Network Function Virtualization Market Size 2024-2028 

The network function virtualization (NFV) market size is forecast to increase by USD 90.1 billion at a CAGR of 31.39% between 2023 and 2028. The market is experiencing significant growth, driven by several key trends. Advances in network infrastructure are enabling the virtualization of network functions, leading to increased efficiency and flexibility. The increasing acceptance of cloud computing is also fueling the market's growth, as NFV allows for the deployment of network functions in a virtualized environment, reducing the need for physical infrastructure. However, the market faces challenges such as system integration and interoperability issues, which can hinder the adoption of NFV. companies must address these challenges to ensure seamless integration and interoperability between different NFV components and ensure the market's continued growth.

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The market is experiencing significant growth due to the increasing adoption of virtualization technology in telecom equipment and data center applications. NFV enables service providers to virtualize network functions, leading to network automation, data center consolidation, and cloud services. The component market for NFV includes virtualized network functions, management and orchestration, and infrastructure. NFV is finding applications in various industries such as IoT deployments, healthcare, energy and utilities, media and entertainment, and enterprise. The benefits of NFV include security agility, cloud migration, and improved network management systems. NFV also offers advanced security features such as caching, intrusion detection systems, domain name services, and core network security.

The market is expected to grow further as more organizations adopt NFV for network functions such as load balancing, firewalls, and VPNs. Overall, NFV is transforming the way network functions are deployed and managed, offering significant benefits in terms of cost savings, flexibility, and improved performance.

Market Segmentation

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

• Component
  • Solutions
  • Services
• End-user
  • IT and telecom
  • BFSI
  • Government
  • Others
• Geography
  • North America
    • Canada
    • US
  • Europe
    • Germany
    • UK
  • APAC
    • China
  • Middle East and Africa
  • South America

By Component Insights

The solutions segment is estimated to witness significant growth during the forecast period. Network Function Virtualization (NFV) is a software-based approach to creating virtualized network functions in a communications infrastructure. This technology enables the replacement of traditional hardware-based network equipment with virtual network functions, reducing power consumption and equipment costs. Capital expenditure is minimized as enterprises no longer need to purchase and maintain physical equipment. Operational expenditure is also impacted as virtualized functions can be easily managed and updated, reducing the need for manual intervention. Enterprise data centers and cloud-based services are major adopters of NFV due to its ability to support data-intensive applications. Service providers are also embracing NFV to digitalize their voice networks, transitioning from traditional TDM gateway offices to virtualized gateway offices.

Moreover, the pandemic and resulting consumer behavior shifts have accelerated the adoption of NFV as businesses seek agility and programmability to adapt to changing market forces. Complexity and management are the top impacting factors for NFV adoption as IT departments grapple with the digitalization of network functions. Emerging technologies such as 5G, edge computing, and security issues add to the complexity. Lack of standards and the need for virtual applications technology and virtual infrastructure further complicate the landscape. Despite these challenges, NFV offers significant benefits, including cost savings, flexibility, and improved performance. Companies like ZTE and Airtel are leading the way in NFV implementation.

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The solutions segment was valued at USD 9.60 billion in 2018 and showed a gradual increase during the forecast period.

Regional Insights

North America is estimated to contribute 42% 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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Network Function Virtualization (NFV) is a software-based approach to creating virtualized network functions in a communications infrastructure. This technology enables the deployment of virtual network functions on common IT hardware and allows for the decoupling of network functions from proprietary hardware. The NFV market is witnessing significant growth due to the increasing adoption of digital transformation in enterprises and service providers. The pandemic has accelerated this trend, leading to a shift towards cloud-based services and data-intensive applications. The implementation of NFV in enterprise data centers comes with benefits such as reduced power consumption, lower equipment cost, and a shift from capital expenditure to operational expenditure.

However, the complexity of managing virtualized network functions and the lack of standards pose challenges. The top impacting factors on the NFV market include programmability, the IT department's role, and the emergence of technologies like 5G, edge computing, and security issues. As businesses continue to digitalize, the demand for virtualized voice networks, such as virtualized TDM gateway offices, is increasing. The transition from IP-based to virtualized gateway offices is a significant trend. The agility offered by NFV is crucial in today's market forces, which are driven by consumer behavior and purchasing patterns. The impact of NFV on the communications industry is immense, and its importance will only grow as businesses continue to adopt emerging technologies.

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.

Network Function Virtualization (NFV) Market Driver

Advances in network infrastructure is the key driver of the market. The wave in the number of connected devices in various industries has resulted in an enormous volume of data being transmitted over networks. This data presents businesses with opportunities to optimize costs, enhance services, and boost revenues. To address the need for secure and efficient network operations, there is a growing demand for advanced network technologies. Virtual Desktop Infrastructure (VDI) and Network Function Virtualization (NFV) are among the technologies gaining traction. NFV, in particular, enables the creation of secure, virtualized network functions, improving business efficiency and neutralizing cyber threats. Automation and flexible production techniques are being adopted in manufacturing processes over the network, leading to increased productivity. Predictive asset maintenance, another NFV application, helps companies save on scheduled repairs, reduce maintenance costs, and prevent breakdowns during operations.

Network Function Virtualization (NFV) Market Trends

Increasing acceptance of cloud computing is the upcoming trend in the market. The global market for Network Function Virtualization (NFV) has experienced significant growth due to the widespread adoption of cloud computing. Cloud technologies such as Amazon Web Services (AWS), Google Drive, One Drive, and Office 365 have gained immense popularity, driving the demand for NFV solutions. The cost-effectiveness and ease of management of cloud-based network virtualization offerings are key factors fueling their adoption across various industries. Moreover, advancements in cloud network virtualization and efficiency improvements have made cloud deployments increasingly secure, reliable, and flexible. Virtual Desktop Infrastructure (VDI) is a prime example of how NFV is being utilized in the enterprise sector to securely deliver desktops and applications over the Internet. The secure and efficient nature of NFV solutions makes them an attractive option for businesses looking to streamline their network infrastructure and reduce operational costs.

Network Function Virtualization (NFV) Market Challenge

System integration and interoperability issues is a key challenge affecting the market growth. The market is witnessing significant growth in various industry verticals, such as BFSI, telecom, healthcare, and government, due to the adoption of advanced network technologies. However, the integration of virtual network infrastructure with an organization's IT infrastructure can pose challenges, including system integration and interoperability issues. These problems can result in technical glitches during operations, leading to potential costs and reduced operational efficiencies. The integration of multiple IT systems and advanced technologies in traditional IT infrastructure can create cross-platform system integration issues. To address these challenges, companies must provide unified network virtualization solutions that can seamlessly integrate with an organization's IT infrastructure. Ensuring a secure and efficient virtual desktop infrastructure is crucial to mitigate potential risks and maintain operational excellence.

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 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, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.

6WIND - The company offers network function virtualization such as 6WIND virtual accelerator software used in Network function virtualization infrastructure, data center virtualization, or Network appliance virtualization.

The market research and growth report includes detailed analyses of the competitive landscape of the market and information about key companies, including:

• A10 Networks Inc.
• Access Co. Ltd.
• Ciena Corp.
• Cisco Systems Inc.
• Cloud Software Group Inc.
• Dell Technologies Inc.
• Ekinops SA
• Fortinet Inc.
• Fujitsu Ltd.
• Hewlett Packard Enterprise Co.
• Huawei Technologies Co. Ltd.
• Intel Corp.
• International Business Machines Corp.
• Juniper Networks Inc.
• Nokia Corp.
• Oracle Corp.
• Radware Ltd.
• Sandvine Corp.
• Telefonaktiebolaget LM Ericsson

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 due to the increasing adoption of virtualization technology in telecom equipment and data center applications. NFV enables network automation, data center consolidation, and cloud services by virtualizing network functions and replacing traditional hardware with virtual appliances. This virtualization technology is essential for IoT deployments, providing security agility, facilitating cloud migration, and enhancing network management systems. NFV is crucial for organizations of all sizes, particularly large enterprises, as it allows for the orchestration and automation of virtual infrastructure managers, software-defined networking, and WAN configurations. NFV is also a key component in the deployment of 5G technology, enabling the virtualization of core network functions.

Moreover, the functions virtualized through NFV include traffic forwarding, monitoring, security, caching, intrusion detection systems, domain name services, and more. The NFV market encompasses various industries such as manufacturing, healthcare, energy and utilities, media and entertainment, and the Software Defined Everything (SDx) ecosystem. Key companies in this market include Nokia.

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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, Middle East and Africa, and South America
• 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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