VMware, EMC’s majority-owned virtualization business, has been pushing the software-defined data center for close to two years, but while SDDC still remains more of a concept than a reality, virtual appliances are going mainstream in the data center, according to a new report from Infonetics Research. “Virtual application delivery controller (ADC) revenue is growing fast as cloud services, hybrid cloud, and the shift to cloud-architected data centers create demand for virtual appliances,” noted Cliff Grossner, directing analyst for data center and cloud at Infonetics.
“Hardware-based ADCs aren’t going away anytime soon. They still provide the performance required by larger-scale deployments, and vendors are working to fold in other services such as security, application traffic monitoring, and predictive analytics,” he continued. “This will keep the market for hardware-based appliances healthy even as a portion of the ADC market turns to virtual appliances.”
The 4th quarter 2013 and year-end Data Center Network Equipment report found that:
- Global ADC revenue grew 10% in 4Q13 from 3Q13, and finished 2013 at $1.75 billion, up 4% over 2012, when the previous record high was set;
- ADC virtual appliances are going mainstream, accounting for 14% of ADC revenue in 4Q13;
- In 4Q13, WAN optimization revenue is up 4% sequentially, but remains on an overall downward trajectory, down 8% from the year-ago 4th quarter; and,
- Vendors are adding mobility functionality to WAN optimization products to drive new revenue while waiting for the cloud to have a positive impact.
Even though the WAN optimization market is still primarily hardware-based, the move to virtual appliances has been accelerating for more than a year. “Virtual appliances are a nascent and fast-changing market,” said Casey Quillin, Senior Analyst of Data Center Appliance Market Research at Dell’Oro Group. “We foresee higher-end, higher-priced products that make networks smarter becoming more prevalent.”
According to WANop vendor Silver Peak’s founder and CEO David Hughes, Dell’Oro said most of the revenue growth in the WAN optimization market will be driven by virtual appliances. Their report noted that “virtual WANOP appliances provide greater flexibility in application optimization and data access in the cloud as well as between disparate data centers and branch offices.”
Then there are the money savings. “Customers prefer Silver Peak’s software because it radically reduces deployment complexity and lowers the total cost of ownership by more than 50% when compared to competitive hardware-based offerings,” said Hughes.
There are a number of reasons why the WAN should be getting a lot more attention, although that doesn’t seem to be the case. Nearly 70% of enterprise executives expect to see WAN bandwidth demand increase in the coming year, but only 15% plan to add any WAN capacity at all. Despite the increased demand being generated by cloud, mobile and M2M (machine to machine or the Internet of Things), this gap will only expand, even though more than 85% of IT executives say their current WAN infrastructure negatively impacts critical app performance on a regular basis, with the average business experiencing 14 WAN-related incidents a year.
According to another recent survey of networking personnel from midsized enterprises and education institutions, 65% of respondents said current WAN optimization solutions are not sufficient to handle the growing complexity presented by networks which increasingly span multiple devices, geographies, and cloud infrastructures. The survey identified five key challenges a WAN solution must address:
- ensuring resources for critical applications – 69%;
- enforcing appropriate network use – 57%;
- reducing WAN circuit speed – 49%;
- troubleshooting networking problems – 34%; and,
- supporting critical IT projects – 20%
The bottom line is that a change in approach is needed to proactively manage today’s network, said Zeus Kerravala, Principal Analyst at ZK Research. “To pragmatically solve network management issues, IT needs to think beyond traditional WAN solution approaches, which historically have focused on traffic acceleration.”
More and more, it looks like virtual appliances will be the preferred choice when it comes to dealing with accelerating network demands and lagging network budgets.