As promised early this year, EarthLink Holdings Corp. (NASDAQ:ELNK) is venturing into a software-defined wide area network (SD-WAN) offering where it is targeting multi-site business clients. The company has tapped VeloCloud to be its vendor partner in the SD-WAN as it plans to roll out its full-fledged product in the fall.
But in the SD-WAN space, EarthLink will be taking on a host of competitors including telecom provider Verizon Communications Inc. (NASDAQ:VZ). Others eyeing the SD-WAN market are Centurylink Inc (NYSE:CTL), Vonage Holdings Corp. (NYSE:VG), MetTel and Masergy.
In the case of Verizon, the carrier partnered with Viptela to launch its SD-WAN product in February. But Verizon’s virtual network offering goes beyond simple SD-WAN support to include WAN optimization and security.
On its part, EarthLink Holdings is looking to roll out an SD-WAN platform that will support functions such as application growth, branch implementation and network agility among others.
It seems the idea of bringing VeloCloud on board is that EarthLink hopes to offer VeloCloud’s Cloud-Delivered SD-WAN as part of its SD-WAN package. EarthLink’s CEO Joe Eazor said that their SD-WAN offering aims at giving customers greater visibility and control over devices, apps and websites based on their network.
EarthLink’s suite of SD-WAN will include bandwidth prioritization, security services, hosted voice and optimized application performance.
It was back in February that EarthLink announced that it was testing an SD-WAN product that it planned to take out to customers to try before the end of this year. The company has now made good that promise as it has announced VeloCloud as part of its SD-WAN rollout partner.
What’s the opportunity?
IDC estimates that the global SD-WAN market could be worth more than $6 billion in revenues by 2020. The research firm’s estimates call for the SD-WAN industry to grow at a compound annual growth rate of 90% in the five-year period between 2015 and 2020.
But EarthLink Holdings will have to battle it out with a host of rivals to grab a meaningful share of the SD-WAN market.
EarthLink posted revenues of $240.4 million in 2Q2016, which fell 15.3% YoY and 5.5% QoQ. The reported revenue also missed the consensus estimates. EPS of $0.04% missed the consensus estimate of $0.07.