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The Network Function Virtualization Market size is forecast to increase by USD 90.1 billion. The market is estimated to grow at a CAGR of 31.39% between 2023 and 2028. The growth of the market hinges on several critical factors. Advances in network infrastructure play a pivotal role in enabling the virtualization of network node functions, transforming how communication services are created and delivered. The proliferation of smart-connected devices further drives demand for agile and scalable network solutions provided by NFV. Additionally, the high penetration of wireless network infrastructure enhances the deployment and efficiency of NFV architectures. NFV utilizes IT virtualization technologies akin to traditional server-virtualization approaches in enterprise IT, abstracting network functions into flexible building blocks that can be linked or chained together. This innovative approach not only enhances operational efficiency but also supports service providers in meeting evolving consumer demands for robust and adaptable communication services in a digital-first environment.
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The market is witnessing significant growth due to the increasing demand for network automation and cloud services in various industries. NFV technology enables the virtualization of telecom equipment and functions, leading to data center consolidation and improved network management. The market is segmented into components, applications, and end-users. Components include hardware, software, and services. Applications include IoT deployments, security agility, cloud migration, caching, intrusion detection systems, domain name services, core network, and others. End-users are majorly service providers, healthcare, energy and utilities, media and entertainment, and enterprise. NFV is essential for service providers to offer agile and flexible network services, reduce operational costs, and enhance security. In the healthcare sector, NFV enables the deployment of telemedicine services, while in energy and utilities, it ensures efficient energy management. In media and entertainment, NFV supports content delivery networks and video streaming services. The NFV market is expected to grow further with the increasing adoption of cloud services and the need for security in data center applications. Network functions virtualization is also crucial for enabling 5G network deployments and ensuring network slicing for various industry verticals.
The high penetration of wireless network infrastructure is driving growth in the market. The spread of the Internet around the world has never been at an ever higher level since the contemporary world. The ever-increasing Internet and wireless broadband penetration across verticals is the primary driver of the global market as it is driving the proliferation of the social and mobility phenomenon across enterprises.
However, the entire digital system is implemented in a way to incentivizes the consumer fairly in the consumption of digital products and services. The increasing construction of data centers for the storage of data over the network requires NFV and SDN. Hence, the adoption of sophisticated NFV technologies is driven by these business transformations across vertical segments, which will boost the growth of the global market in focus during the forecast period.
The rising adoption of BYOD is a key trend in the market. Due to the preferences of employees for using their smartphones, tablets, and portable computers on the job, enterprise mobility has taken a prominent place in corporate life. The bring your own devices (BYOD) policy demands specific network services and IT service delivery frameworks to guarantee electronically secure and productive work environments.
Moreover, companies are providing NFV solutions to implement the BYOD program successfully by offering an environment in which the workforce of an organization can use their personal devices through robust Internet connectivity. In order to achieve better efficiency, this will be complemented by reducing traffic on the network, which will have a positive impact on the growth of the global market during the forecast period.
Data privacy and security concerns is a major challenge faced by the NFV market. More security and data breach problems have been caused by increasing connectivity and data sharing. Earlier, cybersecurity was concentrated on a limited number of connected devices. However, due to the IoT revolution, there will be a large-scale combination of both physical and virtual worlds.
Therefore, the fear of cyber attacks can hamper the sensor and device data in an industrial setup. This data is accessible on the internet and should be authenticated by means of an authentication layer. The possibility of cyber intrusion will result in less uptake of network services, which may hamper the growth of the global market in focus during the forecast period.
The market share growth by the solutions segment will be significant during the forecast period. The adoption of NFV eliminates the use of hardware appliances by replacing the latter with virtual software and infrastructure provided by vendors. This software enables networks to provide on-demand services, by adopting it from telecom providers., which is comparatively difficult while using physical hardware appliances.
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The solutions segments showed a gradual increase in the market share of USD 9.60 billion in 2018. NFV deployments also include SDN controllers, where both SDN and NFV technologies will enhance the control of the deployed virtual services. The NFV market will experience massive growth during the forecast period after the commercial deployment of 5G technologies because in order to use an agile network and provide on-demand services, there is a growing need for Virtual Network Functioning Platforms and Management Software.
The IT and telecom segment will grow at a higher pace compared with the global average rate during the forecast period. This is mainly due to the adoption of new network technologies such as 4G and 5G, as well as the need to manage the network systems according to strategic business requirements and strict government laws. In order to stay competitive in their business, the adoption of IT and telecommunications sectors network services by organizations is expected to increase with regard to performance and effectiveness as well as improved communication between networks. Consumers are likely to play a vital role in the growth of IP traffic owing to the increased digitalization and connected devices powering smart connectivity which will have a positive impact on the growth of the market during the forecast period.
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North America is estimated to contribute 42% to the growth of the global market during the forecast period. Technavio’s analysts have elaborately explained the regional market trends and analysis and drivers that shape the market during the forecast period. In this region, the demand for developing network infrastructure by firms to gain a competitive edge in the market and its increasing network infrastructure complexity are key enablers of the NFV market. Due to competition between different network functions and virtualization providers, companies have been improving their products in order to maintain a market share. The adoption of NFV in North American countries such as the US and Canada is the highest in the region. Such factors will increase the market growth in this region during the forecast period.
This market growth and trends report includes the adoption lifecycle of the market research and growth, covering from the innovator’s stage to the laggard’s stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the market analysis and report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their growth strategies.
Customer Landscape
Companies are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.
This market forecast report also includes detailed analyses of the competitive landscape of the market and information about 15 market companies, including:
Qualitative and quantitative analysis of companies has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize companies as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize companies as dominant, leading, strong, tentative, and weak.
The market research report provides comprehensive data (region wise segment analysis), with forecasts and estimates in "USD Billion" for the period 2024 to 2028, as well as historical data from 2018 to 2022 for the following segments.
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The market is experiencing significant growth due to the increasing adoption of virtualization technology in telecom equipment and data center applications. NFV enables network automation and data center consolidation by virtualizing network functions, such as server virtualization and cloud services. This technology is essential for IoT deployments and provides security agility for cloud migration and network management systems. NFV is particularly relevant to large enterprises, as it allows for the use of virtual infrastructure managers and software-defined networking. The market is also driven by the adoption of 5G technology, which requires more efficient and flexible network configurations. Components of the NFV market include virtualization, orchestration, automation, and virtual appliances.
Key applications include traffic forwarding, monitoring, security, caching, intrusion detection systems, domain name services, and core network functions. Manufacturing, healthcare, energy and utilities, media and entertainment, and software-defined everything are some of the industries driving the growth of the NFV market. Key companies in this market include VMware and Nokia, among others. The market is expected to continue growing due to the increasing demand for network flexibility and efficiency. NFV is also essential for organizations of all sizes, as it enables the use of hardware and virtualization in a more agile and cost-effective way. The NFV orchestrator plays a crucial role in managing and automating the deployment and operation of virtual network functions. WAN configurations and monitoring are also important aspects of NFV, ensuring optimal network performance and security.
Market Scope |
|
Report Coverage |
Details |
Page number |
190 |
Base year |
2023 |
Historic period |
2018-2022 |
Forecast period |
2024-2028 |
Growth momentum & CAGR |
Accelerate at a CAGR of 31.39% |
Market growth 2024-2028 |
USD 90.1 billion |
Market structure |
Fragmented |
YoY growth 2023-2024(%) |
25.24 |
Regional analysis |
North America, Europe, APAC, Middle East and Africa, and South America |
Performing market contribution |
North America at 42% |
Key countries |
US, China, Germany, Canada, and UK |
Competitive landscape |
Leading Companies, Market Positioning of Companies, Competitive Strategies, and Industry Risks |
Key companies profiled |
6WIND, A10 Networks Inc., Access Co. Ltd., Ciena Corp., Cisco Systems Inc., Cloud Software Group Inc., Dell Technologies Inc., Ekinops SA, Fortinet Inc., Fujitsu Ltd., Hewlett Packard Enterprise Co., Huawei Technologies Co. Ltd., Intel Corp., International Business Machines Corp., Juniper Networks Inc., Nokia Corp., Oracle Corp., Radware Ltd., Sandvine Corp., and Telefonaktiebolaget LM Ericsson |
Market dynamics |
Parent market analysis, Market Forecasting, Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, Market growth and Forecasting, COVID 19 impact and recovery analysis and future consumer dynamics, Market condition analysis for forecast period |
Customization purview |
If our market report has not included the data that you are looking for, you can reach out to our analysts and get segments customized. |
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1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation by Component
7 Market Segmentation by End-user
8 Customer Landscape
9 Geographic Landscape
10 Drivers, Challenges, and Opportunity/Restraints
11 Competitive Landscape
12 Competitive Analysis
13 Appendix
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