Historically, the two most predictable trends in the bandwidth market have been consistent demand growth and price erosion. But those trends have been challenged over the past few years.
Recent supply chain issues and geopolitical challenges have dramatically slowed price erosion globally. For the first time, we're asking ourselves, are prices actually increasing?
"The two most predictable trends in the bandwidth market have been persistent demand growth and price erosion."
For PTC '22, Senior Research Manager Brianna Boudreau took a look at the most common pricing questions we've gotten over the past year to think through how they might play out in 2022.
In previous iterations of this workshop, our first question would not be if prices are falling, but by how much?
Enterprise customers have embraced hybrid networks that employ multiple underlay technologies combined with an SD-WAN overlay. And for good reason.
Many SaaS applications and cloud services have been optimized to work over local internet connections rather than through central internet breakouts. The integration of an SD-WAN overlay addresses many of the concerns about network performance and security that come along with incorporating internet into the WAN.
And as we detailed in our recent blog series, the DIA and broadband services included in these hybrid networks are often cheaper than MPLS–sometimes considerably so. This allows WAN managers to reduce network spend or increase their capacity while staying within the same budget.
But even after enterprise customers have undergone a network transformation, it is still imperative for them to keep tabs on the market and assess what their network should cost. Particularly if their network contract includes a benchmarking clause.
With the latest update of our enterprise port pricing, we looked back at some previous hypothetical network scenarios to see how the cost of network ownership can change over time.
Corporate traffic patterns continue to change. And static, single technology transport networks designed to secure internal corporate communications no longer meet network requirements.
Today they are being replaced by dynamic, hybrid, application-aware networks.
These new WANs are intelligent at the edge. They are able to categorize data and route it over a variety of transport types based on policy or application performance requirements. And they ensure a high-quality, secure experience to users regardless of their physical location, access device, or application location.
One innovation assisting WAN managers in deploying hybrid networks—while also ensuring the security and performance of their network—is SD-WAN.
Historically, the two most predictable trends in the bandwidth market have been consistent demand growth and price erosion. But those trends have been challenged over the past few years.
Recent supply chain issues and geopolitical challenges have dramatically slowed price erosion globally. For the first time, we're asking ourselves, are prices actually increasing?
So far, we’ve looked at several more conservative approaches to constructing a hybrid WAN.
But what if we went all the way down the rabbit hole to an all Internet WAN?
For example, throwing a lot of bandwidth at the network and letting SD-WAN take care of the internet performance.
Use of the internet in corporate WANs is quickly growing. And for good reason.
Not only are internet services such as DIA and broadband cheaper than MPLS, many of the SaaS applications and cloud services that enterprises have adopted have been optimized to work over local internet connections rather than through central internet breakouts.
In addition, SD-WAN has emerged as a tool that allows WAN managers to incorporate these lower cost internet services into their network without sacrificing performance or security. But not every network site (or enterprise customer) is a good fit for an all internet WAN.
In our next two scenarios, we take an approach that we see many enterprises taking—designating network sites into tiers and assigning different network services to each tier. This allows companies to add in local internet breakouts at most offices, but keep some MPLS at higher priority sites that need service level assurances.
Our latest Global Internet Geography Research Service refresh came with new pricing data.
And if you'd like a sample of this new data, you've come to the right place. Let's jump right in, shall we?
Enterprises can choose few or many providers in the middle mile (or none at all). As with other technology procurement decisions, this depends on an individual enterprise’s capability to orchestrate multiple vendors and preferences for specific vendors in the chain.
It also depends on current network infrastructure and the desire to leverage that toward a reconfigured WAN, as well as the performance and cost goals the enterprise wants to achieve.
To provide insight into how a complete SD-WAN overlay can impact total network spend, it’s useful to look at how various cost components apply to a specific network.
Looking at the total cost of the overlay and its impact on a network’s total cost of ownership (TCO) affords the most apples-to-apples comparison between service providers, particularly with a number of pricing models currently in the market.
To do this level of analysis, we created a hypothetical network based on our median WAN Cost Benchmark customer.
While the key SD-WAN transformation use case was built around network cost and resiliency, its focus is now shifting to security.
Enterprises have moved to more internet connectivity. Traffic patterns have moved away from on-premise data centers to neutral colo facilities or cloud service providers/hyperscalers. And over the past two years, edge access has moved out of the corporate site—to home and remote connections.
These forces changed how enterprises approach network security, and SD-WAN vendors have responded with new partnerships and feature sets.
This review looks at enterprise security trends and how SD-WAN vendors have adapted to accommodate security needs.
Unlike network services, SD-WAN is not a commodity, and pricing strategies are still in flux. But as the service matures, this is beginning to change.
Median price points have started to decline and the range in reported vendor prices has started to converge.
Let's unpack SD-WAN prices—starting with pricing models.
