Five SD-WAN vendors are running neck-and-neck for market leadership, according to a new Dell’Oro Group report.

Dell’Oro’s inaugural SD-WAN market share report indicated a 64% growth for the technology in 2019 – just surpassing $1 billion.

Dell’Oro’s Shin Umeda

“While 2019 was breakout year for SD-WAN adoption, it is still early days for market penetration,” said Shin Umeda, vice president at Dell’Oro Group.

Dell’Oro named Cisco, Silver Peak, Versa Networks, VMWare and Fortinet as market share leaders; they reportedly accounted for about 60% of revenue in 2019. And the five vendors are locked together, as none surpassed 20% of market share.

“We expect market-share shifts and vendor consolidation over the coming years as there are far too many vendors in this space,” Umeda said.

Versa’s Kelly Ajuha

Versa Networks CEO Kelly Ahuja predicted 2020 SD-WAN growth to surpass that of 2019.

“As the Dell’Oro results reveal, long gone are the days when bolted-on elementary SD-WAN functionality will suffice. Enterprises and service providers alike are adopting mature SD-WAN architectures which deliver the additional required networking capabilities, such as security, routing, analytics and scalability,” said Ahuja, whose company exceeded 1,000 enterprise customers last year.

Umeda listed three key drivers for SD-WAN. The first is the movement of enterprise WAN traffic from data centers to cloud services.

The shift often leads to suboptimal cloud application performance as traffic is funneled through the corporate data center, resulting in bandwidth bottlenecks over expensive and lower capacity WAN connections,” Umeda said. “SD-WAN enables application-level path selection and prioritization over higher capacity, lower-cost Internet connections.”

The second driver is cost. While some experts have argued that partners should not pitch the technology on the basis of price, it is undeniable that certain customers have sought out SD-WAN providers in hopes of reducing their bills.

“This may occur through simplified and automated provisioning, configuring, managing and updating WAN technologies including CPE devices, network performance and monitoring, application performance and network functions software. Cost may also be reduced through the use of lower-cost internet connections, either as replacement of or in conjunction with private WAN connections based on MPLS or Ethernet services,” Umeda said.

Umeda said the third and final driver is more recent than the others: security. And this is the area where a great deal of differentiation is occurring. SD-WAN vendors vary considerably in how they to tackle security, with some opting for built-in features and others promoting best-of-breed integrations.

“The two approaches are not mutually exclusive and may address different use cases such as DIY enterprise and service provider managed services,” Umeda said.

Fortinet has stood out in particular with its security approach. The company, which rose steadily in market share reports throughout 2019, added SD-WAN features to the software stack for its previously existing next-generation firewall.

“As I understand, Fortinet does not explicitly charge for SD-WAN functionality, so it is not clear how their customers value the feature set,” Umeda said. “Also, Fortinet touts their hardware with custom ASICs as the enabler and differentiator for their SD-WAN offering, which is the opposite approach [of[ most other vendors.”

In other SD-WAN news, Gartner awarded its 2020 Peer Insights Customers’ Choice for WAN Edge Infrastructure award to Aryaka, Cisco, CloudGenix, Fortinet and Huawei. Gartner selected the winners through end-user voting.