Window on WANs

Jul 28 2009   1:42PM GMT

WANs across the water, WAN optimization across the seas

Tim Scannell Profile: TScannell

Just like other technology sectors, the WAN optimization market has been battered by the recession and a cautious reluctance by IT types to spend any significant money on network upgrades. Nevertheless, the WAN optimization market has survived and even (relatively) thrived in this tough and bitter economy, with sales hitting about $226 million in Q1 this year.

Things are just as tough outside the U.S., although the picture is a tad brighter in Asia-Pacific countries (including Japan), which had experienced a 21% yearly growth until declining to 13.3% this year. They still chalked up revenues of US$279.6 million, according to our friends at Frost & Sullivan. The market researcher expects growth to rocket to 22.2% next year and hit US$831.6 million by 2015.*

Not surprisingly, larger corporations are responsible for most WAN optimization purchases, since they have more available cash than small and medium-sized businesses (SMBs) and are seeing an increasing demand for WAN speed and access from regional and branch offices. These large companies accounted for about 61% of the overall sales in Asia-Pacific regions last year, according to Frost & Sullivan. WAN acceleration helps these companies cope with varying bandwidth speeds and provide equal and reliable access to corporate data resources across country boundaries, a Frost researcher noted.

We couldn’t agree with him more, since all of the vendors and companies we talk to that have divisions based outside the U.S. or are themselves headquartered in the hinterlands tell us that customers are screaming for faster access across the Web, especially as cloud computing rolls in and software as a service (SaaS) becomes the norm.

One of these companies is SAP AG, which is a heavyweight when it comes to advanced ERP and CRM applications but a relative newbie in terms of WAN optimization. Executives there have been fielding a lot of comments from customers about access to their core set of applications, most of them having to do with access and acceleration. SAP listened carefully and then took quick action by launching its own WAN optimization initiative last year. The strategies behind this move, as well as details on SAP’s WAN optimization plans in general, are detailed in an interview with the company’s new WAN optimization chief, Jana Richter.

“We have a lot of customers who are seeing an increasing amount of traffic and are at the point where they need to buy more bandwidth — which can be quite costly in certain regions,” Richter pointed out. “Or they have to set up local servers for certain tasks, just because the applications are not performing well over long distances.”

SAP expects to see a lot more business from SMBs, which seems to mirror some of the research just now coming out concerning activities in this market segment. The numbers of SMBs worldwide is expected to reach the 330 million mark by 2014, with the 98% of these that employ 100 people or fewer outside the U.S. accounting for close to 90% of all business, ABI Research said. All of these companies are ripe for wireless, a fact that you would have been aware of long ago if you subscribed to the SearchEnterpriseWAN Twitter feed.

To summarize:

  • WAN optimization is hot and getting hotter, especially outside the U.S. and in the Asia-Pacific region in particular.
  • Remote workers and branch offices are driving demand because of data and applications access concerns.
  • SMBs will most likely fuel the charge in demand for WAN optimization tools and solutions as their numbers increase worldwide.

* Frost & Sullivan’s 2009 Asia-Pacific WAN Optimization Controller Market report.

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