SD-WAN Market After M&A: Is Aryaka Number One?

This year Cisco bought Viptela and VMware announced its intention to purchase VeloCloud, taking out some of the hottest startups in the software-defined networking WAN (SD-WAN) market. This has led the remaining startups to position themselves as the next leaders.

For example, Aryaka Networks, one of the few SD-WAN startups that is focused on operating exclusively as a service model, said last week in a press release that it is now the the "largest independent SD-WAN Provider" based on market share data released by research firm IHS Markit.

"Aryaka is proud to be recognized as a market leader because it is a testament to the fact that we’ve tripled our business in the last three years," said Shawn Farshchi, President and CEO of Aryaka, in a corporate release.

Aryaka officials are adamant that the company has its sights set on an IPO and is not interested in being acquired.

A lot of other startups in the market have recently been raising their hands as well. Silver Peak last week announced it had surpassed 600 SD-WAN deployments worldwide. And Talari has a new CEO who is trumpeting a channel expansion strategy.

Aryaka's press release cites new research from IHS and has listed the SD-WAN leaders by revenue (in order) as VelocCloud, Aryaka, Silver Peak, Viptela, Infovista, Citrix, Talari, TELoIP, FatPipe, and Cisco, according to sources who have seen the data. VeloCloud was estimated to top the list with $25 million in revenue in the third quarter and Aryaka had $21 million.

However, these are just estimates by one research firm. And the way that research firms collect data can be biased. For example, is it gross revenue reported by channel partners or is it the net revenue that only drops to the company? Another complication is that a company such as Aryaka is focused on service revenue, while some SD-WAN vendors are selling a mixture of services and hardware. In some cases you end up comparing apples to oranges.

Futuriom in September released our own market estimates. Our report focused on projecting the overall size of the SD-WAN market, which is expected to grow to $1 billion by 2019. It does not estimate revenue by specific vendors. The SD-WAN Growth report does back up Aryaka's claim, concluding that Aryaka likely has more revenue than VeloCloud, when you take into account the company size by number of employees. Other key startups to watch in the market, identified in that report, include Citrix, FatPipe, and TELoIP.

All of this means that 2018 will set up as a very interesting year for SD-WAN, with a startup field that is thinning out and ramping revenue as networking powerhouses Cisco and VMware integrate key acquisitions. It's likely there will be continued consolidation in this space, and other networking vendors such as Juniper Networks and Nokia still developing their SD-WAN strategies could become potential acquirers of these businesses.

For more information on the fast-growing SD-WAN market, including profiles of all the leading players, you can purchase the premium Futuriom research report, "The SD-WAN Growth Report," which includes an overview of the leading vendors as well as a market growth forecast. Use discount code "FUTU" for a 10% discount on a one-user license for the report, which retails for $595.