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How much is the virtual extensible local-area network (vxlan) market worth, and how is it expected to expand?
The virtual extensible local-area network (VXLAN) market size has grown rapidly in recent years. It will grow from $1.81 billion in 2024 to $2.14 billion in 2025 at a compound annual growth rate (CAGR) of 18.2%. The growth in the historic period can be attributed to surge in need for scalable network infrastructure, increased demand for multi-tenant environments, expansion of software-defined networking (SDN), increased need for improved network security and segmentation, increased ritualized data centers, and enhanced network security requirements.
The virtual extensible local-area network (VXLAN) market size is expected to see rapid growth in the next few years. It will grow to $4.14 billion in 2029 at a compound annual growth rate (CAGR) of 17.9%. The growth in the forecast period can be attributed to increasing data center virtualization, growing demand for enhanced network scalability and flexibility, increasing focus on network security and segmentation, increasing adoption of cloud services, and increasing network performance and flexibility. Major trends in the forecast period include advancements in cloud services, advancements in data center technologies, adoption of IoT and edge computing, advancements in network virtualization technologies, and advancements in network automation.
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Which industry factors have accelerated the virtual extensible local-area network (vxlan) market’s expansion?
The rise in cloud computing services is expected to propel the growth of the virtual extensible local area network (VXLAN) market going forward. Cloud computing services refer to delivering computing resources, such as servers, storage, databases, networking, software, and analytics, over the internet. The rise in cloud computing services is due to their scalability, flexibility, and cost-efficiency, enabling businesses to access and utilize advanced technology solutions without needing on-premises infrastructure management. Cloud computing services leverage VXLAN to enhance network scalability, flexibility, and efficiency by creating isolated virtual networks over existing IP infrastructure, supporting dynamic and secure multi-tenant environments, and integrating seamlessly with advanced network technologies. For instance, in April 2024, according to Eurostat Statistics, a European-based statistics and data organization provider, in 2023, 45.2% of EU businesses embraced cloud computing, mainly for email hosting, file storage, and office software. Additionally, 75.3% of these enterprises utilized advanced cloud services, including security software and database hosting, marking a 4.2% rise compared to 2021 in cloud adoption rates. Therefore, the rise in cloud computing services will drive the virtual extensible LAN (VXLAN) market.
What are the primary segments of the virtual extensible local-area network (vxlan) market?
The virtual extensible local-area network (VXLAN) market covered in this report is segmented –
1) By Component: Hardware, Software, Services
2) By Application: Multi-Tenancy, Workload Mobility, Software-Defined Networking (SDN) Overlays, Network Function Virtualization (NFV), Other Applications
3) By Enterprise Size: Large Enterprises, Small And Medium-Sized Enterprises (SMEs)
4) By End-User: Manufacturing, Healthcare, Banking, Financial Services, And Insurance (BFSI), Retail, Media And Entertainment, Government, Information Technology (IT) And Information Technology Enabled Services (ITeS), Telecommunications, Other End-Users
Subsegments:
1) By Hardware: VXLAN-Enabled Network Switches, VXLAN Routers, Network Interface Cards (NICs), Hardware Accelerators
2) By Software: VXLAN Management And Orchestration Software, Network Virtualization Software, Security Software For VXLAN, VXLAN Gateways And Controllers
3) By Services: Professional Services (Consulting, Integration, And Support Services), Managed Services (Monitoring And Optimization), Cloud-Based VXLAN Deployment Services
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Which firms are leading the virtual extensible local-area network (vxlan) market?
Major companies operating in the virtual extensible local-area network (VXLAN) market are Microsoft Corporation, Alibaba Cloud, Dell Technologies Inc., Huawei Technologies Co. Ltd., Intel Corporation, Cisco Systems Inc., Oracle Corporation, Broadcom Inc., NVIDIA Corporation, Hewlett Packard Enterprise Company, Nokia Corporation, VMware LLC, Keysight Technologies, Juniper Networks Inc., Fortinet Inc., Red Hat Inc., Arista Networks Inc., Extreme Networks, Ribbon Communications Inc., Spirent Communications, FS.com Inc., Arrcus Inc., Pica8 Software Inc., IP Infusion, Asterfusion Data Technologies Inc.
Which market trends are set to define the future of the virtual extensible local-area network (vxlan) market?
Major companies operating in the virtual extensible local area network (VXLAN) market are focusing on developing innovative solutions, such as next-generation firewalls, to provide robust security, performance, and flexibility for modern network environments. Next-generation firewalls enable granular network segmentation and micro-segmentation within VXLAN environments. This segmentation isolates different network segments, limiting the spread of attacks and ensuring that security policies are consistently applied across virtual networks. For instance, in June 2022, Cisco Systems Inc., a US-based digital communications technology company, launched the Cisco Secure Firewall 3100 Series, a line of next-generation firewalls. The Cisco Secure Firewall 3100 Series offers VXLAN features, enhancing network scalability and flexibility. It supports VXLAN configuration through a web interface for easy setup of interfaces and virtual network interfaces (VNIs) and interface management via FlexConfig for flexible, persistent settings. High-performance VXLAN processing ensures efficient encrypted traffic handling. The Cisco secure firewall management center further simplifies network oversight, making the 3100 Series a powerful solution for managing VXLAN traffic and enhancing network security and performance.
Which geographic trends are shaping the virtual extensible local-area network (vxlan) market, and which region has the highest market share?
North America was the largest region in the virtual extensible local-area network (VXLAN) market in 2024. Asia-Pacific is expected to be the fastest-growing region in the forecast period. The regions covered in the virtual extensible local-area network (VXLAN) market report are Asia-Pacific, Western Europe, Eastern Europe, North America, South America, Middle East, Africa.
What Does The Virtual Extensible Local-Area Network (VXLAN) Market Report 2025 Offer?
The virtual extensible local-area network (vxlan) market research report from The Business Research Company offers global market size, growth rate, regional shares, competitor analysis, detailed segments, trends, and opportunities.
Virtual extensible local-area network (VXLAN) is a network virtualization technology that extends the capabilities of traditional virtual local area networks (VLANs) to address scalability issues in large-scale network environments, such as data centers. It enhances network scalability, improves resource utilization, and simplifies network management, making it an essential tool for modern data centers and cloud environments.
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