them very well."

Cisco's Viptella-powered solution has helped differentiate its SD-WAN solution in the crowded market, said Wanda Castelvecchi, national practice manager for ePlus, a Cisco Gold Certified Partner that is offering both Cisco's Viptela SD-WAN solution as well as the Cisco Meraki offering, in addition to SD-WAN products from other providers.

"Viptela had been making a little headway on its own -- we had customers that were already customers of Viptela before the acquisition -- which I definitely think helped [Cisco] stand out and even add some simplicity to their previous iteration of SD-WAN," Castelvecchi said.

Market research firm Gartner in its 2018 Magic Quadrant for WAN Edge Infrastructure also named Cisco in its "Leader" quadrant, alongside fellow leaders VMware and Silver Peak.

IDC's 2018 SD-WAN infrastructure market share report listed VMware as capturing 8.8 percent of the market or $121.2 million, a 39.9 percent increase year-over-year that was in part driven by its SD-WAN service powered by VeloCloud, which the Palo Alto, Calif.-based provider acquired in December 2017.

Silver Peak followed at 7.4 percent or $101.1 million, a 93 percent year-over-year increase. Aside from the “rest of the market” segment, VMware and Silver Peak were the two closest vendors to Cisco.