Virtual Networking Market Size, Share & Trends Analysis Report By Component (Hardware, Software), By Deployment, By Enterprise Size, By Application, By Region, And Segment Forecasts, 2023 - 2030

Virtual Networking Market Size & Trends

The global virtual networking market size was valued at USD 32.15 billion in 2022 and is expected to grow at a compound annual growth rate (CAGR) of 25.6% from 2023 to 2030. The market growth can be attributed to several factors, including an increase in focus on virtual technologies that manage virtual machines, rising cloud computing adoption, high levels of advanced communication methods adopted by people, rising software-defined networking adoption in enterprises, and the need for network and physical hardware virtualization to lower network downtime. At the same time, the growing adoption of industrial automation and the shifting preferences of businesses toward cloud services is also significant factor contributing to the growth of the market.

Numerous virtual networking solution providers across the globe are focusing on developing virtual router appliances that offer better IP routing with better connectivity. For instance, in November 2022, BBIX, Inc., a company that operates Internet Exchange (IX) business, and BBSakura Networks, Inc., a network solution provider, launched a new feature OCX-Router(v1) in the Open Connectivity eXchange(OCX), a cloud-based network service. "OCX-Router(v1)" is a virtual router appliance that offers IP routing on the OCX network. Customers can use "OCX-Router(v1)" to exchange the traffic between regions or cloud services inside the tenant network without going via their on-premise facilities.

Ease in network management is also a major benefit offered by the virtual networking solutions.Traditional network management involves manual configuration of network devices, which can be time-consuming and prone to errors. With virtual networking, network administrators can manage and configure the entire network infrastructure from a centralized location, simplifying network management and reducing the risk of errors. Virtual networking solutions come equipped with automation capabilities that allow network administrators to automate network configuration tasks. This helps reduce the time and effort required for manual configuration and ensures consistency across the network.

Virtual networking solutions are highly beneficial in cloud computing because they provide organizations with a flexible, scalable, and efficient way to manage their network infrastructure. Virtual networking solutions allow organizations to optimize their use of cloud resources by creating virtual networks tailored to their specific needs. This means that organizations can create separate networks for different workloads or applications, ensuring each workload or application receives the resources it needs to perform optimally. Moreover, virtual networking solutions are highly scalable, allowing organizations to quickly and easily add or remove resources from their virtual networks as needed.

With the proliferation of Internet-of-Things (IoT) devices, the demand for virtual networking solutions that can support a large number of connected devices has increased. As the number of IoT devices continues to grow, organizations are increasingly looking for scalable virtual networking solutions that can accommodate large numbers of devices and data. Virtual networking solutions need to be able to handle the vast amounts of data generated by IoT devices and provide efficient ways to process, store, and analyze it. However the security concerns associated with the virtual networking solutions is a significant factor that is expected to impact the market growth.

COVID-19 Impact Analysis

The COVID-19 pandemic has positively impacted the virtual networking market, owing to the rising adoption of virtual networking solutions as organizations worldwide shifted to remote work and online collaboration. The pandemic forced many organizations to shift to remote work, which created a significant demand for virtual networking solutions that enable remote access to corporate networks and applications. This has led to a surge in demand for virtual private networks (VPNs), virtual desktop infrastructure (VDI), and other remote access solutions. The pandemic has also highlighted the importance of network security, as remote work has increased the risk of cyber-attacks and data breaches. This has led to a greater demand for virtual networking solutions that provide advanced security features, such as encryption, firewalls, and intrusion detection and prevention systems.

Component Insights

The software segment dominated the market in 2022 and accounted for more than 42.0% share of the global revenue owing to the increasing adoption of Software-defined Networking (SDN) technologies. SDN enables organizations to abstract the network from the underlying hardware, creating a virtualized network infrastructure that is flexible, scalable, and efficient. This has led to a greater demand for software solutions that can provide advanced networking functionality, such as routing, switching, and security, without relying on proprietary hardware. Additionally, the availability of hypervisor software solutions allowing multiple virtual machines to run on a single physical server, has further accelerated the adoption of software solutions in the virtual networking market, providing organizations with cost-effective and customizable solutions.

The services segment is projected to witness remarkable growth over the forecast period owing to the growing demand for professional and managed services that can help organizations plan, design, deploy, and manage virtual networking solutions. As virtual networking becomes more complex and critical to business operations, organizations are looking for specialized services that can provide them with the expertise, resources, and support they need to ensure the successful implementation and operation of their virtual networking solutions. Additionally, the emergence of cloud-based virtual networking solutions has created a greater need for cloud services and support, such as cloud migration, cloud management, and cloud optimization services.

Deployment Insights

The cloud segment dominated the market in 2022 and accounted for more than 55.0% share of the global revenue. As organizations are increasingly adopt cloud computing, they are also looking to leverage the benefits of virtual networking in the cloud, such as flexibility, scalability, and cost-effectiveness. One emerging trend is the use of cloud-based virtual private networks (VPNs), which enable organizations to securely connect their cloud resources to their on-premises network and other cloud-based resources. Additionally, the use of cloud-based load balancers, which can distribute traffic across multiple servers and optimize application performance. As organizations continue to adopt cloud computing, these trends are expected to continue to drive the growth of the cloud segment over the coming years.

The on-premise segment is projected to witness significant growth over the forecast period. Increasing demand for hybrid cloud and multi-cloud environments, which require on-premise virtual networking solutions to securely connect the cloud-based resources with the on-premise resources, is a significant factor driving the segment growth. As organizations adopt more cloud-based services and applications, the need for secure and reliable on-premise virtual networking solutions will continue to grow. Moreover, the use of NFV and SDN solutions to optimize on-premise virtual networking infrastructure is also a significant factor contributing to the growth of the segment.

Enterprise Size Insights

The large enterprises segment dominated the market in 2022 and accounted for more than 68.0% share of the global revenue. Large enterprises across the globe are increasingly adopting cloud-based solutions and infrastructure to increase their scalability. As a result, there is a growing need for virtual networking solutions that can provide secure and reliable connectivity between different cloud environments, as well as between on-premises infrastructure and cloud environments. Moreover, with the rise of remote and hybrid work models, organizations need virtual firewall solutions as employees are accessing corporate resources from various locations and devices. Such factors mentioned above bode well for the growth of the segment over the forecast period.

The small and medium enterprises segment is projected to expand at the highest CAGR over the forecast period as small and medium enterprises are increasingly adopting cloud-based solutions for their IT infrastructure, including cloud storage, SaaS applications, and cloud-hosted servers. Virtual networking solutions can help small & medium enterprises segment to connect their on-premises infrastructure to the cloud, as well as provide secure and reliable connectivity between different cloud environments. Moreover, SDNs can help small & medium enterprises to centralize and automate network management while reducing costs and increasing agility. Such factors are expected to create growth opportunities for the segment over the coming year.

Application Insights

The IT & Telecommunication segment dominated the market in 2022 and accounted for more than 25.0% share of the global revenue. The ability of virtual networking solutions to offer better flexibility, cost savings, and scalability is a major factor driving segment growth. Virtual networking solutions allow IT & telecommunication companies to create, modify, or remove virtual networks as needed to support changing business requirements without the need to deploy and manage physical network infrastructure. This increases agility and reduces costs associated with physical network infrastructure, such as hardware, cabling, and maintenance. Additionally, virtual networking solutions enable companies to scale their networks easily and efficiently without investing in additional hardware or software.

The BFSI segment is expected to grow significantly over the forecast period. BFSI firms are increasingly implementing virtual networking technologies to improve network performance, boost agility, and minimize expenses, thereby contributing to segment growth. BFSI firms may use virtual networking solutions to construct customized and secure virtual networks that are independent of their physical network infrastructure, allowing them to manage better and safeguard critical data. Moreover, virtual networking solutions can offer higher flexibility and scalability than traditional networking solutions, allowing BFSI firms to easily adapt their networks to changing business needs. Additionally, virtual networking solutions may assist BFSI businesses in lowering the cost of hardware and maintenance associated with traditional network infrastructure while boosting network performance and dependability.

Regional Insights

The North America region dominated the market in 2022 and accounted for more than 30.0% share of the global revenue. North America is experiencing significant growth due to the increasing demand for cloud computing, software-defined networking (SDN), and Network Function Virtualization (NFV) solutions. Cloud computing adoption is boosting demand for virtual networking solutions in North America as businesses migrate their IT infrastructure to the cloud to improve agility, save costs, and increase scalability. Because of its capacity to consolidate and automate network administration while lowering costs and enhancing agility, SDN is gaining popularity in North America. Those elements mentioned above point to a positive outlook for the region's economy throughout the anticipated period.

The Asia Pacific region is anticipated to emerge as the fastest-growing segment over the forecast period. Increasing adoption of hybrid cloud models, where organizations use a combination of public and private clouds to achieve greater flexibility, scalability, and cost-effectiveness is a significant factor contributing to the regional growth. Cloud computing also includes the use of virtual routers and virtual firewalls, as well as more sophisticated technologies such as Zero Trust Network Access (ZTNA) and Secure Service Edge (SSE), to safeguard workloads as they migrate to the public cloud.

Key Companies & Market Share Insights

Leading industry companies are extensively spending in R&D to increase their product lines, which will help the Virtual Networking market to flourish. Participants in the market are also extending their worldwide footprint through a number of strategic actions, such as new product launches, partnerships, mergers and acquisitions, and collaboration. Competitors in the virtual networking market must offer cost-effective solutions to flourish and prosper in a more competitive and developing market environment.

Numerous businesses in the virtual networking market are creating alliances and cooperation with other industry participants. This allows them to capitalize on each other's capabilities and resources, allowing them to provide more complete and integrated solutions to clients. Businesses are also increasing their regional footprint to enter new markets and increase their consumer base. Partnerships with local players, investment in network infrastructure, and focused marketing efforts are all possibilities. Some of the prominent players in the virtual networking market include:

• Huawei Technologies Co., Ltd.

• Hewlett Packard Enterprise Development LP

• VMware, Inc.

• Cisco Systems, Inc

• Microsoft Corporation

• IBM Corporation

• Citrix Systems, Inc.

• Juniper Networks, Inc.

• Oracle

• Verizon Communications Inc.

Virtual Networking Market Report Scope

Global Virtual Networking Market Report Segmentation

This report forecasts revenue growth at global, regional, and country levels, and provides an analysis of the latest industry trends in each of the sub-segments from 2017 to 2030. For the purpose of this study, Grand View Research has segmented the virtual networking market report based on component, deployment, enterprise size, application, and region:

• Component Outlook (Revenue, USD Million, 2017 - 2030)

  • Hardware

  • Software

  • Services

• Deployment Outlook (Revenue, USD Million, 2017 - 2030)

  • On-Premise

  • Cloud

• Enterprise Size Outlook (Revenue, USD Million, 2017 - 2030)

  • Large Enterprises

  • Small &  Medium Enterprises

• Application Outlook (Revenue, USD Million, 2017 - 2030)

  • BFSI

  • Public sector

  • Manufacturing

  • Hospitality

  • IT and Telecommunication

  • Healthcare

  • Others

• Regional Outlook (Revenue, USD Million, 2017 - 2030)

  • North America

    • U.S.

    • Canada

  • Europe

    • U.K.

    • Germany

    • France

  • Asia Pacific

    • China

    • India

    • Japan

    • South Korea

    • Australia

  • Latin America

    • Brazil

    • Mexico

  • Middle East & Africa

    • Kingdom of Saudi Arabia (KSA)

    • UAE

    • South Africa