Software Defined Networking (SDN) Market Analysis By End Users (Enterprises, Cloud Service Providers, Telecommunications Service Providers), By Solutions (SDN Switching, SDN Controllers, Cloud Virtualization Applications) And Segment Forecasts To 2020

Published: April 2014 | Report Code: 978-1-68038-114-6 | Report Format: Electronic (PDF)

Industry Insights

Software Defined Networking (SDN) entails the separation of the forwarding plane from the control plane in a network. This helps in effective data flow control and provides network administrators with a software-based approach to manage the network. In comparison to SDN, which offers a centralized controller, in traditional network architectures, each network device needs to be configured separately. As a result, there exists a high degree of dependency on vendor-specific tools and instructions. Since SDN promotes flexibility and scalability in the network along with helping streamline operations, it is being increasingly used by enterprises, telecom service providers, etc.

The global Software Defined Networking (SDN) market was estimated to be valued at USD 326.5 million in 2013, which is expected to reach USD 4,909.8 million by 2020, growing at a CAGR of 44.2% from 2014 to 2020. Mobile Network Operators (MNOs) have been garnering increasing subscriber base since the majority of the population globally uses mobile devices. This trend is particularly prevalent in emerging nations, which have witnessed high demand for mobile phones, tablets, and phablets among others. MNOs need to ensure that their network is capable of handling the burgeoning number of users, which is made possible by SDN. Therefore, growing need and demand for mobility is a key driving force for the market.

Additionally, SDN facilitates the establishment of an efficient network and ensures virtualization, cloud services, agility, etc., which is expected to propel market growth. Lack of standardization in implementation and utilization of the technology may act as a restraint to the market over the next six years. Growing consumerization of IT has led to adoption of Bring Your Own Device (BYOD) policies. This is expected to serve as an opportunity for the global SDN market, with a growing number of organizations aiming to use BYOD in order to improve productivity. 

Global Software Defined Networking (SDN) market by end user, 2012 - 2020 (USD Million)


End Users Insights

Enterprises are expected to remain the largest end user segment over the forecast period; it accounted for over 40% of the global revenue in 2013. The key factors fueling SDN adoption in the enterprise space include enhancing overall infrastructure flexibility, along with need to reduce the time-to-market of various applications and services. In order for SDN to be deployed across the enterprise, it is crucial to ensure complete knowledge of the implementation. Telecommunications service providers are expected to be the fastest growing segment, at an estimated CAGR of 45.6% from 2014 to 2020. There exist a large number of telecom service providers such as China Telecom, Telefonica, France Telecom, Singapore Telecom. SDN enables network resilience, as well as reduction in capital and operating expenditure in the telecom sector. 

Solutions Insights

SDN solutions primarily include SDN switching, SDN controllers, and cloud virtualization; other solutions primarily comprise network virtualization security. SDN switching is expected to benefit from first time end users; the solution consists of legacy and hybrid switches, routers, Programmable Flow Products (PFP), etc. SDN controllers function as middleware and aid in effective networking by managing flow control between the network devices and the application. Cloud virtualization applications are expected to, be the largest solution segment over the next six years, and accounted for over 30% of the overall revenue in 2013. It is also expected to be the fastest growing segment over the forecast period. 

Regional Insights

North America occupied over 50% of the global market share in 2013, which can be attributed to high penetration of mobility as well as enhanced cloud services in the region. Asia Pacific is expected to be the fastest growing market at an estimated CAGR of 47.7% from 2014 to 2020, with trends such as Bring Your Own Device (BYOD) driving the need for a manageable network. This is also a considerable opportunity for potential market entrants as well as existing participants in order to gain market share. 

Competitive Insights

SDN industry participants include IBM Corporation, Cisco Systems, Juniper Networks, VMware, Alcatel-Lucent, Hewlett-Packard, etc. Companies operating in the market are divided on the basis of their product offering, such as hardware, software and services. Market players aim to provide end-to-end solutions, with presence across the value chain. Mergers, acquisitions and strategic collaborations have been among the key growth strategies. 

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