Burgeoning WAN Optimization Market Tops $236M in 2005

Infonetics: Medium and large organizations continue to become more and more geographically dispersed due to acquisitions, entry into new markets, and the use of lower cost locations. This trend is on a collision course with the desire of IT managers to consolidate many data centers into just a few.

For example, when Joe Remote Worker in Virginia tries to access his corporate e-mail, monthly sales report, and customer database from the servers at his company’s headquarters in New York, the inherent latency and bandwidth constraints of the WAN often turn this simple task into a time-consuming, frustrating endeavor. Multiplied by thousands of remote branch users, this can cause organizations serious productivity losses.

WAN optimization appliances are deployed at the data center and at branch/remote sites to address these performance issues and accelerate applications by performing compression, caching, protocol optimization, bandwidth shaping, and/or QoS monitoring.

The fast-growing WAN optimization appliance market increased 49% worldwide in 2005 to $236 million, and unit shipments increased 39%. Infonetics forecasts double-digit annual growth at least through 2009, with annual unit shipments almost tripling and revenue more than doubling.

WAN optimization is still a relatively small market, but it’s poised for tremendous growth because it balances the desire to consolidate data centers with the need to deliver applications to an ever more distributed workforce,. There was a lot of activity in the WAN optimization market last year: acquisitions, new companies entering the market, and significant growth.

• Packeteer leads the market for WAN optimization appliance revenue in 2005, followed by Expand, Juniper, and Riverbed

• The majority of vendors in this space are startups that have a single focus on WAN optimization, including new entrants Silver Peak and Certeon

• The market is currently concentrated in North America, with 46% of revenue coming from that region in 2005, and EMEA and Asia Pacific account for most of the remainder.

WAN Optimization Appliance Market Outlook

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