Software-Defined Data Center Market - By Solution (Software-Defined Compute (SDC), Software-Defined Networking (SDN), Software-Defined Storage (SDS), By Organization Size (SME, Large Enterprises) By End-Use, Forecast, 2023 – 2032

Software-Defined Data Center Market Size

Software-Defined Data Center Market was valued at USD 56.5 billion in 2022 and is projected to grow at a CAGR of over 19% between 2023 and 2032. Global expansion of the industry is driven by the flexibility and scalability offered by SDDC solutions. SDDC provides a more flexible and scalable infrastructure compared to traditional data centers. With software-defined architecture, resources can be dynamically allocated and adjusted based on workload demands. This scalability allows organizations to adapt quickly to changing business needs, ensuring that they can efficiently manage varying workloads without over-provisioning hardware resources.
 

To that end, in August 2023, VMware, Inc. broadened its existing collaboration with Oracle to assist clients in modernizing their VMware workloads on Oracle Cloud Infrastructure (OCI). In this extended partnership, customers now have the option to enroll in Oracle Cloud VMware Solution through VMware Cloud Universal. This program, designed for flexible procurement and consumption, streamlines the process for businesses seeking to adopt eligible VMware Cloud services. VMware Cloud Universal is particularly advantageous for organizations with hybrid cloud architectures, those with extended or fluctuating cloud migration timelines, or those with specific cloud bursting needs.
 

One of the primary drivers for the adoption of SDDC is the need for increased automation and orchestration in data center operations. Citing an instance, in October 2023, Microsoft unveiled its plan to establish a team focused on researching data center automation and data center robotics. The company is actively recruiting for the position of hardware automation team manager, particularly seeking expertise in robotics, according to insights from DCD. This strategic move follows a recent incident where a Microsoft Azure outage in Australia was attributed in part to shortcomings in software automation. The outage occurred when a utility power sag triggered the shutdown of cooling units, leading to rising temperatures. In this context, the lack of on-site staff for manual rebooting prompted the automated system to shut down servers to prevent overheating, highlighting the need for enhanced automation measures such as rebooting the cooling units directly.
 

SDDCs enable the automation of various tasks, such as provisioning, configuration, and management of infrastructure components. This automation leads to improved efficiency, reduced manual errors, and faster response times to changing business requirements. However, security has been a significant concern for organizations considering the adoption of SDDC. As data becomes more virtualized and software-defined, there are increased attack surfaces and potential vulnerabilities that cybercriminals could exploit. Ensuring the security of virtualized infrastructure and data in a software-defined environment is crucial, and concerns about the robustness of security measures may restrain some organizations from fully embracing SDDC solutions.
 

COVID-19 Impact

The COVID-19 pandemic significantly influenced the software-defined data center (SDDC) industry, driving a surge in demand for flexible, scalable, and remote-friendly infrastructure solutions. With a sudden shift to remote work, organizations accelerated digital transformation initiatives, increasing reliance on SDDC for seamless data management and accessibility. The pandemic highlighted the importance of agile and resilient IT infrastructures, prompting a reevaluation of traditional data center models and fostering a greater adoption of SDDC technologies to support evolving business needs.
 

Software-Defined Data Center Market Trends

The integration of edge computing with SDDC is expected to gain prominence. As organizations leverage edge computing for real-time processing of data closer to the source, the SDDC market may see increased efforts to extend software-defined principles to edge environments. This integration aims to enhance agility and resource management for distributed computing architectures. Besides, the incorporation of Artificial Intelligence (AI) and Machine Learning (ML) into SDDC solutions is anticipated to grow. Intelligent automation and analytics powered by AI and ML can optimize resource allocation, enhance predictive maintenance, and improve overall efficiency in data center operations. This trend aligns with the broader industry shift toward more autonomous and self-optimizing infrastructure.
 

Software-Defined Data Center Market Analysis

Based on solution, the market is divided into software-defined compute (SDC), software-defined networking (SDN), and software-defined storage (SDS). The SDS segment is expected to grow at a CAGR of around 18% during the forecast period. The demand for software-defined compute (SDC) solutions is propelled by the imperative for greater flexibility and efficiency in modern IT infrastructures. SDC enables the abstraction of hardware from computing resources, allowing dynamic allocation based on workload demands. This flexibility caters to the evolving nature of applications and workloads, fostering agility in resource utilization. Additionally, SDC solutions contribute to cost optimization by decoupling software from specific hardware, supporting scalability, and facilitating streamlined management. As organizations seek adaptive and responsive computing environments, the demand for SDC solutions continues to grow, driven by the need for agile, cost-effective, and scalable computing infrastructures.
 

Based on organization size, the market is categorized into SME and large enterprises. The large enterprises segment was valued at over USD 35 billion in 2022. Software-Defined Data Center (SDDC) solutions are gaining popularity among large enterprises due to their transformative impact on infrastructure management. SDDC centralizes and automates data center operations, enhancing agility and scalability. Large enterprises benefit from the flexibility to allocate resources dynamically, optimizing performance for varying workloads. The abstraction of hardware through virtualization improves resource utilization, leading to cost efficiencies. Moreover, SDDC facilitates streamlined management, reducing manual errors and enhancing overall operational efficiency. As enterprises prioritize digital transformation, SDDC emerges as a pivotal solution, aligning with the need for scalable, agile, and cost-effective infrastructure.
 

North America held a dominant market share of over 40% in 2022. North America software-defined data center market is experiencing robust growth due to the rapid adoption of SDDC solutions in the region to modernize their data center infrastructures, enhancing flexibility and scalability. With a strong emphasis on digital transformation and the need for agile, efficient IT environments, SDDC aligns well with North American businesses' evolving requirements. Additionally, the region's well-established IT infrastructure and a growing awareness of the benefits of SDDC contribute to the industry's healthy growth as organizations seek advanced solutions for streamlined management and optimized resource utilization.  
 

Software-Defined Data Center Market Share

Major players operating in the software-defined data center industry are:

• Cisco Systems Inc
• Fujitsu
• Hitachi Data Systems (Hitachi Vantra)
• HPE
• Huawei
• IBM Corporation
• Juniper Networks, Inc
• Microsoft Corporation
• NEC Corporation of America (NEC Corporation)
• NetApp, Inc
• Oracle Corporation
• Vmware, Inc

VMware, Inc., and Microsoft Corporation are dominant players in the global market, holding over 20% of the revenue share in 2022. These companies in the SDDC market are bolstering their presence through strategic initiatives such as partnerships, mergers, and acquisitions. Emphasizing innovation, these firms invest in research and development, introducing cutting-edge technologies to stay competitive. Additionally, customer-centric approaches and expanding service portfolios contribute to market leadership.
 

Software-Defined Data Center Industry News

• In July 2023, NTT Ltd. introduced its new software-defined data center campus in Chennai (India), spanning six acres and boasting a total capacity of 34.8 MW across two buildings. The first facility, operational with a 17.4 MW IT load, accompanies the arrival of the MIST subsea cable system in Chennai, solidifying NTT's position in the India data center industry.
   

The software-defined data center market research report includes in-depth coverage of the industry with estimates & forecast in terms of revenue (USD Billion) from 2018 to 2032, for the following segments:

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Market, By Solution

• Software-Defined Networking (SDN)
  • Hardware
  • Software
  • Services
    • Managed services
    • Professional services 
• Software-Defined Storage (SDS)
  • Hardware
  • Software
  • Services
    • Managed services
    • Professional services
• Software-Defined Compute (SDC) (Largest Market)
  • Hardware
  • Software
  • Services
    • Managed services
    • Professional services

Market, By Organization Size

• SME
• Large enterprises

Market, By End Use

• Enterprise
  • BFSI
  • Retail & e-commerce
  • Government
  • Healthcare
  • Manufacturing
  • IT enabled Services (ITeS)
  • Others 
• Telecom service provider
• Cloud service provider

The above information is provided for the following regions and countries:

• North America
  • U.S.
  • Canada
  • Mexico
• Europe
  • UK
  • Germany
  • France
  • Italy
  • Spain
  • Benelux
  • Switzerland
  • Nordics
• Asia Pacific
  • China
  • India
  • Japan
  • ANZ
  • Singapore
  • South Korea  
• South America
  • Brazil
  • Argentina
  • Chile
  • Colombia
• MEA
  • GCC
  • South Africa