In 2008, the global WAN optimization market crossed the $1 billion mark for the first time, although the recession...
is slowing its growth, according to Infonetics Research.
The market grew by 29% last year, from about $800 million in 2007, "but that growth rate was cut in half from the year before," according to Matthias Machowinski, directing analyst at Infonetics. He said that enterprises have continued to invest in WAN optimization during the global recession, but investment is starting to slow.
"It's slowing down quite a bit, so we are feeling the effects of the economic slowdown as well," he said. "But the fact is that it's performing well given the challenges in the economy."
Machowinski is projecting a much more modest 6% growth rate for WAN optimization in 2009.
He said the market will continue to grow -- albeit at a slower pace -- because enterprise IT organizations can still make a good case for investing in WAN optimization, even at a time when most companies are slashing budgets.
"By putting in this kind of technology, a lot of times it allows you to cut back or [maintain] the WAN bandwidth you currently have," he said. "You can figure out pretty easily how long it will take you to have a return on investment."
"It also solves some specific challenges," he said. "This kind of technology allows you to move large amounts of data along smaller pipes. It can deal with any latency issues you might have, especially when you have poor links between sites."
Today, the WAN optimization market is largely a three-horse race among Cisco, Blue Coat Systems and Riverbed Technology, Machowinski said. Each of the companies holds between 25% and 28% of the market.
Cisco finished 2008 with a slight lead in market share over second-placed Blue Coat, with Riverbed third.
"They all offer very distinct technologies," Machowinski said. "Riverbed was one of the first in the market here. They have a lot of capabilities in their offering, mobility being one that they've had for a while now. And their latest move to extend their platform to allow other applications to reside on it is interesting."
Last month, Riverbed announced an OEM agreement with Microsoft to embed a virtualized partition on its Steelhead WAN optimization appliances. This Riverbed Services Platform, based on Windows Server 2008, allows enterprises to deploy applications for branch offices as virtualized services on the local Steelhead machine.
Machowinski said Blue Coat has a unique approach to the market. Its gateway appliances provide a variety of security services in addition to WAN optimization. And Cisco offers deployment flexibility with its Wide Area Application Services (WAAS) product by allowing enterprises to embed the technology on a variety of Cisco network devices.
"They all seem to be resonating with a certain number of buyers," he said, "and that shows you that buyers have different demands."
The other vendors in the WAN optimization market have less significant market share, Machowinski said. All are in the low single digits. These other vendors tend to have more regional or specialized appeal to customers. For instance, he said, Ipanema Technologies has been doing more business in Europe, while Silver Peak tends to win customers who want to focus on high-performance, high-throughput links.
Citrix Systems has been trending upward in recent years, but the company still has less than 4% of the market, Machowinski said.
"They've had some success in wrapping that offering more closely with their overall application delivery strategy," he said. "But do I see them overtaking Cisco, Blue Coat and Riverbed? I think the big battle is between those three guys right now."
Let us know what you think about the story; email: Shamus McGillicuddy, News Editor