This week, we published our Secure Access Service Edge (SASE) Forecast and Research report, a deep analysis on the market, the key players, and the opportunity that lies ahead for it. We expect SASE revenue to grow more than 500% by 2025. As a result of strong market growth, we also expect a tremendous opportunity for new vendors to stake their claim in this increasingly complex environment. As the SASE market is at a relatively early stage, many vendors are introducing new products and services to the marketplace, many of which can be considered “best-of-breed” offerings.
 
We think enterprises will be navigating multiple priorities, shifting between the needs of their security teams and their networking teams. As enterprises shift toward Zero Trust and SASE architectures, they are increasingly evaluating and deploying multi-vendor cloud-delivered security services, and it is not currently necessary for all the SASE elements to come from a single vendor. For example, HPE Aruba (Silver Peak) offers freedom of choice through a best-of-breed multi-vendor partner ecosystem. HPE Aruba’s approach is reinforced by the hundreds of deployments they have alongside cloud-delivered security services from partners like ZScaler, Netskope and Check Point. Enterprises working with vendors like HPE Aruba, with a multi-vendor partnering strategy, should be able to continue working with vendors they have worked with already or be able to pick “best-of-breed” systems.
 
The news media has featured our research, and the reports have had interesting takes, for example a Dark Reading article, SASE Surge: Why the Market Is Poised to Grow, focuses on the significant growth opportunities for the market. 

Alan Weckel:  This week, HPE Aruba announced its planned acquisition of Silver Peak for $925 million with an expected close date during HPE's fiscal 2020, so we expect the deal to close in calendar 4Q20. SD-WAN is becoming a battleground for vendors as an increasing portion of enterprises want single-pane and cloud-managed solutions for their branch equipment.  

Our research indicates the average branch employee connects to over one dozen cloud services daily and the edge-to-cloud experience has never been more critical in the COVID and post-COVID world as businesses try to engage with customers across an increasing amount of physical and virtual locations.  

Enterprises will accelerate the retirement of MPLS links for more advanced WAN architectures with Cloud-first principles in their physical branches.  Enterprise will also deploy a mix of hardware and software into employee's houses as Work-From-Home (WFH) changes every employee's residence into a new branch extension of the enterprise.  

We have conducted significant research into the Branch in 2020 and how it will transform across verticals and product categories (SD-WAN, legacy routing, WLAN, switching, and security) based on long-term structural changes to the market as well as the sudden changes forced on customers by COVID-19.  We project SD-WAN as the fastest-growing component in the Branch over the next five years.
Silver Peak's advanced SD-WAN portfolio (both hardware and software), completes HPE Aruba’s breadth of WAN offerings, strengthens Aruba ESP (Edge Service Platform) and complements Aruba's strong position in Ethernet Switching, and WLAN, especially Aruba's newer WiFi 6 APs and custom ASIC-based 6200/6300 Access switches.

We expect that AI/ML will increasingly become part of the Branch market in each year of our forecast driven by further product integration by vendors and the need to control and monitor an increasing amount of user and device (IoT) traffic.  As the AI engines learn, self directly networks will move towards self-driving as automation of tasks beyond simple device management become common across networks.  The ability to use AI at this scale in networking today is limited to the largest hyperscalers, but will quickly make its way to campus and branch networks.

We expect overall Branch spending to increase above its 2019 run rate during the forecast period (post-COVID) and single-pane management to nearly triple during that timeframe.  HPE Aruba's acquisition of Silver Peak will help them address the fastest-growing part of SD-WAN and Branch networking.  While there are dozens of SD-WAN, campus switching, WLAN, and security vendors vying for Branch spend, there are only 6 US-based vendors that have a holistic portfolio that customers want and need.

Posted by Alan Weckel, founding technology analyst.

Throughout the years, I’ve attended Aruba’s Atmosphere conferences.  This year, I missed the in-person connections of the previous years, but Aruba did a great job transitioning over to a virtual event with engaging content…and some green screens.  At Aruba’s user conference, Atmosphere, the company informed attendees of its new single-pane, cloud-native platform called ESP.  We were impressed not only with ESP but how well it delivered the message under tough circumstances, using Zoom webinar.  We want to highlight the ESP launch because it launches the company into a new category, that of single-pane management.  We expect that customers value the capability to manage Wi-Fi, Switching, SD-WAN, 5G and IoT using the same system, without “swivel-chairing” between multiple software interfaces.  And, by combining all these different “edge” systems to a single manager, this allows for a unified policy, security and insights system.
 
ESP.  What we learned about Edge Services Platform (ESP) at the Atmosphere show.  ESP is an automated, all-in-one platform that operates in the cloud or on-premises, and is designed to deliver a cloud experience at the edge.  Large or small companies can use ESP, and it is also available on its controller-less APs, and can be used across large campuses down to branches and to remote worker locations.  Now, with the launch of ESP, data gathered from APs, switches, IoT devices, user devices and SD-WAN connections are retained in a single location, and thus this data can be analyzed together.  Since all the telemetry data is in one place, the company can now use Artificial Intelligence (AI) to improve insights into how the network is performing, to improve the throughput (the company claims 15%), and reduce to the time to resolve issues (the company claims a 90% improvement).  Aruba shared with attendees that it has 10M APs at customer sites – we see this large installed base, spinning off a lot of telemetry, as being a key advantage to Aruba, because AI systems get better with more data.  

Greenlake.  Aruba ESP can be consumed either as a service in the cloud or on-premise, as a managed service delivered through Aruba partner. Customers can also consume it as a network as a service through GreenLake. Greenlake is a Network as a Service offering recently introduced by Aruba that allows customers to pay for equipment and services monthly, as opposed to as an up-front expenditure.

Other new product announcements.  UXI-6 sensor - the company announced a new sensor for gathering information from IoT and user systems.  This data can be leveraged by software and services to enable asset tracking, contract tracing and other systems.  Additionally, the company announced a new Ethernet Switch, the CX 6200 Switch Series.  The new switch can run on enterprise campuses, branch access and data centers.  
 
Contact Tracing.  The company is also innovating for the future hybrid work environment. They are releasing a new set of contact and location tracing tools, and are working with a partner, Plexus.  It uses a variety of data sets: Wi-Fi, BLE/Bluetooth, location-capabilities inherent in the infrastructure, wrist-bands, keycards, or Aruba asset tags.  Wi-Fi-only is the base case and is the minimum data set that gets customers started immediately.  As additional data sources, primarily those leveraging Bluetooth to improve tracking and capabilities of the contact tracing system. For expanded capabilities, Aruba Technology Partners integrate with Aruba infrastructures to monitor social distancing and group sizes, and generate contract tracing trees of potentially exposed individuals. 

Today, HPE Aruba announced its Aruba Air Pass cloud service that allows for a hand-off between cellular and Wi-Fi networks.  The service is enabled by Passpoint, which is a standard created by the Wi-Fi Alliance.  The idea is that a mobile operator customer can go into a building with Wi-Fi coverage and, without having to "log on" to the Wi-Fi, the user's phone will automatically connect.   Using Air Pass means that mobile operators won't need to build a cellular infrastructure in these buildings for customers to continue with their phone calls.

For mobile customers to see the benefit of seamless roaming from the Air Pass service, mobile operators will need to engage in a relationship with the property owners of the building.  While this seems like a lot of work, connecting to Air Pass will be far easier than it would be for a property owner to install a cellular network inside the building.   Examples of in-building cellular that can operate either on licensed, shared or unlicensed spectrum is a Distributed Antenna Systems (DAS) system or licensed small cells.  Building owners or operators have to build new, in-building cellular if they want cellular coverage.  Managed Service Providers, such as Federated Wireless, have begun selling a service to property owners where they will manage the cellular infrastructure for the owner.

Aruba has some competition for its service to allow Wi-Fi sharing to mobile operator customers. In February 2020, Cisco announced its Unified Domain Center as a means of sharing Wi-Fi coverage with mobile operators, as well, and claimed that it is at the proof of concept stage with operators.  Also, Swedish software and services company, Aptilo, has created systems that allow SIM-based device users to roam onto Wi-Fi, as well.  We applaud the efforts of Aruba, Cisco, Aptilo and many others who have built systems to allow device users to roam between cellular and Wi-Fi networks.

There has been a lot of excitement by mobile operators and cellular equipment suppliers about the 5G opportunity to expand to enterprises.  In November 2019, for instance, Nokia discussed how enterprises are adopting its Private LTE systems to allow cellular coverage at customers such as utilities and shipping ports.  We have been cautious on the idea that mobile operators will get lots of new revenue from providing cellular coverage to the enterprise; a year ago, we laid out our thoughts on the 5G Enterprise hype at the MWC19 show. 

The implications of the emergence of services like Air Pass and the capabilities of Unified Domain Center is that Enterprise Wi-Fi coverage will be leveraged in the 5G era far more than all the hype about "5G" wiping out the need for Wi-Fi.  However, we also feel that cellular systems will see growing popularity in certain enterprise verticals, as was evident at the MWC-Americas 2019 show.

We attended the Comcast Business analyst event in Philadelphia.  We find the Business Services part of Comcast is interesting, and so do customers, because it is growing rapidly.  It installs a “new Ethernet every four minutes,” and has “40-45K installs per month.”  The company shared with the audience that it is expanding the breadth of its services to grow its potential revenue it can get from each customer, and in many cases is either acquiring or developing this technology itself.  We see these development efforts as moving up the technology stack.
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To understand Comcast Business, you have to know that it has unique approaches to its different customer segments.  The organization addresses customers of different sizes, and it does not use the same terminology as some others do: SMB (<20 employees), Mid-market (20+ employees), Enterprise (Fortune 1000).  We think it is more common that small is considered 100 employees and smaller, which would include SMB and Comcast’s Mid-Market, and that mid would be 101 employees or greater.  Here are the Comcast Business market views:

More details about customer segments.  In addition to attacking three customer size groups with distinct approaches, it also serves two verticals (carriers and government) segments with different strategies and recently acquired Deep Blue (May 2019) that serves WiFi to venues and hospitality verticals.  Each served customer type uses different combinations of third-party developed technology and Comcast in-house developed technology.  The company has 4,000 people developing in-house technology.  As a mix of total systems sold to customers, today, Comcast Business uses a higher mix of in-house developed technology when serving its small and mid-market customers than it does when serving large enterprises.  The group that serves Enterprise Solutions serves large enterprises using mostly using third-party technology from vendors like Cisco, Fortinet, and HPE.
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On the other hand, the company serves smaller-sized customers using fully or partially in-house developed technology.  Comcast Business’s SVP Product Management, Bob Victor, summed up its approach to working with third-party vendors by saying, “We want to totally commoditize hardware.”  We assume he means this is a long-term goal because, during the event, the company told us of new hardware and software relationships announced with new vendors. 
For small and mid businesses, the company has developed several in-house technology systems that compete with vendor-supplied technology.  One such example is its WiFi Pro service, which combines internet connection and WiFi service.  In WiFi Pro, which was introduced a couple of years ago to small businesses and is available at up to four Access Points, the company sources WLAN access points from a non-branded access point.  Based on our discussions at this conference, we would not rule out that at least some of the in-house developed technology may be supplanted by vendor-supplied technology if there is a compelling reason.  However, on multiple occasions, we learned that the direction the Comcast Business is going is to develop in-house technologies and bring these directly to customers, first with smaller customers, and perhaps very long term to large enterprises.

Managed Services.  The company delivers both transport/network services and transport bundled with other services; there is a case to be made that Comcast Business’ bundled services could be called Managed Services.  However, even Comcast says there is some confusion about using the terminology “Managed Services,” because of customer expectations; some customers see it as a very high level of services, where customers do nothing, while others see it as Comcast Business is “working with” the customer to deliver the service.

Playing to Strengths.  On an overall basis, Bill Stemper, who runs Comcast Business, says the company’s strategy is to focus on serving the wireline needs of businesses in the US.  He says, “this is where we invest.  We expect to focus this way for decades.” 

Small Business details.  Stemper said that the company would bring “mobile to small business.”  It will bring mobile to this segment when “all the systems are squared away, and when sales reps are capable of selling this additional service without slowing down customer purchasing decisions on the existing suite of services.”  It is currently offering mobile in selected markets to learn more about selling this new service.  We expect mobile to small business to be offered sometime in 2020.

Growth Avenues in Mid-Market.  The company made it clear that it believes the mid-market is an enormous growth opportunity.  And, starting in 2020 and beyond, the company says, it is putting more investment into it to improve coverage, its focus, and its reach.  Today, the company has 800 reps targeting the in mid-market and plays to strengths in certain verticals such as government, education, and healthcare.  

Large Enterprise Opportunities.  Approaching the Fortune 1000, the company has its most meaningful exposure in finance, healthcare, restaurants, retail, hospitality verticals.  The company is finding customers who, according to Comcast, are replacing MPLS service with broadband and getting a 50% cost reduction and an order of magnitude speed improvement.  Comcast introduced a leader from a large finance company to the audience, and though we cannot name the customer, the company shared that it had moved initially to use Comcast transport, and is currently doing a proof of concept for voice and Comcast’s ActiveCore SD-WAN service.  Comcast reiterated its plans to use Cisco, Fortinet, and HPE at large enterprise (Fortune 1000), though implied it is entering another phase that it internally calls Enterprise 2.0 for its Enterprise Solutions group.  In Enterprise 2.0, the company hinted it might develop more in-house technology and further implied its ActiveCore (SD-WAN is one service it offers in ActiveCore) might find a home in some large enterprises.  Comcast’s customer endorsed the idea of using white box universal CPE loaded with “best of breed services” instead of buying vendor-supplied routers so it will not have to replace 15,000 routers when it comes to upgrading time or transitioning. 

Carrier opportunity.  Bill Stemper, who leads Comcast Business explained that, since 2009, it has served carrier Ethernet to the mobile industry and it will pursue 5G opportunistically.  Elaborating further, Stemper said it would decide whether we can get leverage on new builds to serve 5G simultaneously with other customer types.  So, it sounds like building new plant to serve only 5G backhaul is not in the cards. 

Deep Blue WLAN.  In May 2019, the company acquired a Troy, NY-based WiFi services company.  We understand from the presentations that Deep Blue was growing at least 30%/year for several years before the acquisition and that its revenues may have hit around $40M.  The company designs/installs third-party WLAN and associated systems, then operates the networks for a recurring fee mainly in verticals such hospitality and large venues.  The wholly-owned subsidiary has developed advanced software and services capabilities that could easily be leveraged across the other parts of Comcast Business, but from what we learned, there has been no cross-fertilization as of yet.

Products.  The company is expanding the number of services it can deliver to customers, thereby increasing its possible revenues to each customer.  It began offering SD-WAN services three years ago.  It plans to expand beyond SD-WAN.  In its mid-market customer focus, the company will soon offer security (Advanced Firewall and UTM, for instance), routing, and a bit later on, voice gateway (SBC) and WiFi.  For premises-based VNFs, these are run on a universal CPE (uCPE) that today costs about $1,000 to Comcast and it will be launching a $500 uCPE with similar capabilities soon.  The company is updating the cable plant that serves business users, where 4 M businesses are passed, towards a “mid split” architecture that allows for greater upstream speeds so that initially 50 Mbps up and down will be possible, and then over time 100/100, 300/300 and longer-term 1 Gbps up and down.  The company also uses EPON for more demanding needs and places like multiple dwelling units; it won’t be moving to XG PON (10 Gbps) for the foreseeable future.

The company has a multi-vendor approach with these VNFs.  This week, it announced Fortinet UTM/security.  We expect the company could announce other security, routing and perhaps longer-term, other SD-WAN vendor options.  We think the company will stick with a single WiFi cloud controller for at least the next year or so, but indicated it could introduce at least one more vendor’s technology afterward.  The $500 uCPE device is capable of 1 Gbps SD-WAN throughput, as well as advanced firewall at 1 Gbps and has UTM at 600 Mbps. These are impressive throughput numbers, we think, especially because similar throughput capabilities are available on proprietary boxes from vendors that cost much more.

Additionally, the product called CBR2, a new version of its Comcast business router, will be coming soon.  Both the original CBR and CBR2 have WLAN as a built-in feature.  But, neither the CBR nor the CBR2 has sufficient WLAN coverage capabilities to satisfy a mid-sized business, so Comcast thinks its soon-to-be-launched WLAN plans to mid-sized businesses allow it to serve more customers.  One such new target from these added WLAN capabilities will be the E-Rate program, which is a partial funding mechanism for K-12 schools overseen by the US FCC, is one such target.


Comcast emphasized that it has spent significant time and resources developing software capabilities that allow it to orchestrate VNFs, to remotely administer customer networks, and to allow multiple VNFs from different vendors, or to allow VNFs that are developedin-house by its customers.
 

We attended the Qualcomm Wi-Fi 6 event held in San Francisco today. Representatives from partner companies who attended included HPE Aruba, Cisco, Commscope, Boingo, Netgear, Rivet Networks, AMD, and Microsoft. The principal announcement at the event was that Qualcomm announced its Networking Pro Series Platforms which are focused on Wi-Fi 6 capabilities, semiconductor systems which are in initial stages of availability and expected to be available on systems in coming months and quarters. The new Networking Pro Series chip systems hit four price points generally segmented by the number of antennas (more at the higher end) and are primarily targeted to the enterprise market, though we learned that some of the high-end consumer ("prosumer") vendors plan to use these chips as well. The new Networking Pro products have unique features compared to previous Wi-Fi 6 chips introduced from Qualcomm, including upstream MU-MIMO and upstream OFDMA and the design claim is that these can support 1,500 simultaneous users both upstream and downstream.

In the past, it could be said that Wi-Fi and cellular compete in some markets. We found it interesting that Qualcomm said that it expects that Wi-Fi 6 mesh products will be the way to get 5G millimeter-wave signals indoors. Several Qualcomm executives echoed the message that Wi-Fi and cellular are complementary, even though many Qualcomm service provider and cellular equipment partners do not subscribe to this point of view.

Qualcomm shared some impressive numbers. It ships approximately 1B Wi-Fi device chips per year at a run-rate; it has shipped over 4B Wi-Fi chips since 2015; and by comparison, had shipped 1/2B chips by 2010. It has shipped Wi-Fi chips with MU-MIMO capabilities to a total of 0.75B client devices. Qualcomm claims it has found that Target Wait Time (TWT) can improve cell phone battery life by as much as 60%.

HPE Aruba President, Keerti Melkote, presented and shared with the audience that it had won the Wi-Fi project to the nearby Chase Center, where the NBA's Warriors play and that it should operating soon. Additionally, Melkote emphasized that Aruba had recently begun shipping its price-competitive Instant ON product and the take-up has been strong. Cisco SVP Engineering, Anand Oswal, primarily discussed Cisco's Open Roaming initiative that focuses on seamless and secure public Wi-Fi onboarding. It was interesting that Cisco did not focus its comments on Wi-Fi 6. Morgan Kurk, CTO Commscope and acting President of Ruckus Networks spoke about the benefits of Wi-Fi 6 to venues, primary and secondary educational institutions, including AR & VR, 1:1 and online assessment use cases. Derek Peterson, CTO Boingo, a Wi-Fi/cellular venue services provider shared that it is now serving 1B consumers per year. Its goal is to get 100 MHz to each user, and that it will reach this goal by using all available spectrum, licensed and unlicensed. Peterson also shared its observations of the benefits from using Wi-Fi 6 at its trial that began in April of 2019 at the John Wayne Airport in Irvine, CA. Morgan Teachworth, Head of Hardware Platforms of Cisco Meraki, shared observations of several events it has been involved with, including the US Open Pebble Beach 2019 event, where, to its surprise, upload traffic exceeded downlink traffic. David Henry, SVP Connected Home Products from Netgear, hinted that it plans to introduce its Wi-Fi 6 mesh product, saying wait for details next week. We also learned that Netgear would leverage the highest end Qualcomm Network Pro chips intended for enterprise-class devices. 

VK Jones, VP of Technology, Qualcomm Atheros, spoke about future products and standards work. He said by 2020, we should expect 6 GHz, and, by 2022, 802.11ax Release 2 features including scheduling and spatial re-use to improve old device capabilities. 6 GHz requires a third-party service provider to coordinate what frequencies each access point uses.

We attended the Aruba Atmosphere 2019 user conference in Las Vegas.  What we learned was that Aruba had made solid progress since last year’s Atmosphere conference.  It has delivered on 802.11ax, SD-Branch (and SD-WAN), AI/ML, and Zigbee/Bluetooth 5.0, and elements of the IoT market.  The company also introduced a new access point that was not hinted at last year, an 802.11ad outdoor access point.  If we were to sum up the company’s main message for the show, it’s all about SD-Branch.  The company took great efforts to emphasize that its portfolio has greater breadth than ever and is among the few vendors that can deliver all the networking a company may desire.

802.11ax.  At last year’s event, the company told customers to expect 802.11ax products by Nov/Dec of 2018.  Our market share tables show the company shipped 802.11ax for revenue in 4Q18.  At the show, the company also announced some new, full-featured 802.11ax Access Points, the 530 and 550 series.  These new Access Points support Bluetooth 5 and Zigbee, to allow support of IoT devices.  These new 802.11ax Access Points will be available this month, April 2019.​

802.11ad.  The company also introduced a point to point outdoor access point.  The new AP387 allows 1 Gbps at 400 meters using 802.11ad and has a backup of 5 GHz 802.11ac in case of inclement weather.  This device has been shipping for a “couple months” according to the stage presentation (personnel at the show booth said since January 2019).

Machine Learning.  Using Machine Learning for Client Steering and for managing Transient clients. At last year’s Atmosphere event, the company was just rolling out AI/ML to customers to improve networking capabilities for wireless users. 

SD-Branch.  The company disclosed that it has 25,000 SD-Branch “wins,” which means that it has many contracts to sell “at some point in the future” SD-WAN and other branch equipment systems such as WLAN and switching.  At last year’s event, the company had not sold any SD-WAN, so this is a big accomplishment and signifies Aruba’s progress in delivering what it calls a Single Pane of Glass approach that includes four parts:  SD-WAN orchestration, Dynamic Path Steering, Secure Connectivity, and Dynamic Segmentation.

Clearpass Device Insight.  The company introduced its device recognition system, intended to simplify the discovery of IoT devices on the network.  Clearpass Device Insight is available in April 2019.  This cloud service uses a fingerprint database, as well as AI/ML, to find devices on the network, and then presents them by category on a single screen.

During the day-2 presentations, the company had some fun and CTO, Partha Narasimhan, showed a picture of him pretending to be an IT executive of a fictitious university.

There were 3,100 attendees at the Atmosphere show in Las Vegas, most of which appeared in attendance at the keynote.  Artificial Intelligence and Cloud were the main topics.  Specifically new for the show:  cloud-managed SD-WAN, NetInsight, ArubaEdge Partner program, Cape Networks acquisition.  Cloud-managed SD-WAN – June/July ’18 availability (dynamic path selection, VPC direct to AWS or Azure).  NetInsight is a data-collecting and cloud-analysis AI platform that finds anomalies and allows improvements to wireless LAN operation.  Cape Networks acquisition to allow user-experience simulation for cloud-services connection quality measurement. 

Keerti Melkote, President of Aruba, discussed financials: FY17 was up 15% Y/Y, reaching $2.5B, split 49% to wired and 51% to wireless.  (650 note: for C17, we measure WLAN + non Data Center Switch + Enhanced NAC product revenues at $2,260M).

A key message of the presentation was that as enterprises embrace cloud-services applications like dropbox, Salesforce and Office 365, this means enterprises become more focused on edge access than ever.  Citing statistics like that 80% of advanced attacks  use valid credentials, 8 weeks average gestation period of typical attacks, and 84% of those who’ve deployed IoT have been breached, the company said that securing the edge is more important than ever and discussed the Aruba 360 Secure Fabric. 

​Aruba had customers on stage to endorse various products, including Accenture, Ohio State University, and CBRE.  Other customers mentioned on slides included Lufthansa Technik, Purdue University, Rajasthan, Disney, Time Warner, University of Minnesota, University of New Hampshire, University at Buffalo, Northwestern University, University of Washington, Bucks, Virginia Tech, University of Iowa, Illinois, and Lenovo.