SD-WAN Wars: VEP-ons of Mass Attraction?

Enterprise-networking-powerhouse-wannabe Dell (Technologies) EMC, which held the bottom position in an almost-recent top-10 vendor list (although VMware was in 6th place, behind first-place , and the pretenders to its throne such as HPE/Aruba, Juniper, and Huawei), is looking to make a big splash in the puddle with its Virtual Edge Platform family. According to the company, which claims to already serve 98% of the Fortune 500, the new platform family and software bundles enhance SD-WAN to speed digital transformation, and is the first product to use ’s D-2100 , and the features validated and tested solutions with , and Versa software to simplify and accelerate deployments. The , which will start at $1,500, will begin shipping worldwide on April 24.

A subset of software-defined networking (SDN) — i.e. technology versus architecture — SD-WAN represents a small fraction of the overall networking market (~5%) but is growing at 59% annually and is expected to be worth $1.3 billion by 2020 (Gartner). 451 Research is a little more pessimistic, putting the market at $1.5 billion by 2021, while IDC is more optimistic — a compound annual growth rate (CAGR) of 69.6% and $8.05 billion by 2021.

The 4Q17 SD-WAN market was valued at $147 million, with CY17 up 3.9x over CY16. VeloCloud (acquired by VMware acquired by Dell) was the top vendor with 19% share, followed by (17%) and Silver Peak (12%). “Reviewing recent wins, we can see a market that is maturing with a transition from early market adopters to mainstream buyers. Other signs of maturation include expansions at existing clients and incremental product offerings such as security and WAN optimization on top of basic WAN transport virtualization,” said Cliff Grossner, Ph.D., Senior Research Director and Advisor for the Cloud and Data Center Research Practice at IHS Markit.

Great growth projections, but on a really small base, when you consider that the overall network market was worth $51 billion last year, and Cisco held 54.3% of it. , the parent of Dell EMC, lumps networking with its much-larger server business, and in its most recent quarter, 3QFY18, reported overall revenue of $19.6 billion, while the networking/server tandem came in at $3.9 billion, an increase of 32% year over year and 3% quarter over quarter. Still, the SD-WAN market — which Dell has the largest share — is hot, driven by the need to to increase security and reduce appliance sprawl, with 93% of recent survey respondents planning to implement the technology by the end of 2019.

It’s a little premature to call it a family yet, Jeff Baher, Senior Director of Product and Technical Marketing, Dell EMC, told IT Trends & Analysis, but “it will most likely have some offspring”. Right now, VEP is positioned between the entry-level PC Gateway family and the family at the high end.

With the new enterprise consisting of people accessing all sorts of devices, all sorts of applications and from all sorts of locations, the “wide area is really the centerpiece of the modern enterprise,” he said. People want choices and flexibility, which plays to Dell EMC’s open philosophy of networking, added Baher.

IDC stated in the product release that more enterprise customers are considering network disaggregation as a more flexible approach to building networks. “With its universal CPE (uCPE) solution for SDN-WAN environments, Dell EMC is extending its Open Networking portfolio to the enterprise edge to accommodate the growing number of cloud-based applications that require lower latency and scalability,” said Brad Casemore, IDC Research VP, Data Center Networks.

The VEP4600 is based on Intel’s Xeon D-2100 product family, whose performance, power and form factor have been tuned for higher performance-per-watt for SD-WAN and uCPE, delivering more than 1.5x faster CPU performance, up to 2x improvement in packet processing, 2x memory bandwidth and up to 4x memory capacity.“A programmable and power efficient system-on-a-chip processor is needed to deliver the performance that users and devices require for edge applications,” said Sandra Rivera, SVP and GM Network Platforms Group, Intel, in another canned quote.

SDN is big and complex, and is challenging to digest, but SD-WAN represents a much more consumable option, said Baher. “This one is critical because you have an almost instant ROI.”

He said Dell EMC’s open networking approach is resonating in the marketplace, in a recent item sponsored by the company. ‘This first phase, or as we say Open Networking 1.0, is four years in the making, and I would say it has been a resounding success as evidenced by some of the pioneering Tier 1 service provider deployments we’ve enabled. There is a clear-cut market fit here as we’ve witnessed both significant innovation and investment. And the industry is not standing still as it moves quickly to its 2.0 version. In this next version, the focus is shifting from decoupling the basic elements of hardware and software, to a focus on disaggregating the software stack itself.’

How successful Dell EMC will be in its networking aspirations remains to be seen, but SD-WAN represents an immediate opportunity. “This is right in our sweet spot, the market is ripe for disruption,” said Baher. There’s an “immediate need for a platform like this”.

DISCLAIMER: Many of the companies referenced in this article are represented in my investment portfolio.

Author: Steve Wexler

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