Virtual Private Network Market Size, Share & Trends Analysis Report By Component, By Type (Site-To-Site, Remote Access, Extranet), By Deployment Mode, By End Use, By Region, And Segment Forecast, 2020 - 2027

Report Overview

The global virtual private network market size was valued at USD 25.65 billion in 2019 and is expected to expand at a compound annual growth rate (CAGR) of 17.4% from 2020 to 2027. The growing concerns over the security of the data being transferred over a public internet connection are expected to drive the growth. A virtual private network (VPN) provides an encrypted connection that allows consumers to connect to the internet over public connections. Several organizations rely on these secure connections to ensure that only designated users can access their networks remotely. However, the pandemic has changed this dynamic and has triggered a huge demand from the end-users using VPN services. Industry experts expect this rise in the demand to lead to challenges, which need to be addressed by both VPN providers and enterprises.

A virtual private network ensures full-time, high-speed, and secure connectivity. Over the years, high-speed, persistent internet connections have become more expensive than those used merely for accessing emails. Hence, enterprises seldom build in additional capacity to accommodate provisional spikes in usage. Using a virtual private network does not require permanent links between end nodes, which are often associated with contract negotiations and monthly fees. Another significant advantage of the VPN solution, over frame relays or leased lines, is that virtual private networks do not require any specialized equipment. In other words, a VPN can potentially serve as an economical source of encryption, tunneling, authentication, and access control services and technologies to carry traffic over a managed IP network, internet, or a provider’s backbone.

The significant upsurge in the number of cyberattacks and the rise in demand for cloud-based security solutions is expected to drive the demand for virtual private networks over the forecast period. Enterprises of all sizes and operating in various industries and industry verticals are aggressively looking for effective means of data management and secured connectivity between different business units. Enterprises also require uninterrupted connectivity for maintaining collaboration with partners and customers globally. At this juncture, VPNs can potentially offer excellent service quality in terms of keeping the most crucial traffic flowing for businesses and avoiding packet loss. Particularly for IT and telecommunications companies, it is getting necessary to minimize costs and improve the quality of business functions to survive in a competitive business environment. Hence, the demand for VPN solutions from the incumbents of the IT & telecommunications industry is expected to increase over the forecast period.

Several end-use industries have started integrating VPNs into their business processes to streamline their operations. The adoption of virtual private networks is increasing as VPNs are helping end-user organizations in becoming result-oriented and more efficient. The growing adoption of VPN is encouraging new entrants to consider a market foray with niche application-specific solutions and services. Market incumbents are also pursuing various strategic initiatives to gain competitive advantages.

Virtual Private Network Market Trends

Virtual private networks are gaining prominence as they can be used to dodge censorship on internet. Countries that presently restrict virtual private networks (such as Russia and China) haven’t harmed industry growth and in fact have brought substantial awareness for its application. These countries have imposed laws for banning virtual private network usage, which creates massive amounts of pushback from local citizens and media coverage.

Countries having obligatory censorship usually block certain news portals and websites and try for monitoring each click the inhabitants make. The easiest solution lot of citizens turn to is a virtual private network. The virtual private network provide encryption of all the data so that the government is not able to censor the connection, enabling users to access the blocked websites and portals.

One of the Slate articles stated, “the companies providing virtual private network have struggled to circumvent some of the imposed technical limitations. However, several companies reported that demand for their service offerings is increasing and the efforts aiming to curb their practices, instead of dissuading users, have developed interest in virtual private networks.

For instance, according to the head of communications Ruby Gonzalez, NordVPN operates just under 3,000 servers, has witnessed "a lot of interest and incredibly strong growth" in China.

Regulation and compliance are a strong driver for all information security markets, including the virtual private network market. Verticals and industries continue to release specific guidance and regulations for global virtual private network market.

The European Union created the General Data Protection Regulation (GDPR) to safeguard and regulate the interests of governments and civilians. It went into effect on May 25, 2018, and covers any companies that store, log, or share the personal information of any user living in Europe. According to GDPR, every user must be able to get all of the data they've shared online from all of the websites or platforms they utilize. They would also have the ability to modify, control, and delete any data they desired.

COVID-19 Impact Insights

The outbreak of the COVID-19 pandemic has had a significant impact on the technology industry. Enterprises of all sizes are requiring most of their employees to work from home as part of the efforts to arrest the spread of the disease. However, organizations are particularly under pressure to ensure a secure work-from-home environment for employees. Hence, they are aggressively deploying a virtual private network.

While the pandemic shows no signs of abating, fraudulent activities are also on the rise. Both corporates and individuals are equally being targeted by fraudsters and hackers. There has been a particular increase in the number of incidents involving individuals being duped by sending fraudulent emails related to COVID-19. Hence, companies are opting for a virtual private network to strengthen security and protect the privacy of the users.

Component Insights

The solution segment accounted for the largest revenue share of over 64.0% in 2019. The services segment is expected to register a significant CAGR over the forecast period. Virtual private network solutions have been gaining high traction, particularly among commercial vendors and individual solution providers, over the past few years. The rapidly-changing nature of work and the changing commercial requirements for virtual private networks would continue to drive the demand for VPN services.

A typical virtual private network solution includes control features, reporting, and management. Over the past few years, vendors have been collaborating with mobile VPN vendors and NAC solution providers as part of the efforts to drive the sales of VPN solutions. VPN services are aimed at enabling the virtual private network to secure a remote connection. Besides, vendors are allowing buyers to compare the prices online in real-time, thereby helping cost-conscious buyers in assessing the VPN services on offer before making a buying decision. At the same time, advances in technology coupled with economies of scale are also expected to allow providers to further reduce their cost structure and accelerate their investments in other aspects.

Type Insights

The remote access segment accounted for the largest revenue share of 35.8% in 2019. This can be attributed to the increasing number of franchised dealers in the market. The extranet segment is expected to register a significant CAGR over the forecast period. The growth can be attributed to the growing usage of extranet by enterprises to post private information on public networks. Moreover, companies are also focusing more on extending their internal web applications to the company’s partners and consumers.

The need for remote access and site-to-site connectivity has been increasing gradually to ensure seamless connectivity. Remote access and site-to-site connection ensure bandwidth and data comparison optimization. The proliferation of mobile VPN devices and the growing need for remote accessibility has been driving the demand for remote virtual private network solutions over the past few years. Remote access can particularly help organizations in complying with security regulations.

Deployment Mode Insights

The cloud segment accounted for the largest revenue share of 72.8% in 2019. This can be attributed to the growing preference for cloud-based deployment to reduce maintenance and costs. Prominent market players are offering virtual private cloud to provide a secure gateway and private on-premise access to cloud resources. For instance, in December 2018, IBM Corporation announced the launch of an on-premises VPN gateway to a cloud VPN created within a VPC.

Vendors are offering virtual private cloud to help enterprises in establishing a private cloud computing environment on shared public cloud infrastructure. These offerings are designed to provide a granulated control over granting or blocking access to particular resources for enterprise customers through specific applications or IP addresses. Cloud infrastructure resources, including storage, virtual servers, and networking, can be deployed dynamically to help VPC customers in adapting to the changes according to their business needs. The subsequent reduced costs and lower maintenance can allow enterprises to focus on attaining core competencies and key business goals.

End-use Insights

The commercial segment accounted for the largest revenue share of 74.1% in 2019. This can be attributable to the rising concerns toward establishing a secure network. Moreover, virtual private networks help in reducing the risks across the entire data lifecycle. Alternatively, VPN solutions help commercial users in building trust with their customers. Cost-effectiveness and fault-tolerant and redundant resource availability are some of the other attractive features that are expected to drive the commercial adoption of virtual private network solutions.

Organizations have started allowing the use of remote devices in the workplace. Hence, most of the employees are now connecting to corporate networks and accessing various business applications from any location via different connected devices, including laptops, computers, netbooks, and tablets. This is particularly driving the demand for VPN solutions on an individual basis. Further, virtual private networks are used for creating hybrid network applications such as a mix of MPLS and Internet VPN solutions. Also, a virtual private network is used to extend the company datacenter in the cloud.

Regional Insights

North America accounted for the largest revenue share of 35.1% in 2019 owing to the rapid growth in the demand from telecommunications and BFSI, among other industries and industry verticals in the U.S. The European market also accounted for a notable market share and is expected to witness steady growth. On the other hand, Asia Pacific is projected to register the highest CAGR over the forecast period in line with the increasing adoption of VPN solutions and services in China, India, and other Asian countries.

China is currently dominating the Asia Pacific region with a rising number of organized players with mobile VPN services. As there are various government policies and regulations regarding popular websites, offering the virtual private network as a solution provided a number of opportunities for entrepreneurs in China, Indonesia, and other Asian countries. Additionally, using VPN services has availed easy networking, and streaming in Asian countries. Using the virtual private network also ensures users about the encryption of their data and protection from hackers. These are the factors that have become significant driving factors to boost the demand for VPN solutions and services in Asian countries.

Remote working has been the new normal for almost all IT enterprises. Since the emergence of the COVID-19 pandemic, there has been a significant increase in the use of remote desktops and virtual private network (VPN) connections. The increase in remote employees and multiple devices is driving the demand for improved visibility and management. Furthermore, the remote users are now able to log in to different networks, that makes central management difficult. Along with managing these devices, enterprises also want to activities of monitor mobile workers on wireless connections.

A recent study conducted by Atlas VPN reported that usage of VPN in the U.S. has increased 53% in the last year. And it increased by 112% in Italy, a country that has been predominantly affected by COVID-19. Further, Defense Information Systems Agency (DISA), a part of US Department of Defense has also been working to strengthen network and VPN capacity. Since March 2020, DISA has provided circuits that are increasing network capacity by nearly 500 gigabits per second. The agency employed additional 63 new circuits since the beginning of the pandemic with 39 more pending activation.

Key Companies & Market Share Insights

The key players that dominated the market in 2019 include Cisco Systems, Inc.; IBM Corporation; Opera Norway AS; Google LLC; Avast Software s.r.o.; Citrix Systems, Inc.; and NetMotion Software. All these vendors are focusing on increasing their customer base to gain a competitive edge in the market. They are pursuing several strategic initiatives, such as strategic partnerships and collaborations, and acquisitions and mergers. Some of the recent developments include the announcement by Cisco Systems, Inc. in April 2020 to launch a payment deferrals program to encourage companies to adopt virtual private network solutions during the pandemic period. Some prominent players in the virtual private network market include:

• Avast Software s.r.o.

• BlackBerry Limited

• Cisco Systems, Inc.

• Citrix Systems, Inc.

• CyberGhost S.R.L.

• Google LLC

• IBM corporation

• NetMotion Software

• Opera Group Company

• WatchGuard Technologies, Inc.

Virtual Private Network (VPN) Market Report Scope

Global Virtual Private Network Market Segmentation

This report provides forecasts for revenue growth at the global, regional, and country levels and analyses of the latest industry trends and opportunities in each of the sub-segments from 2016 to 2027. For this study, Grand View Research has segmented the global virtual private network market report based on component, type, deployment mode, end-use, and region:

• Component Outlook (Revenue, USD Billion, 2016 - 2027)

  • Solution

  • Services

• Type Outlook (Revenue, USD Billion, 2016 - 2027)

  • Site-to-site

  • Remote Access 

  • Extranet

  • Others

• Deployment Mode Outlook (Revenue, USD Billion, 2016 - 2027)

  • Cloud

  • On-premise

• End-Use Outlook (Revenue, USD Billion, 2016 - 2027)

  • Commercial

  • Individual

• Regional Outlook (Revenue, USD Billion, 2016 - 2027)

  • North America

    • U.S.

    • Canada

    • Mexico

  • Europe

    • Germany

    • U.K.

    • France

  • Asia Pacific

    • China

    • Japan

    • India

  • South America

    • Brazil

  • Middle East and Africa (MEA)