Software-Defined Compute Market Analysis North America, Europe, APAC, South America, Middle East and Africa - US, China, Japan, UK, Germany - Size and Forecast 2024-2028

Software-Defined Compute Market Size 2024-2028 

The software-defined compute market size is forecast to increase by USD 9.63 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. This trend is leading to the emergence of software-defined data centers, which offer increased flexibility and efficiency in IT infrastructure. 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. The integration of artificial intelligence (AI) and machine learning (ML) in SDDC enhances IT infrastructure's capabilities, enabling predictive maintenance and optimizing resource utilization.  However, the market also faces challenges, particularly in the area of security. As organizations continue to adopt cloud computing and virtualization, ensuring the security of software-defined computing environments becomes increasingly important. Addressing these security concerns will be a key focus for companies and end-users alike in the coming years.

What will be the Size of the Market During the Forecast Period?

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• Software-defined compute (SDC) is revolutionizing IT infrastructure expenditure by enabling data center operators to allocate and manage compute resources more efficiently. Capital expenditure on traditional hardware is being replaced by investment in software-defined data centers (SDDC), which offer energy usage savings and increased IT productivity. SDDC encompasses software-defined networking (SDN) and virtualization standards, allowing for unified management of network and computing resources. However, interoperability issues between different companies' solutions can pose challenges. Colocation centers and cross-connect IT services are increasingly adopting SDDC for their cloud deployments. Cloud service providers offer cloud-based solutions that provide automated management, operational agility, high performance, and reliability.

• The internet usage trend towards real-time data processing and 5G networks further boosts the adoption of SDDC. A multi-cloud strategy is becoming a popular approach for businesses, necessitating the need for next-generation data centers that support various cloud infrastructure adoption. SDC plays a crucial role in managing these diverse environments, ensuring seamless integration and efficient utilization of resources. In conclusion, the shift towards software-defined infrastructures, driven by the need for operational agility, high performance, and cost savings, is transforming IT infrastructure expenditure. SDC's ability to manage compute resources, network functions, and virtualization standards in a unified manner makes it an essential component of modern IT infrastructure.

How is this market segmented and which is the largest segment?

The market research report provides comprehensive data (region-wise segment analysis), with forecasts and estimates in "USD million" for the period 2024-2028, as well as historical data from 2018-2022 for the following segments.

• Type
  • Cloud system software
  • Virtual machine software
  • Container infrastructure software
• Geography
  • North America
    • US
  • Europe
    • Germany
    • UK
  • APAC
    • China
    • Japan
  • South America
  • Middle East and Africa

By Type Insights

• The cloud system software segment is estimated to witness significant growth during the forecast period.

The market is experiencing significant growth due to the increasing adoption of cloud solutions in the data center industry. Major players in the market are expanding their offerings to cater to the demand for hybrid cloud environments, driven by factors such as cost savings and flexibility. Notable companies, like VMware, are partnering with public cloud providers to offer comprehensive hybrid cloud solutions. The competition in the market is intensifying, leading companies to form strategic partnerships and collaborations to enhance their offerings and attract customers.

Enterprises are increasingly adopting hybrid cloud solutions for their scale-up and scale-down capabilities and enhanced security features, particularly in sectors such as BFSI. Colocation centers, Cross-connect IT services, and IT management companies are also integrating SDC solutions to provide comprehensive IT services to their clients.

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The cloud system software segment was valued at USD 3.18 billion in 2018 and showed a gradual increase during the forecast period.

Regional Analysis

• 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.

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The market in North America is experiencing significant growth due to the increasing demand for high connectivity and bandwidth in the region. Edge computing, which requires low latency, is driving data center providers to install facilities closer to end-users. These developments underscore the importance of cloud system software, virtual machine software, data management, security and compliance, predictive analytics, and intelligent automation in the hybrid cloud solutions space. Data center modernization and the integration of these technologies are essential components of digital transformation initiatives. Edge computing and data center investments are expected to continue shaping the market landscape.

Market Dynamics

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.

What are the key market drivers leading to the rise in the adoption of the Software-Defined Compute Market?

Extended strategic relationships and M and A is the key driver of the market.

• The market is experiencing significant growth due to the increasing collaboration between companies, cloud service providers, and data center operators. These partnerships aim to provide customers with advanced services by sharing resources and expertise. Capital expenditure on IT infrastructure, particularly in datacenters, is a major driver of this market. The adoption of Software-Defined Data Centers (SDDC), which utilize virtualization standards and unified management, is increasing as organizations seek to optimize energy usage and improve IT productivity.

• Furthermore, SDN technology is also playing a significant role in this trend, enabling automation, operational agility, and high performance. In the context of digital transformation, IT management, cybersecurity, and hybrid cloud environments are key considerations. Interoperability issues are a challenge, particularly in colocation centers and cross-connect IT services. Cloud deployments, including public, private, and hybrid, are driving demand for intelligent automation, predictive analytics, machine learning, and artificial intelligence. The BFSI vertical, telecom giants and healthcare industries are significant contributors to the market. Managed services, 5G, next-generation data centers, and data center modernization are also key areas of focus. Edge computing and multi-cloud strategies are gaining traction, as is the adoption of cloud system software, virtual machine software, and data management solutions.

What are the market trends shaping the Software-Defined Compute Market?

The emergence of software-defined data centers is the upcoming trend in the market.

• The market is experiencing significant growth due to the increasing adoption of Software-Defined Data Centers (SDDC) by IT infrastructure expenditure-focused datacenter operators. SDDCs enable the virtualization of compute resources, allowing for unified management of IT infrastructure and improved energy usage. This results in increased IT productivity, operational agility, and high performance, making SDDCs a popular choice for businesses. SDDCs offer several benefits, including reduced provisioning times, effective utilization of infrastructure resources, and cost savings through the avoidance of new infrastructure purchases and power consumption expenditures. Additionally, SDDCs facilitate easy migration of workloads to public, private, or hybrid cloud deployments, providing flexibility and adaptability for businesses.

• Companies in the market offer a range of solutions to help enterprises implement SDDCs. Software-Defined Networking (SDN) and virtualization standards play a crucial role in ensuring interoperability and seamless integration with existing IT infrastructure. In colocation centers and cross-connect IT services, SDC solutions can be implemented alongside cloud-based solutions and software-defined infrastructures for optimal performance and security. In a hybrid cloud environment, SDC solutions can be used to manage and automate the allocation of compute resources across public, private, and edge computing environments. This is particularly important for industries such as BFSI, telecom giants, and healthcare, where data security and compliance are paramount.

What challenges does Software-Defined Compute Market face during its growth?

Security challenges is a key challenge affecting the market growth.

• The market is experiencing significant growth as IT infrastructure expenditure continues to rise, with datacenter operators investing heavily in Capital Expenditure (CapEx) for Software-Defined Data Centers (SDDC). Energy usage is a critical consideration in this context, as IT productivity and Unified management become increasingly important. Software-Defined Networking (SDN) and virtualization standards play a crucial role in addressing interoperability issues in colocation centers and cross-connect IT services. Cloud deployments, including public, private, and hybrid cloud environments, are driving the adoption of cloud-based solutions and Software-Defined Infrastructures. IT management, cybersecurity, and digital transformation are key priorities in this landscape, with Artificial Intelligence (AI), Machine Learning (ML), and Predictive Analytics becoming essential tools for Intelligent Automation and Hybrid Cloud Solutions.

• Cloud Computing Services are at the heart of this evolution, with Automated Management and Operational Agility enabling High Performance and Reliability. Edge Computing and Data Center Modernization are also gaining traction, as Internet usage continues to increase and multi-cloud strategies become more common. The emergence of 5G and Next-generation data centers is further fueling the adoption of cloud infrastructure, as Cloud service providers offer increasingly sophisticated Hybrid Cloud Deployment options. However, the market is not without challenges, including Predictive analytics, Machine learning, and Artificial intelligence Interoperability challenges. Data Management, Security, and Compliance remain top concerns, particularly in sensitive verticals like BFSI and Healthcare.

Exclusive Customer Landscape

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 market report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their market growth analysis strategies.

 Customer Landscape

Key Companies & Market Insights

Companies are implementing various strategies, such as strategic alliances, market forecast, 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 includes detailed analyses of the competitive landscape of the market and information about key companies, including:

• 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.
• VMware Inc.

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.

Research Analyst Overview

The market is experiencing significant growth as organizations continue to seek ways to optimize their IT infrastructure and enhance productivity. This market, which encompasses software-defined data centers (SDDC), cloud computing, and virtualization standards, is transforming the way businesses manage and utilize their computing resources. One of the primary drivers of the SDC market is the increasing demand for IT infrastructure expenditure among datacenter operators. As businesses continue to digitalize their operations, the need for more efficient and agile IT infrastructure solutions becomes increasingly important. Capital expenditure on SDC solutions enables organizations to reduce energy usage, improve operational agility, and deliver high performance and reliability.

Furthermore, another key trend in the market is the adoption of unified management solutions. These solutions enable organizations to manage their SDN, virtualization, and cloud deployments through a single pane of glass. This not only simplifies IT management but also enhances security and compliance. Interoperability issues have long been a challenge in the market. With the proliferation of colocation centers, cross-connect IT services, and hybrid cloud environments, ensuring that different software-defined infrastructures can work seamlessly together is crucial. Addressing these interoperability challenges is essential for the continued growth of the market. The BFSI vertical is a significant contributor to the market, with the need for high security and compliance driving the adoption of software-defined solutions.

Moreover, telecom giants are also investing heavily in SDC to support their 5G networks and next-generation data centers. Cloud-based solutions are becoming increasingly popular in the SDC market, with organizations seeking to take advantage of the flexibility and scalability they offer. Automated management, predictive analytics, machine learning, and artificial intelligence are key features of these solutions, enabling businesses to optimize their compute resources and improve IT productivity. The healthcare sector is also adopting SDC solutions to support the digital transformation of their operations. Edge computing is a particular area of interest, with the need to process and analyze data closer to the source driving demand for SDC solutions.

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What are the Key Data Covered in this Market Research and Growth Report?

• CAGR of the market during the forecast period
• Detailed information on factors that will drive the market growth and forecasting between 2024 and 2028
• Precise estimation of the size of the market  and its contribution of the market in focus to the parent market
• Accurate predictions about upcoming market growth and trends and changes in consumer behaviour
• Growth of the market across North America, Europe, APAC, South America, and Middle East and Africa
• Thorough analysis of the market's competitive landscape and detailed information about companies
• Comprehensive analysis of factors that will challenge the growth of market companies

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