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SDN Primed for Big Growth Through 2020

February 05, 2016

Software defined networking (SDN) is catching in many places as a means to get access to services without having to bring in a lot of specialist hardware. That means huge drops in capital expense, and even some slack in operating expense as well for many users. A combination of more service for less money is lost on few, and International Data Corporation (IDC) study results suggest that SDN is poised for big growth in the near term.

The IDC study covered several facets of SDN, including the physical network infrastructure involved as well as SDN applications, virtualization and control software, and associated professional services. All of these together were set for a compound annual growth rate (CAGR) of 53.9 percent from 2014 to 2020. The gains are impressive enough; the absolute even more so. By 2020, the reports note, the SDN market will be worth almost $12.5 billion.

The physical network—including things like data center switches—will be the largest part of the SDN market even in 2020, but the software-related categories are expected to show the biggest growth in the field. Software alone is expected to represent $5.9 billion of the market in 2020, nearly half of the overall total. Just virtualization / control layer systems will be worth $2.4 billion, and the SDN applications market will account for around $3.5 billion.

While SDN originally found its footing for the highest-end data center and cloud service providers, it quickly become apparent that a large number of enterprise data centers could likewise put this concept to work with benefits. IDC's vice president of network infrastructure Rohit Mehra noted that SDN's value wouldn't just be in SDN, but how SDN could connect to wide-area networks (WANs) and connect branch offices better. That versatility would likely be a help in its overall growth trajectory.

What's interesting here is that both software and hardware are growing, and almost at the same pace. Software is set to be $5.9 billion of a $12.5 billion industry, which means $6.6 billion is left to hardware. While that's something of a false comparison—anyone who's ever bought hardware and software before knows you can buy a lot more software than hardware for the same price—the near parity of it is noteworthy. Aside from this, however, it's clear that SDN is a field that's primed for growth, and big growth, in a short period. There will be a great many companies pushing toward SDN, and for good reason; who could turn down more services for less money?

Still, this is good news overall. SDN makers in both hardware and software should have plenty of opportunity here to make value propositions clear. That means a lot of new sales afoot, and an expanding market, which should be welcome for many businesses.

Edited by Stefania Viscusi

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