You can often get a good debate going, with no chance of settling the argument, yet, about whether SD-WAN complements or displaces other services such as MPLS. As you would expect, existing suppliers nearly always say there will not be much product substitution, which might disrupt existing revenues.
“It's not going 100 percent from MPLS to SD-WAN,” said CenturyLink CEO Glen Post.” It's usually a hybrid network solution.” But will there be some cannibalization. There almost has to be, as Post acknowledges. “Our concern is it's more of a competitors' advantage.”
AT&T’s position also is about what you might expect from a firm that stands to lose if substitution is what eventually happens at its enterprise accounts, and gains if it can hang on to what it already has, and then adds new accounts in the smaller business area.
According to AT&T CEO Randall Stephenson, SD-WAN “tends to be real down-market” (smaller accounts, not enterprise). But there already is a small impact on the more-traditional products. “We're seeing some effect from it.”
“Up-market, the traditional VPN capability is always, we think, is going to be the enduring capability,” Stephenson says. “But down-market, we're going to have to be prepared to compete with this kind of offering.”
The strategic problem is that, quite often, the selling point for SD-WAN is that it is a less-costly, easier-to-manage VPN.
In the near term, it will be hard to discern how much SD-WAN is a replacement for MPLS (it is) and how much it also represents a new product category that represents incremental growth (the “down market” segment AT&T believes exists).
Long term, it is hard to see how software-defined networking does not, in fact, displace one or more legacy product categories. Can you think of any enterprise, mid-market, small business or even consumer data products that have not been replaced by newer offerings?
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