WAN Optimization Market Booming

It should come as no surprise that enterprises want to squeeze as much performance out of their Wide Area Networks (WANs) as possible. The latest data from Infonetics Research found that they’re spending ever-increasing amounts to do so.

The research firm found that for the third quarter of 2007, sales revenue for WAN optimization appliances nearly doubled from the same quarter in 2006. During the third quarter of 2007 alone, sales of WAN optimization appliances rose by 20 percent compared to second quarter.

Infonetics forecasts that the final growth tally for the year will add up to a 65 percent year-over-year increase for WAN optimization appliances, with revenues hitting $700 million.

The sector’s rapid growth is expected to continue through 2010, during which Infonetics predicts WAN optimization appliance revenues will reach $1.2 billion, according to Matthias Machowinski, the firm’s directing analyst.

Machowinski explained to InternetNews.com that a few factors are driving the space’s staggering growth. Those factors include geographically dispersed workforces, datacenter consolidation and greater numbers of users accessing more applications across the WAN.

With such a hot market, a number of firms are vying for leadership in the space. Machowinski said Riverbed, Cisco and Bluecoat occupy the top spots today.

Riverbed, which Infonetics identified as the market leader, posted quarterly revenue of $63 million during third quarter, according to Alan Saldich, the company’s vice president of product marketing. Riverbed’s most recent product release came in October, with new appliances and an updated RiOS (Riverbed Optimization System) update.

In addition to leading in Infonetics’ study, Saldich pointed out that Riverbed also holds a top position in the most recent Gartner Magic Quadrant and a top position in the most recent Forrester Wave report.

Blue Coat, which Infonetics ranked third during the quarter, had previously been listed as No. 2 in the space by Dataquest/Gartner.

“We have the highest growth rate, about three times higher than Riverbed and Cisco,” said Steve Schick, senior director for corporate communications at the company.

Schick said one of the reasons behind the booming growth is that the WAN optimization market and its offerings are quickly evolving.

“The old style of WAN optimization was to simply accelerate what you could across the WAN to fix the slowness associated with file access and enterprise application response time in branch offices,” Schick said. “Now companies want WAN optimization that gives them visibility into what is going across the WAN and the ability to accelerate mission-critical applications, stop malware and unauthorized applications and manage everything in between.”

While new technologies are helping to drive the market, there’s still quite a lot of market left to penetrate. According to Riverbed’s Saldich, businesses have deployed only about 100,000 WAN optimization appliances to date, versus an estimated market of 4 million branch offices in the U.S.

“The market is hardly penetrated — 100,000 boxes deployed at 4,000,000 branches is 2.5 percent penetration — and that does not include branch offices outside the U.S.”

Saldich added that Riverbed expects WAN optimization appliances to become standard equipment for branch offices and datacenters due to the wide array of benefits. He also said businesses may be attracted to the products because they can realize a return on their investment in six to nine months.

Despite the optimism, a number of issues could become barriers to adoption for WAN optimization technologies. Among them is the fact that WAN optimization remains a relatively new concept for most IT buyers.

“Like any new technology, there is a natural adoption curve, and the [wide-area data services] market is no different,” Saldich said. “IT architects are becoming more knowledgeable about the limitations of Wide Area Networks and that there is a solution available that can be deployed transparently into their infrastructure.”

Infonetics’ Machowinski also said buyers may initially be dissuaded from buying into WAN optimization appliances because they may need to re-architect applications to ensure better performance across the WAN. The looming threat of a recession could stall growth as well, he said.

Article courtesy of internetnews.com

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