COVID-19 Takes Big Bite Out of Managed SD-WAN Service Revenue

It could be a long way back for managed SD-WAN services. At least one researcher expects the COVID-19 pandemic to stifle demand through most of 2020.

Courtesy: Vertical Systems Group

Vertical Systems Group (VSG) lowered its 2020 growth outlook to 17% due to the pandemic. This follows a triple-digit revenue increase last year for U.S. managed SD-WAN services.

Despite this market dip, the firm expects measurable economic recovery during the fourth quarter. And revenue will rebound starting in 2021, extending through 2024.

VSG’s SD-WAN outlook incorporates government directives, macroeconomic data, enterprise demand information and service provider feedback.

Strong demand for managed SD-WAN services continued in January and February. New customer installations increased, fulfilling orders from the previous year. But in March and April, when the pandemic emerged across the U.S., we all know what happened. Businesses shut down and governments instituted stay-at-home orders. As a result, some companies deferred the SD-WAN implementations they were planning.

May through August mark the gradual reopening of businesses subject to state-by-state guidelines. Some companies will file for bankruptcy, particularly those in hard-hit verticals like retail and travel, VSG predicted. Subsequently, the SD-WAN pipeline for new customer sales will erode.

This fall, enterprises and suppliers will adjust to new operations realities, VSG predicts. Subsequently, an economic rebound will start to take hold. By November and December, look for the economic recovery to gain momentum. SD-WAN sales will increase and installations will accelerate, VSG said.