The global SDN market was valued at USD 10,111.6 million in 2018 and is expected to register a CAGR of 42% during the forecast period. At present, in the SDN market, supply side vendors should focus on enhancing their capabilities in the fields of- professional service, implementation service, support and maintenance service, consulting service, and managed service. The utilization of these services is growing at a considerably high rate and this upsurge is projected to continue for the next five to six years.
Apart from the aforementioned services, SDN software controller is yet another major area in the SDN that manages the flow of data and controls it, accordingly, thereby enabling intelligent networking. In order to gain a competitive advantage and prevail in the SDN market, most of the companies are required to integrate SDN with machine learning and deep learning in order to cater to the new and upcoming use cases. For instance, in July 2019, IBM Corporation invented a deep reinforcement learning approach to maximize the overall performance of the modern programmable SDN architecture that supports 5G.
The datacenter SDN market is a key application area for the SDN vendors to focus on. It is growing at a healthy rate and its prospects remain robust. The modernization of datacenters due to the persistent pursuit of digital transformation is leading to an increasing requirement for SDN. Furthermore, the rising adoption of cloud infrastructure is expected to contribute to the growth of the datacenter SDN market significantly. Therefore, it is imperative for the vendors in the market to focus on the prospects to extend datacenter SDN overlays and fabrics to multi-cloud application environments.
The software-defined wide-area network (SD-WAN) is applied to different WAN connections such as 4G, broadband, LTE, or MPLS. The SD-WAN connects enterprises network, that includes datacenters and branch offices over considerable distance. With the growing number of cloud-based applications, the traditional WAN is unable to offer proper connectivity and speed; SD-WAN is used as it provides flexibility to control the efficiency of the connections in high traffic networks. The SD-WAN relies on edge connectivity abstraction, WAN virtualization, elastic traffic management, and policy-driven, centralized management. SD-WAN provides faster routing between network points, offers high-quality services for critical applications, and increases the network agility; therefore, it has a larger market share in the SDN market as compared to applications such as SD-LAN and security applications. Considering the current market situation, it is mandatory for the vendors in the SDN market to enhance their offerings and cater to the growing demand for SDWAN solutions in order to gain significant market shares.
The IT and telecommunications vertical holds the largest market share among the verticals, which include retail, healthcare, BFSI, industrial and government. SDN provides telecom operators with flexible and highly responsive central control of network traffic through a programmable network. As a result, the operators gain benefits such as lower capital requirement, reduced operational costs, increased service agility and innovation, and new opportunities for revenue generation. SDN enables telecom operators to empower their partners with operational support systems (OSS) and business support systems (BSS) tools, thereby providing a more customer-centric delivery. Telecom operators are increasingly partnering with SDN providers to develop their own managed SDN services. Deutsche Telekom, Verizon, Vodafone, China Mobile, Telefonica or Telecom Italia, Telstra were the early adopters of SDN technology and among the first to offer SDN-based offerings that provide agility and enable digitization. In September 2019, AT&T completed the implementation of SDN in 65% of its network; the company plans on virtualizing 75% of its network by the end of 2020. Other telecom operators are expected to follow suite in the near future.
Enterprises in other verticals such as retail, healthcare, and BFSI have realized the importance of SDN as it helps them to tap into customer data and preferences at the points of service, along the provision of network security. In June 2019, British Telecom deployed Juniper's Contrail Networking platform for SDN capabilities and fabric management; it also implemented AppFormix monitoring software to analyze both physical and virtual environments, along with the high-density QFX series Ethernet switches. The telecom operators are increasingly investing in SDN technology; therefore, partnering with telecom operators would provide the SDN providers with a number of opportunities
Cisco Systems Inc., Juniper Networks Inc., NEC Corporation, Brocade Communications Systems Inc., Intel Corporation, Big Switch Networks, Hewlett Packard Enterprise Company, Huawei Technologies Co. Ltd, Pica8 Inc., Ciena Corporation, Pluribus Networks Inc., and IBM Corporation are the major companies in the market that compete in terms of services offered and pricing. These companies primarily focus on the development of switches, network infrastructure, and controllers. Although the global players are dominating the market, regional players with small market shares also have a strong presence. The global players are expected to strengthen their presence worldwide through organic and inorganic growth during the forecast period. In July 2019, IBM Corporation and AT&T partnered for cloud and software-defined networking. AT&T Business Solutions migrated its internal software applications to the IBM cloud. IBM made AT&T Business its primary provider of SDN technology. Similar initiatives by other players are seen prominently in the market. For instance, in December 2018, Pluribus partnered with Edgecore to accelerate open networking market and increase the speed across datacenter networks. In October 2018, Juniper Networks partnered with Nutanix to improve network automation and security to act as a unified partner for computational application and storage. Therefore, it is compulsory for the new entrants in the SDN market to follow similar strategies to attain inorganic growth and expand their customer base.
