Frost & Sullivan Asia Pacific (Including Japan) WAN Optimization Controller Market H1'09 - Executive...

8/3/2019 Frost & Sullivan Asia Pacific (Including Japan) WAN Optimization Controller Market H1'09 - Executive Summary

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Executive Summary Asia Pacific (including Japan)

WAN Optimization Controller Market,H1 2009

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WAN Optimization Controller Market


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APAC (including Japan) H1 2009 Highlights

Flat$129.7 millionRevenues (H1 2009)

IncreasingMore than 12Competitors (active marketcompetitors in base year)

Decreasing$800 to

$200,000Price range

Increasing17.3%

Compound annual growth rate

(2008-2015)

Increasing$795.4 millionPotential revenues (2015)

TrendMeasurement Name Measurement

Market age Growth -

Replacement rate(average period of unitreplacement)

3-5 years Decreasing

Price sensitivity Medium Increasing

Market OverviewMarket Engineering Measurements Analysis

Note: All figures are rounded. Source: Frost & Sullivan

The Asia Pacific (APAC) WAN Optimization Controller(WOC) market declined by a flat -2.3% on a YoY basis, asenterprises in the region were decidedly more careful withtheir WOC investments due to the ongoing global economicuncertainty.

Nonetheless, the relatively immature stage of the marketmeant that there was still plenty of growth potential, whichalso meant that demand for WOC remained fairly consistenteven amidst the economic gloom. Moreover, the growingmaturity and mindshare associated with WOC technology

also led to enterprises becoming more aware of the benefitsthat WOC solutions were able to offer to their businesses.

More importantly, the pressure to cut costs whilstenhancing business competitiveness was key in justifyingthe merits and value proposition offered by WOC solutions,particularly in light of greater IT integration and applicationutilization among business setups in the region.

Verticals such as service providers, BFSIs and governmentremained committed to WOC spending due to the IT-intensive nature of their industries. In particular, the adventof managed WAN optimization services in light of greaterpressure to keep CAPEX and OPEX levels low was a keydriver for WOC spending among service providers in APAC.


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APAC (including Japan) Market Drivers / Restraints

Internal compliance issues (e.g. non-work related bandwidth usage)

Inadequate availability of bandwidth

Growing adoption of business applications

Empowering remote locations/access

Expansion of corporate networks

Driver

Medium

Medium

High

High

High

34 years

MediumHigh2

MediumMedium4

HighMedium3

57 yearsRank 12 years

1 High Medium

5 Low High

Market Drivers Ranked in Order of Impact, 2008-2015

Note: All figures are rounded. Source: Frost & Sullivan

Market Restraints Ranked in Order of Impact, 2008-2015

Improvement in bandwidth availability

Costly WAN optimization solutions

Increased adoption of managed WAN optimization services

Misconception towards bandwidth inefficiencies

Economic slowdown

Restraint

Medium

Low

High

Medium

Medium

34 years

LowMedium2

LowMedium4

HighMedium3

57 yearsRank 12 years

1 High Low

5 Low Medium


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APAC (including Japan) Revenue Forecasts

WAN Optimization Controller Market: Revenue Forecasts, 2008-2015

Note: All figures are rounded; the base year is 2008. Source: Frost & SullivanNote: Compound Annual Growth Rate (2008-2015): 17.3%

685.8

795.4

204.0

260.8 279.4

325.7 401.8

487.2

582.9

16.0%

19.6%

23.3%

16.6%

27.8%

21.3%

17.7%

7.1%

$0

$100

$200

$300

$400

$500

$600

$700

$800

$900

2007 2008 2009 2010 2011 2012 2013 2014 2015

Year

Reven

ues(Million)

0%

5%

10%

15%

20%

25%

30%

35%

40%

Gro

wthRate


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Demand Analysis


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APAC (including Japan) Demand Analysis By Technologyand Topology

Adoption Trends

WAN

Management,

$38.3, 29.5%

WAN

Acceleration,

$91.5, 70.5%

Key:Total WOC revenues = $129.7 Million

Technology Demand Analysis

WAN acceleration continued to drive the growth of the WOC market inAPAC, as the technology segment was gradually displacing WANmanagement as the de-facto definition of WAN optimization. Thetechnologys emphasis on accelerating WAN performance and

countering the issue of application latency was perceived by enterprisesas a more impactful and direct way of optimizing WAN traffic in theirburgeoning corporate networks.

However, there remained a distinctive difference between highbandwidth countries with those experience low bandwidth speeds. Inmarkets such as Japan and South Korea whereby bandwidth wasreadily available, the main driver of WOC adoption remained with WANmanagement solutions. The opposite was true for markets with relativelylow bandwidth speeds such as ASEAN and ANZ.

The deployment of WOC continued to shift towards the branches andendpoints due to rising importance in empowering branchoffices/endpoints, as well as with efforts made by vendors to cater toWAN optimization across all topologies in a network. In particular, with

enterprise mobility and remote access becoming common features in abusiness setup these days, there was greater need for enterprises tolook at optimizing traffic performance at these remote locations as well.

The empowerment of the branch office was particularly pertinent asenterprises sought to shift more business functions to these branchlocations whereby labor costs might be more competitive. Note: All figures are rounded; all dollar value in US$ million; the base period

is H1 2009. Source: Frost & Sullivan

Datacenter,

$48.2, 52.7%

Branch,

$39.2, 42.9%

End-point,

$4.1, 4.4%

Topology Demand Analysis


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APAC (including Japan) Demand Analysis By Vertical

Adoption Trends

Service providers emerged as the key adopters of WOC in H109, asthe vertical began to recognize the value-add that WOC could offer inimproving their services footprint with customers on top of the basicbandwidth provision. Moreover, in some markets such as ANZ,

managed WAN optimization services were also rising in popularity dueto enterprises focus on reducing their CAPEX and OPEX levels.

As expected, spending from the BFSI vertical declined by -9.6% on aYoY basis in light of the global financial meltdown, as the verticalbecame decidedly more cautious towards their spending behavior.However, the IT-intensive nature of a typical BFSI setup, coupled withthe recent boom in BFSI branch expansion across the region, meantthat WOC continued to witness demand coming from APAC enterprises.

The government vertical accounted for 14.8% of the WOC market inH109 as the economic slowdown meant that the onus for IT spendingfell on the public sector, as funds began to dry up in the private sector.With administrative processes facilitated by IT nowadays, there was alsoa pertinent need for governments to look at WOC as a tool to enhance

performance levels across their networks.Other verticals with intensive IT needs such as tech/internet companiesand industries with remote offices such as mining and agriculture werealso keen adopters of WOC in H109, as the need to synergizeperformance levels across the WAN became a way through whichenterprises could enhance the competitiveness of their existing setups.

SP, $29.0,

22.4%

MFG, $16.1,

12.4%

Education,

$8.1, 6.2%

Others, $16.6,12.8%

BFSI, $26.4,20.3%

Govt, $19.2,

14.8%

Tech/Internet,

$14.4, 11.1%

Key:BFSI Banking, Financial Services & InsuranceGovt Government

SP- Service ProviderMFG - Manufacturing

Vertical Demand Analysis

Note: All figures are rounded; all dollar value in US$ million;the base period is H1 2009. Source: Frost & Sullivan


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APAC (including Japan) Demand Analysis By Horizontal

Horizontal Demand Analysis

Adoption Trends

LB, $80.7,

80.1%

SMB, $20.1,

19.9%

Key:LB Large BusinessesSMB Small & Medium Businesses

Large enterprises dominated the spending on WOC in H109,contributing to a massive market share of 80.1% in the process. In away, the growing influence and dominance of symmetrical WANacceleration devices in the WOC space, as well as the role of WOC as a

performance enhancer for WAN links across offices, was graduallyincreasing the relevance of the technology for the large enterprisesegment, whilst lowering its popularity among the SMB enterprises,many of which did not face the problem of massive networks with trafficissues.

Moreover, the symmetric nature of WAN acceleration solutions alsomade it costly for SMB enterprises to consider, thus smaller-sized

companies were more likely to turn to asymmetric WAN managementsolutions if they needed to optimize traffic across their WANs.

Indeed, with perception of WOC becoming more attuned towards theoptimization of traffic between the data center and branch offices andendpoints, large enterprises were undoubtedly attracted to the valueproposition offered by the technology, particularly for those with regionaland global footprints, as they had to grapple with the issue of disparatebandwidth availability across the APAC region.

Some large enterprises were also observed to adopt both WANacceleration and management solutions in tandem, as they sought notonly to overcome issues such as application latency, but to controlbandwidth usage among their employees in the advent of Web 2.0technologies such as social networking sites.

Note: All figures are rounded; all dollar value in US$ million;the base period is H1 2009. Source: Frost & Sullivan


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Market Definition for Asia Pacific WANOptimization Controller Market H1 2009


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Market Definition Chart

Market Definition:

WANOptimization

Controllers

Datacenter Branch End-Point

WAN Traffic Management WAN Acceleration


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Market Definition

WAN Optimization Controllers :

WAN Traffic Management controllers are appliances or software that enhance the WAN performance by classifying,monitoring and shaping the WAN traffic.

WAN Acceleration controllers are symmetric appliances or software that are deployed in the Datacenters and branchoffices / remote locations to enhance application and WAN performance. The controllers use techniques such as traffic

shaping, compression, caching, and protocol acceleration to enhance performance. WOCs can be deployed atDatacenters, branch offices or at end-points.


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Research Methodology

In-house information/secondary research

WAN OptimizationVendors

Major DistributorsSystem Integrators &

Resellers

Data collation, analysis &strategic review

Final Research Service

Primary Research


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Customer Segmentation

CUSTOMER SEGMENTATION

EnterpriseHorizontals Large

(>500 employeesin the country)

Small/Medium(500 employeesin the country)

Major Verticals BFSI Manufacturing Government Education Service Provider Tech/Internet Others


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Important Notes

1. All revenues are based on end-user prices that is, actual price paid by end users for the products. All revenues associated with

system integration, maintenance, and other professional services attributes have been excluded from this analysis.

2. Revenues are in United States Dollars, unless specified otherwise.

3. The average channel markup is assumed to be between 30-40%.

4. The research excludes WAN Optimization products that are focused exclusively on non-enterprise verticals (such as only Telecom-

focused products).

5. Appliances that offer limited functionality by offering these as non-core features on routers or other platforms are excluded from the

study.

6. Stand-alone WAN Link load balancers are excluded from this study. Only symmetric appliance deployments are considered in WANacceleration revenues.


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Contents of Report


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Table of Contents

Chapter 1 - Executive Summary Asia Pacific WAN Optimization Controller Market H1 2009

Chapter 2 Market Definition for Asia Pacific WAN Optimization Controller Market H1 2009

Chapter 3 ANZ WAN Optimization Controller Market H1 2009

Chapter 4 ASEAN WAN Optimization Controller Market H1 2009

Chapter 5 Greater China WAN Optimization Controller Market H1 2009

Chapter 6 Indian WAN Optimization Controller Market H1 2009

Chapter 7 Japanese WAN Optimization Controller Market H1 2009

Chapter 8 South Korean WAN Optimization Controller Market H1 2009


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Chapter Contents

Each Chapter will comprise of the following:

- Market Overview / Market Engineering Measurement Analysis

- Market Drivers / Restraints

- Revenue Forecasts

- Demand Analysis ( By Country / Technology / Vertical / Horizontal )

- Competitive Analysis

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