Global SD-WAN becomes $3bn market for large multinational enterprises

The onset of the pandemic accelerated global firms’ plans to redefine how their businesses operated, in particular how they managed their wide area networks (WANs), with software-defined WANs flourishing and secure access service edge (SASE) emerging. However, a study from specialist telecoms market research and consulting firm TeleGeography has calculated that despite these drivers, the global SD-WAN market for large multinational enterprises currently accounts for just 5% of the total market.

Using insight from TeleGeography’s WAN manager survey and WAN cost benchmark, the study used the total number of global corporate WAN sites and market price ranges as key variables, with static assumptions about the geographic distribution of network sites, mix of connectivity products, bandwidths, distance of local loops and SD-WAN roll-outs. 

A 5% market share implies, says TeleGeography’s latest WAN market size report, a market value of $3bn, with local loops connecting customer sites to direct internet access (DIA) being $3.8bn in TeleGeography’s model – or 6% of the market. Yet by contrast, multiprotocol label switching (MPLS), the legacy network infrastructure said by many to be on the way out in favour of SD-WANs and SASE, is said to be worth $17bn, maintaining 29% of the global WAN market.

Together, MPLS and access loops connecting to MPLS points of presence (PoP) account for 60% of the market for large multinational enterprise WANs. Together, MPLS and DIA port charges remain the largest contributor at $33.6bn, followed by local access charges, at $22.1bn.

“SD-WAN adoption is ramping up globally, but MPLS still remains the dominant networking technology,” said TeleGeography senior manager Greg Bryan.

“It’s interesting to note that DIA market share is larger than SD-WAN. The market for internet underlay services is slightly larger than overlay. Overall, the WAN market has diversified and, across geographies, the pricing differences within product sets vary considerably.

“For example, compared with other well-developed countries, the US is a more expensive local access and broadband market,” he said.

The research firm attributes the market diversification and disruption to how multinational corporations design and source their networks to cloud computing, the migration of the datacentre away from corporate premises, local internet breakouts, and the introduction of SD-WAN, which despite its current sluggish pace of adoption is expected to gain momentum.

“Currently, MPLS exceeds SD-WAN, although we expect a considerable shift in the next few years as businesses demand better flexibility, reliability and cloud access,” said Bryan.

“Moving forward, reliance on MPLS and private access from customer sites to MPLS PoPs will lessen, and we predict that this is likely to have a material impact on the business of selling corporate networks.”