A variety of forces are arrayed against the WAN acceleration/ optimization market, including falling bandwidth costs, new IT funding models, better-designed applications, and more. These forces won't kill the WAN acceleration market, but I believe they will keep it from growing.
A recent Infonetics report on ADCs and WAN optimization bears this out. The report stated "WAN optimization sales got a temporary bump in 2Q13, but the segment remains on an overall downward trajectory, declining 11% from 2Q12."
Last year I wrote a report, The Next-Gen WAN (registration required), that drew from an InformationWeek survey of IT professionals. While 51% of respondents said they use WAN optimization on either most connections or a few key connections, I also stated "the value of this technology may fade in the years ahead." Here's why.
Bandwidth is Cheap
The easiest way to improve a WAN connection is to buy more bandwidth, and that option becomes more feasible as the price of WAN bandwidth continues to drop. But there are other factors that make bandwidth even cheaper.
The first is the slow but gradual growth of Virtual Desktop Infrastructure (VDI). In the last five years, VDI has moved from "sort of works" to "works well enough" to gain wider acceptance. Besides reducing bandwidth consumption, VDI has other values, including improved security and simpler desktop administration.
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The second factor is the increasing use of Internet connections as primary bandwidth to replace traditional WAN services. VPN technology has traditionally been complex and hard to operate, but recent enhancements have made this choice more attractive. Internet connectivity is many times cheaper than WAN and readily available in any geography.
There is an interesting business condition here as bandwidth moves to Internet connections and consumes the majority of resources. As that trend continues, dedicated WAN costs will become more expensive. This will count against WAN optimization in the long term.
Capital and Operations
Companies are reluctant to invest large amounts of capital to reduce operating expenses. The current trend is to move IT charges into operating expenses. WAN acceleration is both capital intensive and operationally expensive due to its high purchase cost and ongoing support and maintenance costs (including the IT personnel to manage the product).
While many WAN optimization companies are providing virtual appliances to reduce costs, you still need to provision each remote location with at least a physical server, hypervisor and the virtual appliance.
These days, IT funding models aim to incur costs on a monthly or quarterly basis to match ROI; a technology deployment such as WAN optimization that requires a year or more to show ROI is likely a non-starter.
Some analysts and engineers believe WAN acceleration has a future in hybrid cloud applications, which could perhaps justify capital and operational expenses. But I think dynamic bursting between private and public clouds is an edge case at best, not a mass-market play. Hybrid cloud rarely survives a close technical inspection.
New Protocols and Applications
Another less visible trend is that software vendors are becoming conscious of network efficiency. Although a decade overdue, new protocols such as SPDY and Microsoft's SMB 3.0, as well as more efficient programming, are improving the network response times for applications. WAN acceleration has always been a workaround for poor technology, so any concerted to improve application efficiency makes the entire WAN optimization industry less relevant.
While the business case is against WAN acceleration, we won't see the end of this market in the next decade. Locations that have poor telecommunications infrastructure have specific needs that WAN acceleration can meet.
That said, overall it's hard to see that WAN acceleration will grow. It's time to focus on structural change in IT infrastructure and move past minor (but operationally expensive) tweaks to efficiency in the WAN.
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