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The software-defined compute market size is forecast to increase by USD 9.62 billion at a CAGR of 14.76% between 2023 and 2028. The market is experiencing significant growth, driven by extended strategic relationships and mergers and acquisitions. One of the primary trends shaping this market is the emergence of software defined data centers (SDDCs), which enable organizations to virtualize their IT infrastructure and resources. This shift towards SDDCs offers numerous benefits, including increased agility, scalability, and cost savings. However, the market also faces challenges, particularly in the area of security. With the increasing adoption of cloud computing and the use of software-defined technologies, the risk of cyber attacks and data breaches is heightened. As such, vendors and organizations must prioritize security measures to protect their data and maintain customer trust. Overall, the market is poised for continued growth, driven by the benefits of SDDCs and the need for robust security solutions.
The market is witnessing significant growth due to the increasing IT infrastructure expenditure by Datacenter operators. Capital Expenditure on Software-Defined Data Centers (SDDC) is on the rise as organizations seek to optimize their IT productivity and reduce Energy usage. Unified management of Compute Resources through SDDC enables Automated Management and Operational Agility, making it a preferred choice for businesses. SDDC incorporates Software-Defined Networking (SDN) and Virtualization standards, ensuring Interoperability issues are minimized. Colocation centers and Cross-connect IT services are also leveraging SDC for Cloud deployments, providing High Performance and Reliability. The adoption of Cloud-Based Solutions and Cloud Computing Services is driving the demand for SDC. Artificial Intelligence (AI) and Machine Learning (ML) are being integrated into SDC, enabling next-generation data center to offer 5G capabilities. A Multi-cloud strategy is becoming increasingly popular among Cloud service providers, leading to the widespread adoption of SDC in various industries. Internet usage continues to surge, and the need for efficient and scalable compute infrastructures is more critical than ever. SDC provides the solution, offering automated management, operational agility, and high performance, making it an essential component of IT infrastructure.
The market research report provides comprehensive data (region-wise segment analysis), with forecasts and estimates in "USD billion " for the period 2024-2028, as well as historical data from 2018 - 2022 for the following segments.
The market share growth by the Cloud system software segment will be significant during the forecast period. The Software-Defined Compute (SDC) market is experiencing significant growth due to the increasing IT infrastructure expenditure by datacenter operators. Capital Expenditure (CapEx) on traditional hardware is being replaced by the adoption of Software-Defined Data Centers (SDDC), which offer energy efficiency, IT productivity, and unified management.
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The Cloud system software segment in the global market has steadily grown from USD 3.18 billion in 2018. Software-Defined Networking (SDN) and virtualization standards are key components of SDDC, enabling interoperability issues to be addressed. Colocation centers and cross-connect IT services are also integrating SDC solutions to cater to the demands of cloud deployments. Major IT management players, including telecom giants and BFSI verticals, are investing in SDC for automated management, operational agility, high performance, reliability, and the integration of Artificial Intelligence (AI), Machine Learning (ML), Predictive Analytics, and Intelligent Automation. Hybrid cloud solutions are gaining popularity due to their ability to offer scale-up and scale-down capabilities, security, and compliance. Cloud-Based Solutions, Compute Resources, and Software-Defined Infrastructures are being adopted for digital transformation, and cloud computing services are becoming essential for businesses. Edge Computing and Data Center Modernization are also driving the demand for SDC. Vendors are partnering to offer managed services, addressing cybersecurity concerns and ensuring seamless integration of cloud systems software, virtual machine software, and data management.
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North America is estimated to contribute 47% to the growth of the global market during the forecast period. Technavio's analysts have elaborately explained the regional trends and drivers that shape the market during the forecast period.
Software-Defined Compute (SDC), a significant component of Software-Defined Data Centers (SDDC), is revolutionizing IT infrastructure expenditure by enabling unified management of compute resources through automation and operational agility. Datacenter operators are increasingly adopting SDC to optimize capital expenditure and reduce energy usage in their IT environments. With the integration of Software-Defined Networking (SDN) and virtualization standards, interoperability issues are being addressed, paving the way for hybrid cloud deployments in various industries, including BFSI vertical and telecom giants. Cloud-Based Solutions, such as managed services, are increasingly popular in this context, providing IT management, cybersecurity, and data management capabilities. AI, ML, and predictive analytics are being integrated into SDC to ensure high performance, reliability, and intelligent automation. Data center modernization through SDC is also driving the adoption of cloud computing services, edge computing, and cross-connect IT services in colocation centers. Security and compliance are paramount, making SDC a crucial element in digital transformation strategies. Cloud System Software and Virtual Machine Software play a vital role in ensuring efficient utilization of compute resources in this high-performance, hybrid cloud environment.
Our researchers analyzed the data with 2023 as the base year, along with the key drivers, trends, and challenges. A holistic analysis of drivers will help companies refine their marketing strategies to gain a competitive advantage.
Extented strategic relationships and M and A is notably driving market growth. The market is experiencing significant growth due to the increasing adoption of cloud infrastructure and multi-cloud strategies. With the advent of 5G technology and the rise in Internet usage, cloud service providers are focusing on next-generation data centers to deliver advanced services. Vendors are collaborating to offer container infrastructure software solutions and enhance their offerings. For instance, Red Hat and Nutanix's strategic partnership in July 2021 aims to provide powerful solutions for building, scaling, and managing cloud-native applications in hybrid clouds.
Moreover, the healthcare sector is embracing software-defined compute for predictive analytics, machine learning, and artificial intelligence applications. Interoperability challenges are being addressed through standardization efforts and partnerships. Enterprises are adopting hybrid cloud deployment models to leverage the benefits of both public and private clouds. Edge computing is also gaining traction to manage data closer to the source, enhancing data management and automation. Data security remains a top priority, and software-defined compute solutions offer advanced security features to mitigate risks. Thus, such factors are driving the growth of the market during the forecast period.
Emergence of software-defined data centers is the key trend in the market. The increasing reliance on the Internet for business operations and the implementation of multi-cloud strategies are key factors fueling the adoption of software-defined compute solutions. Software-defined data centers (SDDCs) allow enterprises to virtualize infrastructure resources, including compute, storage, security, and network, and manage them using software. This abstraction automates infrastructure management, leading to increased computing, storage, and network capacities, as well as enhanced security. Moreover, SDDCs enable the reduction of new resource provisioning time and overall costs by effectively utilizing infrastructure resources. They also facilitate seamless migration of workloads to public cloud, private cloud, or hybrid cloud environments.
Furthermore, companies in the software-defined compute market are providing SDDC solutions to enterprises, addressing their needs for agility, cost savings, and flexibility. Additionally, SDDCs are gaining traction in sectors like healthcare due to their ability to handle predictive analytics, machine learning, and artificial intelligence workloads. Interoperability challenges are being addressed through standardization efforts, ensuring seamless integration with various cloud service providers and edge computing architectures. The market is expanding swiftly as businesses seek more adaptable and scalable solutions to manage their IT infrastructure, including the growing demand for efficient processing of cryptocurrencies. Data management and automation are also crucial aspects of SDDCs, ensuring data security and privacy. Thus, such trends will shape the growth of the market during the forecast period.
Security challenges is the major challenge that affects the growth of the market. The market is experiencing significant growth due to the increasing adoption of cloud infrastructure, multi-cloud strategies, and the rollout of 5G technology. Cloud service providers are investing heavily in next-generation data centers to support the demands of Internet usage and data management. Enterprises are implementing hybrid cloud deployment models to leverage the benefits of public, private, and edge computing. Predictive analytics, machine learning, and artificial intelligence are being integrated into cloud services to provide advanced automation and data security.
However, the implementation of these advanced technologies presents interoperability challenges, particularly in the context of virtualization and containerization. Virtualization enables seamless application migration without interruptions, but it also poses data security risks, such as hyper jacking, where a cyber-attacker hacks a hypervisor to gain access to virtual machines. As enterprises, particularly those in healthcare and other regulated industries, continue to adopt cloud infrastructure, addressing these security concerns will be crucial. Data management and data security will remain top priorities as organizations navigate the complexities of hybrid cloud environments. Hence, the above factors will impede the growth of the market during the forecast period
The market forecasting report includes the adoption lifecycle of the market, covering from the innovator's stage to the laggard's stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their market growth analysis 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.
Amazon.com Inc. - The company offers software-defined compute services such as Elastic Cloud Compute by AWS compute.
The market research and growth report also includes detailed analyses of the competitive landscape of the market and information about key 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.
Software-Defined Compute (SDC) is a significant trend in IT infrastructure expenditure, particularly for Datacenter operators seeking Capital Expenditure savings and operational agility. SDC refers to the use of software to define and manage Compute Resources in a Data Center, enabling Unified management of IT infrastructure, including Software-Defined Networking (SDN) and Virtualization standards. SDC offers numerous benefits, including Energy usage reduction, IT productivity enhancement, and High Performance. However, challenges such as Interoperability issues, Cybersecurity concerns, and the need for Automated Management in a Hybrid cloud environment persist. Key verticals driving SDC adoption include BFSI and Telecom giants.
Furthermore, cloud deployments, Colocation centers, and Cross-connect IT services are also significant markets for SDC. SDC's integration with Cloud-Based Solutions, Cloud Computing Services, and Edge Computing facilitates Digital Transformation. Security and Compliance, AI, ML, Predictive Analytics, and Intelligent Automation are essential components of SDC, ensuring reliable and efficient Compute Infrastructures. The market for Cloud System Software, Virtual Machine Software, and Data Management solutions is expected to grow significantly in the coming years. Overall, SDC is a crucial aspect of Data Center Modernization, offering Operational Agility, High Performance, and Reliability in a Hybrid cloud environment.
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Market Scope |
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Report Coverage |
Details |
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Page number |
159 |
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Base year |
2023 |
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Historic period |
2018 - 2022 |
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Forecast period |
2024-2028 |
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Growth momentum & CAGR |
Accelerate at a CAGR of 14.76% |
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Market growth 2024-2028 |
USD 9.62 billion |
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Market structure |
Fragmented |
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YoY growth 2023-2024(%) |
12.55 |
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Regional analysis |
North America, Europe, APAC, South America, and Middle East and Africa |
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Performing market contribution |
North America at 47% |
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Key countries |
US, China, Japan, UK, and Germany |
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Competitive landscape |
Leading Companies, Market Positioning of Companies, Competitive Strategies, and Industry Risks |
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Key companies profiled |
Alphabet Inc., Amazon.com Inc., BMC Software Inc., Broadcom Inc., Cisco Systems Inc., Citrix Systems Inc., Datadog Inc., Docker Inc., DXC Technology Co., Dynatrace Inc., Hewlett Packard Enterprise Co., Huawei Technologies Co. Ltd., Inspur Group., International Business Machines Corp., Microsoft Corp., Nutanix Inc., Open Text Corporation, Oracle Corp., ScienceLogic Inc., and VMware Inc. |
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Market dynamics |
Parent market analysis, Market Forecasting, Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, COVID-19 impact and recovery analysis and future consumer dynamics, Market condition analysis for Market forecast period |
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Customization purview |
If our 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 Type
7 Customer Landscape
8 Geographic Landscape
9 Drivers, Challenges, and Opportunity/Restraints
10 Competitive Landscape
11 Competitive Analysis
12 Appendix
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