2018 SD-WAN Market Outlook

The SD-WAN industry began to consolidate in 2018 after several years of rapid growth. Cisco purchased Viptela and VMWare purchased VeloCloud to eliminate competitive threats and add to their virtualized network solutions. Independent ISPs and MSPs also began adopting SD-WAN as a platform to expand services and enable delivery to clients.

The opportunity for service providers to capitalize on launching SD-WAN will continue throughout 2018. The growth of public cloud services will drive enterprise and SMB customers towards service providers that can enable better cloud performance and security through SD-WAN.

Here are just a few of the ways that we see SD-WAN bringing value to ISPs, MSPs and companies large and small in 2018:

Expanded service offerings reduce margin pressure and improve per-client profitability.

SD-WAN is a powerful tool to enable service providers to deliver value to their clients. In addition to access, service providers deliver SD-WAN to satisfy the market’s need for cost-effective, reliable and high-quality voice, video, security and data replication services. Bundling SD-WAN with applications improvise application performance while increasing service provider margins and growing customer wallet-share. SD-WAN becomes the on-ramp for additional service provider hosted services.

Geography and proximity become less important for service providers as SD-WAN virtualizes physical networks.

Instead of relying on physical access networks that require high capital investments or wholesale relationships, SD-WAN allows service providers to offer services anywhere. SD-WAN technology virtualizes the network and abstracts it away from physical facilities and assets.

Using standard off-the-shelf broadband, SD-WAN enables service providers to create networks using the Internet as the backbone and homing into service provider data centres as well as public cloud facilities like AWS, Azure, and Softlayer. SD-WAN means that customers can be supported anywhere and provided with a combination of Layer 2, on-net services and SD-WAN provided Over the Top (OTT) using multiple aggregated broadband off-the-shelf services for off-net locations. SD-WAN allows the service provider to deliver a single, integrated managed network offer.


Increased brand equity through reduced reliance on selling branded systems.

While packaged SD-WAN offerings from large brands offers the ability to “borrow” branding, such offerings also increase customer portability and limit how you stand out in the marketplace. Once a client knows they can purchase an identical service from multiple providers, competitive advantage is reduced to price and professional services. Both are challenging areas in which to differentiate. White-label SD-WAN offerings help service providers increase brand equity, and customer stickiness. By providing a packaged, integrated Application + SD-WAN solution, you control the end-to-end customer experience and have opportunities to increase upsell and cross-sell.

Now, looking forward to 2018, technological developments are set to deliver some new considerations for service providers and their clients.

Growth in Cloud applications and infrastructure will continue, and this will drive SD-WAN adoption. According to IDC, worldwide spending on cloud and associated will reach $160B USD in 2018, increasing over 23% from 2017. By 2021, IDC forecasts this amount will reach $277B. Professional services, telecom and banking use of public cloud will grow fastest during this period. Our belief is that this growth will translate to an increased need for the type of flexible, multi-site deployments that are best suited to SD-WAN. Traditional WAN networking solutions will not be able to reach the performance or ROI delivered by SD-WAN and service providers that have integrated SD-WAN into their product portfolios and are able to market them effectively as components of overall cloud solutions will benefit the most.

ISPs, MSPs and SD-WAN providers alike will feel the effects of the “blockchain rush” as their client companies move to launch blockchain-enabled technology and token economies. Currently estimated at $411M USD, the blockchain market will grow to $7.6B by 2022.  Key drivers to this growth are faster transactions, simplified business processes, transparency, and immutability. Businesses who previously had little need for mission-critical technology infrastructure will turn to service providers to help them make the jump. Reliability and scalability will become more important as blockchain becomes embedded in the fabric of retail, service and other industries. And, like the growing use and adoption of public Cloud, the virtualization of transactions will also contribute to the increasing virtualization of networks through SD-WAN.

Security continues to be a significant source of concern for service providers and their clients, and this challenge is going to increase over time. Sadly, in many cases, it is easy for a bad actor to bring a client business to a complete standstill while demanding a ransom payment. Also, greater connectivity of unprepared legacy businesses and rapid adoption of cloud applications can offer soft targets with high exposure. Service providers will need to be prepared. Integrating SD-WAN and robust security offerings will remain critical.

In closing, we expect 2018 to be a positive year for ISP, MSPs and the SD-WAN industry as a whole. There are challenges to overcome, but those challenges will also deliver great opportunity.