Network Slicing Market

Market Overview

The global network slicing market size was valued at USD 754.38 million in 2023. It is estimated to reach USD 29,350.77 million by 2032, growing at a CAGR of 50.2% during the forecast period (2024–2032). In recent years, the demand for high-speed internet services owing to a rapid proliferation of digitization has surged the demand for 5G network solutions, which are estimated to augment the global market growth. The network slicing market is also driven by partnerships and collaborations among key players, who combine their resources, skills, and technology to develop customized network solutions. Moreover, it promotes interoperability, guaranteeing smooth integration and widespread acceptance of network-slicing technologies, thereby creating opportunities for market expansion.

Network slicing is a pivotal concept in 5G networking, enabling the partitioning a single physical network infrastructure into multiple virtual networks tailored to specific applications or user requirements. Each slice operates as an independent logical network with unique characteristics, such as bandwidth, latency, security policies, and Quality of Service (QoS) parameters. This customization allows diverse use cases, ranging from ultra-reliable low-latency communication (URLLC) for critical applications like autonomous vehicles and remote surgery to massive machine-type communication (MTC) for Internet of Things (IoT) devices. Network slicing maximizes network efficiency by dynamically allocating resources based on demand, ensuring optimal performance for various services. With its ability to adapt to diverse needs efficiently, network slicing is a cornerstone for unlocking the full potential of 5G technology across industries and applications.

Highlights

• Solutions dominate the components segment
• Communication service providers dominate the end-user segment
• Healthcare dominates the industry verticals segment
• North America is the highest shareholder in the global market 

Market Dynamics

Global Network Slicing Market Drivers:

Rising Deployment of 5G Networks

The deployment of 5G networks is a primary driver for the network slicing market, offering high bandwidth, low latency, and massive device connectivity. Network slicing enables operators to efficiently allocate resources to diverse 5G applications and services, catering to various sectors such as manufacturing, healthcare, and smart cities. This technology facilitates the creation of virtual networks with customized performance parameters, ensuring optimal support for applications with stringent requirements, thus driving the demand for network slicing solutions in the evolving 5G ecosystem.

Furthermore, the global 5G wireless connections grew by 76.1% from the end of 2021 to the end of 2022, reaching a total of 1.05 billion. Omdia's newest data reveals that there was a total of 455 million new 5G connections worldwide in 2022. Therefore, these numbers demonstrate a 14 percent surge in quarterly expansion, rising from 923 million in Q3 2022 to 1.06 billion in Q4 2022. Similarly, global 5G connections are expected to grow steadily in 2023, reaching approximately 2 billion connections. By the end of 2027, the number will increase to 5.9 billion. Therefore, the rising adoption of 5G is estimated to boost global market growth.

Global Network Slicing Market Restraint:

Complexity and Standardization 

The complexity and standardization restraint in the Network Slicing market arises from the intricate coordination between hardware, software, and network resources. Lack of standardized protocols and interfaces complicates interoperability among different vendors' equipment, hindering seamless deployment and management of network slicing solutions. Integrating diverse technologies becomes challenging without established standards, leading to vendor lock-in and fragmented ecosystems.

Moreover, the dynamic nature of network slicing exacerbates complexity, necessitating continuous adaptation and optimization of resources. Standardization efforts are essential to address these challenges, facilitating interoperability, scalability, and innovation within the network slicing ecosystem. However, achieving consensus among stakeholders and developing comprehensive standards takes time and effort, delaying market maturity and widespread adoption. Thus, the complexity of implementing and managing network slicing solutions and the absence of robust standardization frameworks are significant barriers to entry for service providers and enterprises looking to leverage this technology.

Global Network Slicing Market Opportunities:

Collaborations and Partnerships

The key players in the market are getting involved in collaborations and partnerships for faster innovation, scalability, and customization, meeting diverse user demands efficiently. For instance, in August 2023, Vodafone and Ericsson successfully conducted a real-time network trial at Coventry University to demonstrate the revolutionary potential of 5G Standalone network slicing for mobile gaming. The trial utilized network slicing capabilities, a crucial aspect of 5G Standalone networks that allows for the customization of connectivity services tailored to specific clients and use cases.

Furthermore, in September 2023, Samsung Electronics and KDDI announced the partnership to establish a 5G Global Network Slicing Alliance by signing a Memorandum of Understanding (MoU). Under this new partnership, the firms will collaborate to launch various commercial 5G network slicing services and evaluate novel business models built on this cutting-edge technology. This news is a result of the firms' continuous efforts in the development of network slicing. Such collaborations are estimated to create opportunities for market growth.

Regional Analysis

North America Dominates the Global Market

Based on region, the global network slicing market is bifurcated into North America, Europe, Asia-Pacific, Latin America, and the Middle East and Africa. 

North America is the most significant global network slicing market shareholder and is expected to expand substantially during the forecast period. With early 5G deployments and a robust ecosystem of technology innovators and service providers, North America emerges as a prominent market for network slicing. In Q4 2022, North America had a total of 119 million wireless 5G connections, making it a frontrunner in adopting this technology. The North American market has achieved a 5G penetration rate of about 32 percent, adding 52 million 5G connections in the past year. This represents a significant growth of 78 percent compared to the fourth quarter of 2021. In 2023, it was estimated that North America contributed 215 million 5G connections, primarily due to the high number of 5G smartphone shipments in the United States.

Furthermore, the region encompasses prominent telecommunications industry leaders and equipment makers, including Cisco, Nokia, and Ericsson. These players are involved in strategic initiatives to enhance their market share. For instance, in February 2024, Cisco and DISH Wireless initiated a proof-of-concept test to evaluate a unique network-slicing solution in a hybrid cloud environment, utilizing Cisco hardware and software. Network slicing will enable DISH Wireless to segregate and effectively handle network traffic based on specific use cases and applications, defining the suitable performance criteria for each category. The utilization of innovative Cisco technology in the proof-of-concept test will allow DISH Wireless to provide enterprise customers with a streamlined implementation of 5G services, accompanied by more substantial service level agreements (SLAs). All these factors are estimated to drive the regional market expansion.

The Asia-Pacific region represents a burgeoning market for network slicing, propelled by extensive 5G infrastructure deployments and rapid digitization across key economies. The government's focus on building smart cities and fostering technological innovation further amplifies the region's demand for network-slicing solutions. Moreover, the regional market players are forming joint ventures with the international players.

For instance, in February 2024, Ericsson, a vendor from Sweden, and Telstra, an operator from Australia, announced their intention to provide 5G network slicing services to Australian businesses as part of their existing partnership. The pair have announced the successful completion of the initial stage of their project, which aims to facilitate slice-based applications such as fixed wireless access (FWA), broadcasting, automobile connectivity, and stadium or precinct services on Telstra's 5G network. The partners have completed the development of the initial wireless capabilities for this project to fully implement and generate revenue from network slicing utilizing Ericsson's Dynamic Network Slicing solution. This is expected to expedite the market growth in the Asia-Pacific region.

Segmental Analysis

The global network slicing market is bifurcated into components, end-users, and industry verticals.

Based on components, the global network slicing market is segmented into solutions and services. 

The solutions segment dominates the global market. Network slicing solutions enable operators to offer diverse services with varying performance, latency, and security requirements tailored to specific user needs within a shared infrastructure. The strategic initiatives by the key players in this market segment are estimated to create market growth opportunities. For instance, in February 2024, Nokia, a vendor from Finland, and A1 Austria, a carrier from Austria, announced the successful completion of the industry's first experiment of 5G edge cloud network slicing with Microsoft. The European vendor used Nokia's 5G edge slicing solution, connected with Microsoft Azure managed edge computing, on A1's operational commercial network in Vienna, Austria.

Based on end-users, the global network slicing market is bifurcated into communication service providers and enterprises. 

The communication service providers segment is estimated to own the market share. Network slicing is a pivotal strategy that communication service providers (CSPs) employ to efficiently cater to diverse connectivity needs. It involves partitioning a single physical network infrastructure into multiple virtual networks tailored to specific requirements such as speed, latency, and security. CSPs can offer customized services to various industries and applications, including the Internet of Things (IoT), autonomous vehicles, and virtual reality.

For instance, a factory may require a low-latency, high-reliability network slice for its industrial automation systems. At the same time, a smart city project might need a slice prioritizing massive connectivity for sensors and devices. By dynamically allocating network resources based on demand, CSPs optimize network usage and enhance user experience while minimizing costs. Network slicing thus revolutionizes how CSPs deliver services, enabling them to meet the diverse and evolving demands of modern digital ecosystems.

Based on industry verticals, the global network slicing market is bifurcated into healthcare, government, transportation and logistics, energy and utilities, manufacturing, media and entertainment, financial services, retail, and others. 

The healthcare segment held a significant market share. Network slicing in the healthcare industry revolutionizes the delivery of medical services by leveraging tailored virtual network segments. These slices allocate specific bandwidth, latency, and security parameters to accommodate diverse healthcare applications, such as telemedicine, remote patient monitoring, and medical IoT devices. By customizing network resources based on the unique needs of each application or service, healthcare providers can ensure seamless connectivity, high performance, and stringent data privacy and security measures.

For instance, critical patient data transmission requires low-latency, high-bandwidth slices to facilitate real-time monitoring and diagnosis. At the same time, administrative tasks may operate on separate slices with less stringent requirements. Ultimately, network slicing optimizes resource utilization enhances service quality, and supports the scalability and flexibility demanded by modern healthcare systems, fostering innovation and improving patient outcomes.

Recent Developments

• February 2024- BT, Ericsson, and Qualcomm effectively executed a trial demonstrating the potential of 5G Standalone (SA) network slicing. The trial, which took place at Adastral Park, BT Group's research and innovation center, showcased the potential of Ericsson's 5G Core and Radio Access Network technology, combined with Qualcomm's Snapdragon 8 Gen 2 for Galaxy Mobile Platform, to provide distinct connectivity options for both consumers and enterprises.
• February 2024- Singtel, in collaboration with strategic partners Ericsson and Samsung, unveiled the world's first live deployment of app-based network slicing.