Revenue Forecast

The revenue estimate for the base year 2023 is $4,400 million, with a compound annual growth rate (CAGR) of 15.3% projected for the study period from 2023 to 2028.

Scope of Analysis

Key Points:

• The North American managed SD-WAN market encompasses approximately 35 companies, with the top four making up 51.8% of the overall connections.
• Managed SD-WAN includes both the network overlay (the software portion) and the underlay, representing a mix of network technologies (for instance, internet, wireless, or broadband).
• Frost & Sullivan forecasts that market revenue will grow at a CAGR of 15.3%, and operational sites will grow at a CAGR of 17% from 2023 to 2028.
• Revenue does not grow as fast as sites due to price erosion.
• The market is considered mature, with many years of steady growth ahead before a decline.

Definitions

Managed SD-WAN

• In managed SD-WAN, the service provider acts as a single point of contact for the complete solution, including the on-prem appliance, the software license, WAN/undelay services, and the various security components with end-to-end visibility for clients through a portal and/or APIs.
• Provider responsibilities in a managed SD-WAN service include:
  •   Procuring, installing, configuring, and managing the edge device (physical or virtual) and software.
  •   Installing and managing the access links on their network, another vendor’s, or the client’s if they own capacity (which is not so uncommon in a campus environment)—in essence, any form of underlay technology.
  •   Managing the moves, adds, and changes across the solution.
  •   Monitoring the service 24/7, troubleshooting, and restoring it in case of a problem.
  •   Offering a service level agreement (SLA) for the entire end-to-end solution and meeting performance guarantees that the SLA establishes.
  •   Creating optional value-added services, such as WAN optimization, business continuity, third-party access management, and security features.
  •   Supporting IT managers with a self-service portal interface that provides a granular level of visibility and control or through an API interface to their IT service management tools.

• Billing for the service in a subscription-based model, where the customer pays a monthly recurring charge (MRC) for the managed SD-WAN. While some providers bill managed SD-WAN services as a single MRC for the edge device, bandwidth charges, and management fees, others charge bandwidth fees separately. For stakeholders doing Network-as-a-Service, they might have usage-based services as granular as hours.

The Impact of the Top 3 Strategic Imperatives

Transformative Megatrends

• Why: The managed SD-WAN market is experiencing significant shifts due to the convergence of network and security services. This transformation is driven by the need for integrated solutions that can address the complexities of modern networking environments.
• Frost Perspective: The evolution towards a platform-based approach is essential for providers to remain competitive. As services become more consumable, companies must adapt their offerings to meet the demands of a rapidly changing landscape, ensuring they can deliver both network and security solutions seamlessly.

Competitive Intensity

• Why: The competitive landscape in the managed SD-WAN market is intensifying as OEMs consolidate, compelling network service providers to forge stronger alliances with the remaining players. This consolidation impacts pricing, service offerings, and market positioning.
• Frost Perspective: To thrive in this competitive environment, network service providers must integrate their operations with OEMs and enhance their network management systems. This integration is crucial for creating platforms that streamline the use and ordering of network technologies, ultimately improving customer satisfaction and loyalty.

Disruptive Technologies

• Why: The rise of disruptive technologies is reshaping the managed SD-WAN industry. As traditional MPLS and Ethernet solutions are replaced by broadband and internet-based services, operators face challenges in managing their revenue streams while pursuing growth in SD-WAN.
• Frost Perspective: Providers need to adopt a platform-driven approach rather than a product-driven one. This shift requires organizational changes and the development of cohesive go-to-market strategies that address internal challenges and build customer trust. Embracing disruptive technologies will be key to navigating the evolving landscape and capitalizing on new opportunities.