Explosive growth of cloud computing is expected to drive market expansion shortly at a CAGR of 16.00% during the forecast period 2024 to 2032

Market Research Future (MRFR) has published on the “Global Virtual Extensible LAN (VXLAN) Market”.

The Virtual Extensible LAN (VXLAN) Market is estimated to register a CAGR of 16.00% during the forecast period of 2024 to 2032.

MRFR recognizes the following companies as the key players in the global Virtual Extensible LAN (VXLAN) Market— Accenture plc, Arista Networks, Cisco Systems Inc., Extreme Networks Inc., Fortinet Inc., Hewlett Packard Enterprise (HPE), Huawei Technologies Co., Ltd., Juniper Networks, Nokia Corporation, and Palo Alto Networks, Inc.

Virtual Extensible LAN Market Highlights

The global Virtual Extensible LAN (VXLAN) Market is accounted for to register a CAGR of 16.00% during the forecast period and is estimated to reach USD 6.46 billion by 2032.

VXLAN is highly suitable for service providers and enterprises that host multiple tenants on shared infrastructure due to its capability to support multi-tenancy environments. Moreover, VXLAN facilitates effective management and optimization of network traffic, fulfilling the demands of high-bandwidth and low-latency applications in 5G networks, thereby accelerating its adoption.

Segment Analysis

The global Virtual Extensible LAN (VXLAN) Market has been segmented based on the Component, Enterprise Size, Application, and End User.

Based on the Components, the market is segmented into Hardware, Software, and Services. The Hardware segment was attributed to holding the largest market share in 2023. Switches are essential for VXLAN deployments, serving as the main devices that forward traffic within a network. In a VXLAN setup, switches function as VTEPs (VXLAN Tunnel Endpoints), which encapsulate standard Ethernet frames into VXLAN packets for transport over an IP-based network. Leading manufacturers such as Cisco, Arista, and Juniper produce advanced VXLAN-enabled switches equipped with specialized hardware for efficient encapsulation and decapsulation. These capabilities ensure minimal latency and high throughput, maintaining performance in large and dynamic virtualized environments.

Based on the Enterprise Size, the Virtual Extensible LAN (VXLAN) Market has been segmented into Large Enterprises and SMEs. The large Enterprises segment was expected to hold the largest market share in 2023. The large enterprises segment achieved significant growth due to their expansive network requirements and substantial resources. Their complex infrastructures necessitate scalable solutions for efficient communication across multiple data centers and cloud environments. VXLAN technology, with its flexibility, scalability, and enhanced network efficiency, is ideally suited to meet these needs. Large enterprises, with their significant investments in networking technologies, play a crucial role in driving innovation and adoption in the virtual extensible LAN industry.

Based on the Application, the Virtual Extensible LAN (VXLAN) Market has been segmented into Multi-tenancy, Workload mobility, Software-Defined Networking (SDN) overlays, Network Function Virtualization (NFV), Disaster recovery, and Others. The Software-Defined Networking (SDN) overlays segment was expected to hold the largest market share in 2023. VXLAN plays a vital role in SDN by offering a scalable and flexible overlay network that can be managed programmatically. This integration facilitates the dynamic provisioning and management of network resources, enhancing agility and reducing operational complexity. In an SDN environment, VXLAN enables the creation of virtual network topologies that are abstracted from the physical infrastructure. This abstraction simplifies network configuration and management, as network policies and configurations can be centrally applied through an SDN controller. The combination of SDN and VXLAN supports rapid deployment of network services, automates network operations, and improves responsiveness to changing network demands.

Based on the end user, the Virtual Extensible LAN (VXLAN) Market has been segmented into BFSI, Healthcare, IT & telecommunications, Government, Retail, Manufacturing, Media and Entertainment, and Others. The IT & telecommunications segment was expected to hold the largest market share in 2023. As the backbone of modern communication networks, IT and telecom firms prioritize VXLAN adoption due to its ability to scale and seamlessly interconnect data centers. The constant demand for high-performance and flexible network solutions in these industries drives widespread VXLAN implementation, cementing their dominant position in the market.

Regional Analysis

The global Virtual Extensible LAN (VXLAN) Market, based on region, has been divided into North America, Europe, Asia-Pacific, and the Rest of the World. North America consists of the US and Canada. The Europe Virtual Extensible LAN (VXLAN) Market comprises of Germany, France, the UK, Italy, Spain, and the rest of Europe. The Virtual Extensible LAN (VXLAN) Market in Asia-Pacific has been segmented into China, India, Japan, Australia, South Korea, and the rest of Asia-Pacific. The Rest of the World's Virtual Extensible LAN (VXLAN) Market comprises the Middle East, Africa, and Latin America.

The largest market share for the Virtual Extensible LAN (VXLAN) Market was maintained by the North American regional sector. The region's thriving IT ecosystem, combined with a high concentration of large enterprises, has driven VXLAN implementation. IDC forecasts that the U.S. technology industry will surpass $5.3 trillion in 2022. Following the 2020 setback, the industry is resuming its growth trajectory, with a 5%-6% increase year over year. The United States, representing 33% of the global tech market, accounts for approximately $1.8 trillion in 2022. Furthermore, ongoing innovation and strategic partnerships within the North American tech sector have strengthened its role as a key contributor to networking advancements.

Moreover, the Europe market has been persistently growing over the forecast period. Numerous European countries are actively advancing digital transformation initiatives across industries, promoting the adoption of cloud computing, virtualization, and software-defined networking (SDN)—technologies that VXLAN effectively complements and supports. As of 2022, 70% of all businesses in the EU have achieved a foundational level of digital intensity. Among small and medium-sized enterprises (SMEs), this figure is 69%, which is approximately 20 percentage points below the EU's 2030 target. In contrast, large businesses have achieved significantly higher levels, with 98% reaching the basic digital intensity threshold. Large businesses also lead in very high (30%) and high (54%) digital intensity levels, whereas only 4% of SMEs reach very high intensity and 27% achieve high intensity. A majority of SMEs report low (38%) or very low (31%) digital intensity levels. The proportion of SMEs meeting the basic digital intensity standard varies widely across countries, ranging from 41% in Greece and 47% in Bulgaria to 89% in Denmark and 90% in Finland.

Cloud adoption among enterprises in the Asia-Pacific region is significantly increasing, driven by the demand for scalable and agile IT infrastructures. According to a report by Oliver Wyman and NASSCOM, cloud technology is projected to contribute 8% to India’s GDP by 2026, potentially boosting the country's GDP by US$ 310-380 billion and creating 14 million jobs. AI, as indicated by the Times of India, is anticipated to contribute around US$ 967 billion to the Indian economy by 2035, with predictions suggesting it could add between US$ 450-500 billion to India's GDP by 2025, accounting for nearly 10% of the country's projected GDP of US$ 5 trillion. Additionally, an IDC study forecasts that approximately 40% of Indian organizations will adopt cloud services to some extent by 2024. VXLAN supports these cloud initiatives by offering efficient and scalable network virtualization capabilities.

Furthermore, the rest of the world's Virtual Extensible LAN (VXLAN) Market is divided into the Middle East, Africa, and Latin America. There is an increasing demand for cloud services throughout MEA & LATAM, which is driven by the necessity for scalable IT solutions. In 2022, the Brazilian Information Technology (IT) market reached a valuation of US$45.2 billion, marking a 3% growth from 2021, according to the International Data Corporation (IDC)’s 2023 Brazil Predictions study and a report by the Brazilian Association of Software Companies (ABES). Brazil ranks 12th globally in the IT market and accounts for 36.5% of the Latin American market. VXLAN enables the establishment of virtual networks that extend across data centers and cloud environments, which is essential for meeting the scalability and flexibility needs of enterprises and service providers.

Key Findings of the Study

• The global Virtual Extensible LAN (VXLAN) Market is expected to reach USD 6.46 billion by 2032, at a CAGR of 16.00% during the forecast period.


• The Asia-Pacific region accounted for the fastest-growing global market owing to the rapid digital transformation and expanding data center infrastructure.


• Based on Application, the Software-Defined Networking (SDN) overlays segment was attributed to holding the largest market in 2023.


• Accenture plc, Arista Networks, Cisco Systems Inc., Extreme Networks Inc., Fortinet Inc., Hewlett Packard Enterprise (HPE), Huawei Technologies Co., Ltd., Juniper Networks, Nokia Corporation, and Palo Alto Networks, Inc., are the key market players.