WAN optimization market speeds up

Dispersion, growth and consolidation are fueling a WAN optimization fire, causing the market to nearly double last year and positioning it to continue on that track.

It's a sign of the times that the WAN optimization market -- though young -- is cocked, loaded and ready to blast.

More and more people consider themselves remote or branch office workers, and because of acquisitions, growth, and geographical dispersion in medium and large organizations, the new trend among IT managers is the desire to consolidate several data centers into just a few.

IT managers crave a way to give end users faster file transfers and better bandwidth utilization without the high costs and headaches of simply buying a larger pipe. They also want to consolidate and cut costs by moving data centers from the branch offices back into headquarters. WAN optimization appliances can help in both cases.

With that in mind, Infonetics Research recently released a market share and forecast report indicating that the WAN optimization appliance market grew a whopping 49% in 2005, topping $236 million. Along with that, WAN optimization units shipped grew 39%.

Infonetics also suggests that the market will see double-digit annual growth through 2009, with annual unit shipments almost tripling and revenue more than doubling.

Infontetics analyst Matthias Machowinski said the need for WAN optimization is clear: Latency and bandwidth constraints of the WAN between headquarters and branch offices can often turn simple tasks such as accessing e-mail, monthly sales reports, or customer databases into time-consuming, frustrating endeavors. Add to that an ever-growing number of branch office workers, and the loss of productivity can be overwhelming.

But spreading out a company while centralizing applications in one data center is creating a conflict, Machowinski said, with branch offices left twiddling their thumbs waiting for time-wasting file transfers, now that all data is stored back at headquarters.

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WAN optimization appliances can solve that problem. They are deployed in the data center and in branch and remote sites to quell performance problems and accelerate applications by several means, including compression, caching, protocol optimization, bandwidth shaping, and Quality of Service monitoring. The end result is faster file transfers and lower bandwidth utilization.

In the past, one solution to boost application performance and speed was to built a bigger pipe, but that has proven costly and in many cases doesn't make the application perform any better, Machowinski said.

"Are you going to build a 10-lane highway to accommodate traffic just on Memorial Day?" he asked.

According to Machowinski, WAN optimization is still technically considered a new market, but as workforces continue to be distributed further, it will explode.

"WAN optimization is still a relatively small market, but it's poised for tremendous growth because it balances the desire to consolidate data centers with the need to deliver applications to an ever more distributed workforce," he said. "There was a lot of activity in the WAN optimization market last year: acquisitions, new companies entering the market, and significant growth."

Of WAN optimization vendors, Packeteer led the market in appliance revenue in 2005, followed by Expand, Juniper and Riverbed. Machowinski pointed out in the report that the majority of vendors in the optimization space are startups that focus solely on WAN optimization, including newcomers Silver Peak and Certeon.

North America leads the WAN optimization revolution, with 46% of revenue coming from the continent; Europe, the Middle East, Asia, and Asia Pacific together account for most of the remaining 54%.

Among other vendors in the space are Allot, Cisco Systems, F5 Networks, Orbital Data, StreamCore, and Tacit.

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