Software-Defined Networking Market Size, Share & Trends Analysis Report By Component (Solutions, Services), By Organization Size (Large Enterprises, Small- & Medium-sized Enterprises), By End-User (Telecommunication Service Providers, Cloud Service Providers, Enterprises), By Industry Vertical (IT, Consumer Goods & Retail, BFSI, Defense, Telecom, Healthcare, Others ) and By Region(North America, Europe, APAC, Middle East and Africa, LATAM) Forecasts, 2024-2032

Market Overview

The global software-defined networking market size was valued at USD 16.23 billion in 2021. It is expected to reach USD 153.70 billion by 2030, growing at a CAGR of 28.37% during the forecast period (2022-2030). 

To make networks more manageable and flexible, software-defined networking is a networking strategy that enables networks to be intelligently and centrally controlled or programmed with the aid of software-based controllers or application programming interfaces (APIs). The network resources are optimized, and networks are swiftly adjusted to new applications, commercial demands, and data traffic. Additionally, it provides a wealth of benefits for businesses, like the ability to respond more quickly to problems and outages for improved network availability, increased flexibility & accelerated time-to-market for new applications, and programmability for networking that enables businesses to automate their network functions and lower operating costs. Traditional networks rely on physical infrastructures like switches and routers for connections and proper operation. On the other hand, a software-based network enables the user to regulate the distribution of resources at the level of the virtual network via the control plane.

As a means of application deployment, enterprises increasingly turn to software-defined networking. This technology allows organizations to roll out apps faster and for less money overall. The major factors driving the growth of the global software-defined networking market are the rise in cloud computing adoption, surge in investments in software-defined networking/network function virtualization to reduce capital expenditures (CAPEX) and operating expenses (OPEX), and rise in demand for mobility services. However, the centralized structure of the data plane and security vulnerabilities associated with legacy network equipment could limit industry expansion. 

Market Dynamics

Global Software-Defined Networking Market Drivers

Growing Cloud Computing Adoption and Increased Investment

Various sectors are using cloud computing services to enable software-driven cloud networking, which combines cloud computing, software-defined networking, and software-driven cloud networking technologies to construct networks. Through virtualizing physical network connectivity, software-defined networking enables network managers to control network services from a single location. Furthermore, a centralized software-defined networking controller allows cloud service providers to host numerous virtual networks without requiring widespread isolation and separation techniques, like VLAN. As a result, the market for software-defined networking is expanding as cloud computing services become more widely adopted by commercial and residential sectors.

The advent of software-defined networking/NFV reduces the burden of capital expenditures and operating expenses borne by businesses while simultaneously facilitating the handling of rapidly growing demands by lowering their dependency on hardware platforms. For instance, a virtualized radio access network (vRAN) reduces operating costs by not requiring a baseband unit (BBU) at the site, along with rents at cell sites, due to the limited power consumption, with an estimated total cost of ownership savings. Additionally, many communication service providers are spending money on these technologies to change how their networks are built and cut running costs. For instance, the telecommunications service company AT&T established a target to virtualize 75% of its network by 2020. Through its NFV/software-defined networking projects, AT&T has started to realize significant cost reductions.

Global Software-Defined Networking Market Restraints

Legacy Network Equipment Issues

Software-defined networking architecture is used in physical and virtual networks to deliver a flexible and managed network. However, this architecture has drawbacks, including challenges with compatibility and the use of virtual devices in different network environments. This aspect limits the market's expansion to some level since switching from legacy networking to software-defined networking is difficult because the legacy network is probably still providing active networking and corporate business systems. The shift to software-defined networking also requires organizations to change most of their networking environments, which calls for compatibility with a hybrid legacy-software-defined networking infrastructure.

Global Software-Defined Networking Market Opportunities

The emergence of 5G 

The creation of a robust and sophisticated heterogeneous infrastructure with vast capacity and connection was made possible by the rise of 5G wireless networks. To make the 5G network more capable of handling the complex operational context and supporting the wide range of new services and applications, a spike in network enhancement for 5G has been observed. Since network function virtualization and software-defined networking are being used to upgrade network design to satisfy the needs of a new eco-system in the future, these 5G network requirements present a wide range of potential for the market's expansion.

Regional Analysis

The region-wise segmentation of the global software-defined networking market includes North America, Europe, Asia-Pacific, and LAMEA.

North America and the Asia Pacific are Envisioned to Lead the Regional Market

North America will likely command the regional market while expanding at a CAGR of 25.4%. North America is one of the first regions to adopt and create software-defined networking technologies. Numerous businesses, including those in the telecommunications, information and technology, healthcare, banking, financial services, insurance, and energy sectors, as well as the public and private sectors of government, have made substantial use of these technologies. The area continues to employ software-defined networking extensively, as seen by the rise in demand for high standards across several business verticals, including secure network infrastructure and interoperable devices.

The surge in the adoption of cutting-edge technologies across numerous industry verticals, the rise in the use of cloud computing & mobility solutions, and the increased demand for network management due to high network traffic are the main factors propelling the growth of the North American software-defined networking market share. As they prioritize shifting their network and IT operations to the cloud, businesses in this region are quickly embracing software-defined networking and network function virtualization technologies. These businesses use software-defined networking to simplify processes and enable easier transitions to a single or multiple cloud environment.

The Asia Pacific is envisioned to grow at a CAGR of 32.75% and hold USD 39,108 million. Due to the region's diverse enterprises' stable but growing adoption of virtual solutions for controlling data traffic, the Asia-Pacific software-defined networking market share is expanding rapidly. To boost corporate performance and productivity, the region has also seen an increase in the use of software-defined networking. 

Rapid industrial development, an increase in startup activity, and a spike in cutting-edge technologies like virtualization services and mobility solutions across operational business systems are the main drivers of the software-defined networking market growth in the Asia-Pacific region. By streamlining and centralizing numerous network management features, software-defined networking enables enterprises in this region to reduce capital and operating expenditure. Additionally, businesses' implementation of software-centric network models to accomplish flexibility and scalability, thereby boosting market growth, is fueled by the rapidly expanding data center infrastructure and rapidly increasing mobile data traffic.

Segmental Analysis

The global software-defined networking market is classified based on the component, organization size, end-user, industry vertical, and region. 

By Component Analysis

Based on the component, the categories include solutions and services.

The section of solutions is predicted to grow at a CAGR of 26.7% and hold the largest market share. A software-defined networking solution enables the dynamic reconfiguration of networks. These solutions aid businesses in directing the flow of network traffic, allowing the network to function successfully with various applications. Greater adoption of software-defined networking solutions by companies and communication service providers to expedite the delivery of new applications and services is one of the key factors driving market expansion.

The section of services will hold the second-largest share. As they ensure the effective operation of platforms and software throughout the entire process, software-defined networking services have become increasingly widespread over the last years across all industry verticals. In the coming years, the increased usage of software-defined networking technologies is anticipated to increase demand for various services.

By Organization Size Analysis

The categories include large and small & medium-sized enterprises based on the organization size.

The section of large enterprises is predicted to grow at a CAGR of 27.4% and hold the largest market share. Software-defined networking enables the growth of network resources and the addition of new servers in large enterprises while minimizing administrative burden. Software-defined networking enables IT departments of major businesses to modify network configurations without affecting the network. As storage and processing requirements evolve, traditional hardware-based networks in large companies and university settings cannot keep up.

The small & medium-sized enterprise section will hold the second-largest share. These businesses have begun adopting software-defined networking to automate processes, enforce uniformity, introduce flexibility, and reduce troubleshooting. Small- and medium-sized companies adopting software-defined networking are primarily driven by the individualized approach offered by software-defined networks, the need to streamline business processes, and the desire to increase efficiency by shortening the time required to troubleshoot a problem.

By End-User Analysis

Based on the end-user, the categories include telecommunication service providers, cloud service providers, and enterprises.

The cloud service providers segment is predicted to advance at a CAGR of 31.88% and hold the largest market share. Cloud computing and software-defined networking are complementary since they encourage and support each other's market activities. A cloud is generated over a network, and service providers are encouraged to embrace it. Software-defined networking assists businesses in resolving cloud connectivity issues, simplifying cloud connectivity management, reducing network expenses, and increasing cloud adoption.

The segment of telecommunication service providers will hold the second-largest share. Software-defined networking is gaining popularity among telecommunications service providers because it allows them to decrease capital and operating expenses by utilizing virtual networking equipment. The adoption of software-defined networking by telecommunication service providers is primarily driven by the need for flexible data network delivery and a desire to decrease the operational cost of networking. The improvement of communication technologies, growth in data consumption, a surge in smartphone prevalence, and the emergence of internet traffic owing to IoT/M2M connectivity also drive the use of software-defined networking.

By Industry Vertical Analysis

Based on the industry vertical, the segments include IT & telecom, consumer goods & retail, BFSI, defense, telecom, healthcare, and others. 

The IT & telecom sector is predicted to advance at a CAGR of 22.9% and hold the largest share. Software-defined networking is widely embraced in the IT sector due to benefits such as data traffic management and a significant network that is practically manageable. In addition, it minimizes the usage of physical devices for network management, reducing manual intervention and operational expenses. Massive amounts of data generated by the Internet of Things (IoT), a surge in demand to improve agility and creativity, and a rise in the need to enhance employee collaboration are some of the primary causes driving the IT industry's adoption of software-defined networking.

The BFSI segment will hold the second-largest share. The banking, finance, and insurance industries gain a lot from software-defined networking technology. The primary driver for adopting software-defined networking in the BFSI industry is the increasing pressure from external forces, such as competition from FinTech startups and a more demanding customer base, for BFSI institutions to adopt a customer-centric business strategy.

Impact of covid-19

COVID-19 has positive and negative market consequences, as carbon emissions have decreased globally due to the lockout. COVID-19's reduction in emissions is a short-term benefit. Still, when industries and enterprises attempt to recoup some of their financial losses in the first quarter of the year, carbon emissions will rise dramatically. COVID-19 had a negative impact on global recycling efforts. Countries, notably the United States, have halted or decreased recycling programs to focus on collecting additional domestic waste or because services have been disrupted by the virus.

Also, with industries slowly returning to normalcy following the COVID-19 outbreak, this shift in workplace health and safety is expected to increase due to mandatory social distancing and continuous personal care through sanitization to eliminate even the tiniest possibility of COVID-19 spread. COVID-19 has impacted various companies' revenues, and if the lockdown is lifted, companies will turn their attention to operations to make up for their losses.

Recent Developments

• In 2022, IBM Corporation announced the development of a new 33-month work order according to its agreement with the Defense Microelectronics Activity (DMEA) to offer security services designed to improve the Department of Defense's (DoD) microelectronics supply chain for mission-critical platforms.
• In 2022, Cisco expanded its alliance with General Dynamics Information Technology to provide Cisco Private 5G services to a wide range of government agencies.