Virtual Extensible LAN (VXLAN) Market by Offering (Hardware, Software, Services), Application (Software-Defined Networking Overlays, Network Function Virtualization), Vertical (Manufacturing, BFSI, Healthcare) and Region - Global Forecast to 2029
[278 Pages Report] The VXLAN market size is projected to grow from USD 1.6 billion in 2024 to USD 3.2 billion by 2029 at a CAGR of 15.0% during the forecast period. Organizations are expanding their IoT initiatives and edge computing infrastructure, VXLAN is scaleing alongside, providing the flexibility needed to add new devices and services without disrupting existing network operations. This demand creates opportunities for VXLAN vendors to expand their market presence by offering solutions tailored to IoT and edge computing needs.
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Virtual Extensible LAN Market Dynamics
Driver: Need for Secure Multi-Tenancy in Cloud Data Centers
As more and more businesses migrate to the cloud, the requirement to isolate and protect data across multiple tenants has become critical. This need has therefore pushed cloud providers to adopt VXLAN technology, in order to enable efficient and secure network segmentation. By using VXLAN, several cloud providers are able to employ isolated network segments that are both scalable and secure. This type of isolation is critical for maintaining data privacy and compliance with regulations across various industries. For instance, in a multi-tenant cloud environment, Microsoft Azure uses VXLAN to encapsulate and route tenant traffic, ensuring that each customer's data remains isolated from others. This encapsulation enables Azure to manage large-scale network topologies efficiently while maintaining strict security standards. Apart from major cloud providers, enterprises are also implementing private cloud solutions. They are therefore increasingly adopting VXLAN to achieve secure and flexible network virtualization, thereby driving the growth of VXLAN technology globally. Additionally, the rise of edge computing and IoT applications necessitates scalable and secure network segmentation, which will further drive the growth of the VXLAN market. As these technologies continue to grow, they create additional opportunities for VXLAN vendors to expand their market presence.
Restraint: Complexity and Deployment Costs
Implementing VXLAN can be complex and costly, particularly for organizations that lack in-house expertise. The technology requires significant investment in compatible hardware, such as VXLAN-capable routers and switches, which can strain IT budgets, especially for smaller enterprises. Additionally, deploying VXLAN necessitates skilled personnel who can manage the intricate network architecture, often requiring extensive training or hiring new staff, further increasing costs. Smaller enterprises may find these expenses prohibitive, slowing adoption as they struggle with the financial and operational demands of VXLAN implementation and maintenance.
Opportunity: Emergence of 5G Networks
The rollout of 5G networks enhances the need for advanced network segmentation and virtualization technologies like VXLAN. 5G's high speed and low latency will drive the deployment of VXLAN to manage and secure the increased network traffic efficiently. The emergence of 5G not only addresses the technical challenges but also presents a significant opportunity for VXLAN's market growth. As 5G networks proliferate, the demand for VXLAN technology is expected to surge, driving increased adoption and deployment across various industries and sectors. Additionally, VXLAN's compatibility with 5G infrastructure positions it as a key enabler for service providers, enterprises, and cloud operators seeking to capitalize on the capabilities of 5G networks. The growing adoption of VXLAN for 5G deployments expands the market reach for VXLAN vendors, leading to increased revenue opportunities and market share. Moreover, as 5G continues to evolve and expand globally, VXLAN technology is poised to play an increasingly vital role in enabling scalable, efficient, and secure network architectures, further fueling its market growth and dominance in the network virtualization landscape.
Challenge: Increased Network Complexity
VXLAN creates logical network segments or tunnels on top of the physical network. While this offers flexibility, it adds an extra layer of complexity compared to conventional networks. It introduces an additional layer of encapsulation, creating more complex network topologies that necessitate specialized knowledge for effective deployment and troubleshooting. Managing these intricate networks involves configuring numerous components, such as VXLAN tunnels, VTEPs (VXLAN Tunnel Endpoints), and network overlays, which can be difficult and time-consuming. Secondly, the integration of VXLAN with existing network infrastructure can be cumbersome, especially in multi-vendor environments where interoperability issues may arise, complicating network management and potentially causing performance bottlenecks.
Additionally, troubleshooting and maintaining VXLAN networks can be more complex compared to traditional networks, requiring more sophisticated tools and methods to identify and resolve issues. This increased operational burden and potential for misconfiguration can lead to hesitancy in adoption, particularly among small to mid-sized enterprises that may lack the necessary resources and expertise. As a result, despite its benefits in scalability and network segmentation, the complexity of VXLAN remains a significant barrier to its broader implementation.
Ecosystem Of Virtual Extensible LAN Market
By hardware switches registered the highest CAGR in the VXLAN market during the forecast period.
Switches are the cornerstone of VXLAN deployments, functioning as the primary devices that handle the forwarding of traffic within a network. In a VXLAN setup, switches act as VTEPs (VXLAN Tunnel Endpoints). These VTEPs encapsulate standard Ethernet frames into VXLAN packets, allowing them to be transported over an IP-based network. Advanced VXLAN-enabled switches, produced by leading manufacturers such as Cisco, Arista, and Juniper, come equipped with specialized hardware to perform encapsulation and decapsulation tasks efficiently. These hardware capabilities ensure minimal latency and high throughput, which are crucial for maintaining performance in large and dynamic virtualized environments.
The software defined network (SDN) overlays application segment contributed the largest market share in the VXLAN market during the forecast period.
VXLAN plays a crucial role in SDN by providing a scalable and flexible overlay network that can be managed programmatically. This integration allows for the dynamic provisioning and management of network resources, enhancing agility and reducing operational complexity.
In an SDN environment, VXLAN can be used to create virtual network topologies that are abstracted from the physical infrastructure. This abstraction simplifies network configuration and management, as network policies and configurations can be applied centrally through an SDN controller. SDN combined with VXLAN enables rapid deployment of network services, supports automated network operations, and enhances the ability to respond to changing network demands efficiently.
Based on region, North America is expected to hold the largest market size during the forecast.
In the global landscape of VXLAN , North America is experiencing robust growth, driven by the rapid adoption of cloud computing, the expansion of data centers, and the increasing demand for scalable and flexible network solutions. Major cloud service providers such as Amazon Web Services (AWS), Microsoft Azure, and Google Cloud are continuously expanding their infrastructure, necessitating advanced network virtualization technologies like VXLAN to manage complex, multi-tenant environments efficiently. Additionally, the rise of IoT deployments across various sectors, including healthcare, manufacturing, and smart cities, requires robust network segmentation and scalability, which VXLAN effectively provides. This growth is further supported by technological advancements in network hardware and software, making VXLAN deployment more practical and efficient for large-scale implementations.
Market Players:
The major vendors in this market include Cisco Systems (US), Hewlett Packard Enterprise (US), VMware (US), Huawei (China), Juniper Networks (US), Arista Networks (US). These players have adopted various growth strategies, such as partnerships, agreements and collaborations, new product launches and product enhancements, and acquisitions to expand their footprint in the VXLAN market.
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Report Metrics |
Details |
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Market size available for years |
2018-2029 |
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Base year considered |
2023 |
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Forecast period |
2024–2029 |
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Forecast units |
Value (USD) Million/Billion |
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Segments Covered |
By Offering (hardware and software, and services), verticals, applications, and region |
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Region covered |
North America, Europe, Asia Pacific, Middle East & Africa, and Latin America |
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Companies covered |
The major players in the VXLAN market are Cisco Systems (US), Hewlett Packard Enterprise (US), VMware (US), Juniper Networks (US), Arista Networks (US), Nutanix, Inc. (US), NVIDIA Corporation (US), Citrix Systems (US), Dell Technologies Inc (US), Microsoft Corporation, Inc. (US), Huawei (China), Nokia Corporation (Finland), Keysight Technologies, Inc. (US), Red Hat (US), Ribbon Communications Inc. (US), Extreme Networks, Inc. (US), FS.COM (US), Spirent Communications Inc. (US), Pica8 (US), Arrcus (US), IP Infusion (US), Cubro Network Visibility (Austria), Versa Networks (US), Asterfusion (China), and A10 Networks (US). |
This research report categorizes the VXLAN market to forecast revenues and analyze trends in each of the following submarkets:
Based on Offering:
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Hardware
- Switches
- Routers
- Other Hardware
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Software
- VXLAN Enabled Network Operating Systems (OS)
- Network Virtualization Software
- Network Management And Orchestration Software
- VXLAN Testing And Analysis Tools
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Services
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Professional Services
- Consulting
- Deployment And Integration
- Support And Maintenance
- Managed Services
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Professional Services
Based on Application:
- Multi-Tenancy
- Workload Mobility
- Software-Defined Networking (SDN) Overlays
- Network Function Virtualization (NFV)
- Other Applications
Based on End User:
- Manufacturing
- Healthcare
- BFSI
- Retail
- Media And Entertainment
- Government
- IT & ITeS
- Telecommunications
- Other Verticals
By Region:
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North America
- United States (US)
- Canada
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Europe
- United Kingdom (UK)
- Germany
- Nordic Countries
- Rest of Europe
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Asia Pacific
- China
- Japan
- India
- Rest of Asia Pacific
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Middle East and Africa
- UAE
- KSA
- South Africa
- Rest of the Middle East & Africa
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Latin America
- Brazil
- Mexico
- Rest of Latin America
Recent Developments:
- In February 2024, KK Networks partnered with Juniper Networks for sustainable cloud metro network deployment delivering superior quality of experience for residential & business users. KKN uses Juniper QFX5120 switches for the data center underlay network, EVPN-VXLAN for the overlay network and EX2300s to create a data center fabric that supports up to 100GbE interfaces.
- In October 2023, Cisco partnered with Aviz Networks to offer an enterprise-grade SONiC offering for large customers interested in deploying the open-source network operating system.
- In February 2022, Juniper Networks and Nipa Cloud partnered to strengthen its existing network infrastructure. It has Nipa has deployed EVPN-VXLAN solutions from Juniper Networks, the QFX5120 Series Switches and MX10003/MX204 Series Universal Routing Platforms, to upgrade its campus and data center networks and better differentiate its offerings.
Frequently Asked Questions (FAQ):
What is Virtual Extensible LAN (VXLAN) ?
Virtual Extensible LAN (VXLAN) is a network virtualization technology that allows the creation of a scalable and isolated virtual network overlay on top of a physical network infrastructure. It extends Layer 2 networks over a Layer 3 (IP) network, enabling the construction of large-scale and flexible virtual networks that can span multiple data centers. VXLAN achieves this by encapsulating Ethernet frames within UDP packets, using a 24-bit segment identifier called a VXLAN Network Identifier (VNI) to provide up to 16 million unique network segments. This capability is essential for supporting multi-tenant environments, large-scale cloud infrastructures, and data center interconnects, allowing for efficient workload mobility and robust network segmentation.
What is the market size of the VXLAN market?
The VXLAN market size is projected to grow from USD 1.6 billion in 2024 to USD 3.2 billion by 2029 at a CAGR of 15.0% during the forecast period.
What are the major drivers in the VXLAN market?
The major drivers in the VXLAN market are increased demand for scalable network segmentation, need for secure multi-tenancy in cloud data centers, and rise of containerized applications.
Who are the key players operating in the VXLAN market?
The key vendors operating in the VXLAN market include Cisco Systems (US), Hewlett Packard Enterprise (US), VMware (US), Juniper Networks (US), Arista Networks (US), Nutanix, Inc. (US), NVIDIA Corporation (US), Citrix Systems (US), Dell Technologies Inc (US), Microsoft Corporation, Inc. (US), Huawei (China), Nokia Corporation (Finland), Keysight Technologies, Inc. (US), Red Hat (US), Ribbon Communications Inc. (US), Extreme Networks, Inc. (US), FS.COM (US), Spirent Communications Inc. (US), Pica8 (US), Arrcus (US), IP Infusion (US), Cubro Network Visibility (Austria), Versa Networks (US), Asterfusion (China), and A10 Networks (US).
What are the opportunities for new market entrants in the VXLAN market?
New market entrants in the VXLAN market have significant opportunities to innovate by offering advanced network virtualization solutions that enhance scalability and security. They can focus on developing software-defined networking (SDN) and network function virtualization (NFV) capabilities, catering to the growing demand for flexible and programmable network infrastructures. Additionally, integrating artificial intelligence (AI) and machine learning (ML) for automated network management and security can differentiate their offerings and address emerging needs in cloud computing and IoT environments. .
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The research study involved four major activities in estimating the VXLAN market size. Exhaustive secondary research has been done to collect important information about the market and peer markets. The next step has been to validate these findings and assumptions and size them with the help of primary research with industry experts across the value chain. Both top-down and bottom-up approaches have been used to estimate the market size. Post which the market breakdown and data triangulation have been adopted to estimate the market sizes of segments and sub-segments.
Secondary Research
The market size of the companies offering VXLAN solutions to various end users was arrived at based on the secondary data available through paid and unpaid sources and by analyzing the product portfolios of major companies in the ecosystem and rating the companies based on their performance and quality. In the secondary research process, various sources were referred to identify and collect information for the study. The secondary sources included annual reports, press releases, and investor presentations of companies; white papers, certified publications, and articles from recognized associations and government publishing sources. Several journals and associations, such as the VXLAN associations/forums, IETF, 3GPP, VXLAN policy coalition, and SDxCentral, were also referred to. Secondary research was used to obtain key information about industry insights, the market’s monetary chain, the overall pool of key players, market classification and segmentation according to industry trends to the bottom-most level, regional markets, and key developments from both the market and technology-oriented perspectives.
Secondary research was used to obtain key information about the industry’s supply chain, the total pool of key players, market classification, and segmentation according to the industry trends to the bottom-most level, regional markets, and key developments from both market and technology-oriented perspectives, all of which were further validated by primary sources.
Primary Research
In the primary research process, various sources from the supply and demand sides were interviewed to obtain qualitative and quantitative information for the report. The primary sources from the supply side included Chief Executive Officers (CEOs), Chief Technology Officers (CTOs), Chief Operating Officers (COOs), Vice Presidents (VPs), Managing Directors (MDs), technology and innovation directors, and related key executives from various key companies and organizations operating in the VXLAN market.
Primary interviews were conducted to gather insights, such as market statistics, data on revenue collected from software and services, market breakups, market size estimations, market forecasts, and data triangulation. Stakeholders from the demand side, such as Chief Information Officers (CIOs), Chief Finance Officers (CFOs), Chief Strategy Officers (CSOs), and the installation team of end users who use smart learning, were interviewed to understand buyers’ perspectives on suppliers, products, service providers, and their current usage of VXLAN hardware, solutions and services, which is expected to affect the overall VXLAN market growth.
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Market Size Estimation
In the market engineering process, the top-down and bottom-up approaches were used along with multiple data triangulation methods to estimate and validate the size of the VXLAN market, as well as other dependent submarkets. The research methodology used to estimate the market sizes includes the following:
- Initially, MarketsandMarkets focuses on top-line investments and spending in the ecosystems. Further, significant developments in the critical market area have been considered.
- Tracking the recent and upcoming developments in the VXLAN market that include investments, R&D activities, product launches, collaborations, mergers and acquisitions, and partnerships, as well as forecasting the market size based on these developments and other critical parameters.
- Conduct multiple discussions with key opinion leaders to learn about the diverse types of authentications and brand protection offerings used and the applications for which they are used to analyze the breakdown of the scope of work carried out by major companies.
- Segmenting the market based on technology types concerning applications wherein the types are to be used and deriving the size of the global application market.
- Segmenting the overall market into various market segments
- Validating the estimates at every level through discussions with key opinion leaders, such as chief executives (CXOs), directors, and operation managers, and finally with the domain experts at MarketsandMarkets
Market Size Estimation Methodology-Bottom-up approach
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Market Size Estimation Methodology-top-down approach
Data Triangulation
After arriving at the overall market size from the above estimation process, the VXLAN market has been split into several segments and sub-segments. To complete the overall market engineering process and arrive at the exact statistics for all segments and sub-segments, data triangulation and market breakdown procedures have been used, wherever applicable. The data has been triangulated by studying various factors and trends from both the demand and supply sides.
The VXLAN market size has been validated using top-down and bottom-up approaches.
Market Definition
VXLAN stands for Virtual eXtensible Local Area Network (VXLAN). VXLAN (Virtual Extensible LAN) is a network virtualization technology designed to address the scalability issues associated with traditional VLANs in large cloud and data center environments. By using MAC-in-UDP encapsulation, VXLAN enables the creation of a Layer 2 overlay network on top of a Layer 3 infrastructure. This allows for the extension of a Layer 2 network across multiple physical locations, making it possible to interconnect and manage large numbers of virtual machines across distributed data centers. VXLAN increases network flexibility and scalability by supporting up to 16 million logical networks, compared to the 4,096 limit of VLANs, and facilitates efficient traffic isolation and segmentation in multitenant environments.
Stakeholders
- Network Server Providers
- Technology Vendors
- Mobile Network Operators (MNOs)
- Independent Software Vendors (ISVs)
- System Integrators (SIs)
- Resellers
- Value-added Resellers (VARs)
- Managed Service Providers (MSPs)
- Compliance Regulatory Authorities
- Government Authorities
- Investment Firms
- VXLAN Alliances/Groups
- Original Design Manufacturers (ODMs)
- Original Equipment Manufacturers (OEMs)
- Enterprises/Businesses
Report Objectives
- To determine and forecast the global VXLAN market by offering (hardware and software, and services), verticals, applications, and region from 2024 to 2029, and analyze the various macroeconomic and microeconomic factors affecting market growth.
- To forecast the size of the market segments concerning five central regions: North America, Europe, Asia Pacific (APAC), Middle East & Africa (MEA), and Latin America.
- To provide detailed information about the major factors (drivers, restraints, opportunities, and challenges) influencing the growth of the VXLAN market.
- Analyze each submarket concerning individual growth trends, prospects, and contributions to the overall VXLAN market.
- To analyze the opportunities in the market for stakeholders by identifying the high-growth segments of the VXLAN market.
- To profile the key market players; provide a comparative analysis based on business overviews, regional presence, product offerings, business strategies, and key financials; and illustrate the market’s competitive landscape.
- Track and analyze competitive developments in the market, such as mergers and acquisitions, product developments, partnerships and collaborations, and Research and Development (R&D) activities.
Available Customizations
With the given market data, MarketsandMarkets offers customizations per the company’s specific needs. The following customization options are available for the report:
Geographic Analysis
- Further break-up of the Asia Pacific market into countries contributing 75% to the regional market size
- Further break-up of the North American market into countries contributing 75% to the regional market size
- Further break-up of the Latin American market into countries contributing 75% to the regional market size
- Further break-up of the Middle East African market into countries contributing 75% to the regional market size
- Further break-up of the European market into countries contributing 75% to the regional market size
Company Information
- Detailed analysis and profiling of additional market players (up to 5)
Growth opportunities and latent adjacency in Virtual Extensible LAN (VXLAN) Market