Virtual Extensible LAN (VXLAN) Market - By Component (Hardware, Software, Services), By Enterprise Size (Large Enterprises, SME), By Application, By End-User Industry & Forecast, 2024 - 2032

Virtual Extensible LAN Market Size

Virtual Extensible LAN Market was valued at USD 1.5 billion in 2023 and is estimated to register a CAGR of over 15% between 2024 and 2032 owing to the increasing demand for multi-tenancy support and the emergence of 5G networks.
 

VXLAN's ability to support multi-tenancy environments makes it ideal for service providers and enterprises hosting multiple tenants on shared infrastructure. Additionally, VXLAN enables efficient network traffic management and optimization, meeting the requirements of high-bandwidth and low-latency applications in 5G networks, further driving its adoption.
 

The modernization of data centers and the integration of software-defined networking (SDN) technologies are fueling the growth of the virtual extensible LAN industry. As organizations seek to improve scalability, resource utilization, and network agility, VXLAN emerges as a crucial solution. Its ability to facilitate network virtualization and segmentation aligns perfectly with the requirements of modern data center architectures and SDN deployments, driving its adoption across diverse industries.
 

For instance, in October 2023, Aviz Networks collaborated with Cisco to provide an enterprise-grade SONiC offering tailored for large customers seeking to implement the open-source network operating system.
 

Though the virtual extensible LAN market is thriving, it faces barriers such as interoperability challenges and security concerns. Addressing interoperability challenges and enhancing security measures are pivotal steps toward fostering the growth of VXLAN solutions. By investing in interoperability standards and facilitating seamless integration with existing network infrastructures, VXLAN providers can broaden their market reach and appeal to a wider range of customers. Additionally, prioritizing robust security protocols and offering comprehensive solutions to mitigate potential risks instills confidence in adopting VXLAN technology across diverse industries.
 

Virtual Extensible LAN Market Trends

The virtual extensible LAN industry is propelled by the increasing adoption of cloud environments and a heightened focus on security. As organizations transition towards cloud-native architectures, VXLAN provides the necessary network scalability and flexibility. Moreover, with security becoming a top priority in modern networking, VXLAN's capability to enforce robust segmentation and implement advanced security measures aligns perfectly with the evolving cybersecurity landscape, driving its adoption further.
 

For instance, in February 2024, Juniper Networks revealed its partnership with KK Networks to deliver a scalable and robust cloud metro network. This initiative aims to offer affordable internet access to residential users, enhancing their quality of experience while ensuring sustainable service delivery for KK Networks (KKN).
 

Virtual Extensible LAN Market Analysis

Based on enterprise size, the market is categorized into large enterprises and SME. The large enterprises segment accounted for around 70% of the market share in 2023 and is expected to reach over USD 3.5 billion by 2032. The large enterprises segment garnered substantial gains in 2023 due to their expansive network needs and resources. Their complex infrastructures often require scalable solutions for efficient communication across multiple data centers and cloud environments. VXLAN technology offers flexibility, scalability, and improved network efficiency, making it an ideal choice for these enterprises. With their ample investments in networking technologies, large enterprises hold a modest share in the virtual extensible LAN industry, driving innovation and adoption forward.
 

Based on end-user industry, the market is divided into manufacturing, BFSI, healthcare, IT & telecommunications, government, retail, media & entertainment and others. In 2023, the IT & telecommunications segment accounted for a market share of around 30% in 2023. The IT and telecommunications segment witnessed a notable surge in 2023, driven by its vital role in digital connectivity. As the backbone of modern communication networks, IT and telecom firms prioritize VXLAN adoption for its capacity to scale and interconnect data centers seamlessly. With an incessant demand for high-performance and flexible network solutions, these industries drive the widespread implementation of VXLAN, solidifying their dominant position in the market.
 

North America holds a major share of over 35% in the global virtual extensible LAN market owing to the region's robust technological infrastructure and early adoption of advanced networking solutions. The region's thriving IT ecosystem, coupled with a high concentration of large enterprises, has propelled VXLAN implementation. Moreover, continuous innovation and strategic partnerships within the North American tech industry have bolstered its position as a key contributor to networking advancements.
 

Also, by securing a significant portion of the market, the U.S. leverages its tech prowess and innovative landscape. With a rich ecosystem of IT giants and startups, the nation drives VXLAN adoption through continuous R&D and strategic partnerships. Additionally, a robust digital infrastructure and proactive investment in network technologies further fortify its position. This dominance underscores the U.S.'s pivotal role in shaping the future of networking solutions globally.
 

Furthermore, the countries, including South Korea, Japan, France, Germany, the U.K., Canada, the Netherlands, the UAE, and Saudi Arabia, have collectively gained a decent share in the virtual extensible LAN (VXLAN) industry. Their adoption stems from a combination of factors, such as robust technological infrastructure, a strong emphasis on digital transformation, and proactive investment in advanced networking solutions. This widespread uptake underscores the global appeal and utility of VXLAN across diverse geographical and economic landscapes.
 

Virtual Extensible LAN Market Share

VMware and Cisco Systems Inc. hold a high market share of over 10% in the virtual extensible LAN industry. VMware focuses on providing robust hybrid and multi-cloud solutions, leveraging VXLAN to ensure seamless network connectivity across on-premises and cloud environments. This approach caters to enterprises aiming for flexibility and agility in their cloud strategies.
 

Cisco continuously innovates its VXLAN offerings by incorporating advanced features like enhanced security, automation, and programmability. This ensures that Cisco’s solutions remain cutting-edge and attractive to enterprise customers. Also, the company invests in expanding its global infrastructure and services, ensuring that its VXLAN solutions are available and performant across different regions. This strategy helps Cisco cater to both multinational enterprises and local businesses.
 

Virtual Extensible LAN Market Companies

Major players operating in the virtual extensible LAN industry are:

• Accenture plc
• Arista Networks 
• Cisco Systems Inc.
• Extreme Networks Inc.
• Fortinet Inc.
• Hewlett Packard Enterprise (HPE)
• Huawei Technologies Co., Ltd.
• Juniper Networks 
• Nokia Corporation
• Palo Alto Networks, Inc.
• VMware (Broadcom)
   

Virtual Extensible LAN Industry News

• In February 2022, Juniper Networks collaborated with Nipa Cloud to bolster its network infrastructure. Nipa deployed EVPN-VXLAN solutions and Juniper's QFX5120 Series Switches and MX10003/MX204 Series Routing Platforms to enhance campus and data center networks.
   
• In March 2022, Aruba introduced VXLAN management and GPS-enabled Wi-Fi networks. Central NetConductor, Aruba's cloud-based service, provides automation and identity-based network access to enforce zero-trust policies.
   

The virtual extensible LAN market research report includes in-depth coverage of the industry with estimates & forecasts in terms of revenue (USD Million) from 2021 to 2032, for the following segments:

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Market, By Component

• Hardware
  • Switches
  • Routers
  • Gateways
  • Others 
• Software
  • VXLAN enabled network operating system
  • Network virtualization software
  • Network management and orchestration software
  • Others
• Services
  • Professional services
    • Consulting
    • Deployment & integration
    • Support & maintenance
  • Managed services

Market, By Enterprise Size

• Large enterprises
• SME

Market, By Application

• Multi-tenancy
• Workload mobility
• Software-Defined Networking (SDN) overlays
• Network Function Virtualization (NFV)
• Disaster recovery
• Others

Market, By End-User Industry

• BFSI
• Healthcare
• IT & telecommunications
• Government
• Retail
• Manufacturing
• Media and entertainment
• Others

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

• North America
  • U.S.
  • Canada
• Europe
  • UK
  • Germany
  • France
  • Italy
  • Spain
  • Russia
  • Nordics
  • Rest of Europe
• Asia Pacific
  • China
  • India
  • Japan
  • South Korea
  • ANZ
  • Southeast Asia
  • Rest of Asia Pacific 
• Latin America
  • Brazil
  • Mexico
  • Argentina
  • Rest of Latin America 
• MEA
  • South Africa
  • Saudi Arabia
  • UAE
  • Rest of MEA