The software-defined wide area networking (SD-WAN) market, like others in the technology space, is undergoing a period of consolidation, as vendors hurry to offer the technology to customers and the largest firms snap up everyone else. Cisco acquired Viptela in early August, and VMware bought market revenue leader VeloCloud this month.

These acquisitions turn the SD-WAN market into a “two horse race,” says IHS Markit senior research director Cliff Grossner, “and we could see even more consolidation as vendors set out to add SD‑WAN to their capability sets, especially since the technology is key to supporting connectivity in the multi-clouds that enterprises are building.”

SD-WAN is a way for enterprises to deploy WAN connections without rolling out new physical infrastructure, by moving more of the network control into the cloud. The technology has a significant advantage over legacy WAN systems in its flexibility, security and lack of reliance on fixed circuits or proprietary hardware. Because connectivity is controlled through the cloud, customers can also scale up bandwidth at peak times on-demand.

Today, the SD-WAN market is only worth about $140 million worldwide, according to IHS’ figures. However, global revenue is expected to reach $3.3 billion by 2021, as service providers work with vendors to deploy overlay solutions, and as virtual network function-based solutions are more closely integrated with carrier operations support systems.

Grossner said, “Currently, the majority of SD-WAN revenue is from appliances, with early deployments focused on rolling out devices at branch offices. Moving forward, we expect a larger portion of SD-WAN revenue to come from control and management software as users increasingly adopt application visibility and analytics services.”

Cisco is the current leader based on in-use SDN revenue share; followed by Arista, White Box, VMware and HPE.