In 2016, SDN deployments are expected to soar, as service providers and enterprises tap related hardware and software to boost network agility.
The number of cloud and communication service providers deploying SDN for the first time, or expanding its use, in the data center will increase from 20% this year to 60% in 2016, according to a recent survey by research firm IHS, based in Englewood, Colo. At the same time, the adoption rate among enterprises is expected to grow from 6% to 23%.
As a result, those companies will be spending a lot more money on SDN development. Revenue from Ethernet switches and controllers used for SDN in the data center and enterprise LANs is expected to increase from $1.4 billion in 2015 to $12.2 billion by 2019, according to IHS. Of that latter number, switches will account for $8.2 billion and SDN controllers $4 billion.
Competition in SDN software
Increased spending on hardware in 2016 is expected to benefit traditional networking vendors, such as Cisco, Juniper Networks and Hewlett Packard Enterprise. But the software market is expected to provide many more opportunities for other vendors.
The number of service providers looking to open source technology for orchestration software, SDN applications and controllers is expected to be as high as 45%, according to IHS. The number of enterprises turning to virtualization vendors or third parties for SDN-related software is expected to reach 39%.
"When it comes to software outside of the switch, there's lots of opportunity for alternate providers," said Cliff Grossner, a research director at IHS.
Open source could take off if proponents can stitch the major standards initiatives into a single platform, said Andrew Lerner, an analyst at Gartner. Removing the heavy lifting required to use open source today is required to compete against the leading proprietary SDN frameworks -- Cisco's Application Centric Infrastructure (ACI) and VMware's NSX.
Companies in a good position to bring the necessary ease of use to open source include Red Hat and Mirantis, which are building SDN platforms around OpenStack, and Brocade, which is developing SDN products around OpenDaylight, Lerner said.
An SDN platform built from the ground up on open technology could deliver some of the promises of SDN, such as application portability across platforms, Lerner said. Such innovation is needed for SDN to become a new way of networking, and not just an incremental improvement.
In the meantime, competition between Cisco and VMware is expected to intensify. Toward the end of 2015, Cisco was ahead of VMware, with 1,100 ACI customers versus 900 NSX users. But that lead could easily change.
"We see rampant interest in both," Lerner said.
SD-WAN delivers on ROI
In 2016, enterprises are likely to get the highest return from SDN development by deploying software-defined WANs. SD-WANs significantly cut the costs of transporting data by shifting traffic away from expensive MPLS connections to cheaper broadband.
In 2011, Sno-Isle Libraries, based in Marysville, Wash., deployed Talari Networks' SD-WAN appliances to virtualize the agency's WAN, which serves 21 community libraries spread out across Snohomish and Island counties in Washington.
Sno-Isle Libraries used the Talari technology to replace its MPLS network with less expensive, consumer-grade broadband, which reduced costs by $400,000 a year, said John Mulhall, information technology manager for Sno-Isle Libraries.
"Gutting an MPLS network is kind of a gutsy move," Mulhall said. "But sometimes, you've got to make those moves, just from a financial standpoint."
As of the end of 2015, 10,000 to 15,000 branch offices were on an SD-WAN, according to Lerner. "I would imagine you're going to see triple that number [in 2016]."
Such a hot market will attract new startups, boosting the total to roughly three dozen in 2016, Lerner said. By the end of the year, consolidation is likely to start with bigger players buying the most promising young vendors.
Consolidation has already started in the overall SDN market. In 2015, 4G LTE provider Cradlepoint acquired SDN vendor Pertino, and Hewlett Packard bought ConteXtream before splitting into two companies -- Hewlett Packard Enterprise and HP Inc. That trend is likely to continue, as startups that fail to gain traction fall to the wayside and larger vendors buy those with innovative technology, analysts said.
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