The increasing demand for a reliable and affordable network management system and the expanding use of telecom products and services in business and data center applications are the key market drivers enhancing market growth.
A combination of hardware & software is used in network function virtualization (NFV), which deals with virtual networks. It helps to streamline networks and related activities, consumes less power, and lowers equipment costs. Many applications can be accessed more easily on a single network appliance. The purpose of network function virtualization is to improve organizational performance and efficiency by integrating cutting-edge technologies like data intelligence, big data analytics, and artificial intelligence. Many small and medium-sized end users are beginning to recognize the significance of the network function virtualization.
Network function virtualization decouples operations like intrusion detection, domain name service (DNS), network address translation (NAT), and firewalls. The global NFV market should expand as a result of the rising need for data-intensive applications in the mobile industry, which also necessitates better network capacity to satisfy client needs. The market demand for the NFV has been considerably boosted by the reduction of equipment power, cooling, and space needs as well as the simplification of network service management. One of the main elements fostering an optimistic view for the industry is significant expansion in the BFSI, healthcare, retail, manufacturing, and information technology (IT) sectors. To manage the increasing network traffic and data complexity, this has increased the need for both advanced network management & NFV solutions.
Figure 1: Network Function Virtualization Market Size, 2024-2032 (USD Billion)
Source: Secondary Research, Primary Research, MRFR Database and Analyst Review
Market CAGR for Network Function Virtualization supplements is being driven by the hrowing enterprises usage. The rising demand for digital infrastructure that integrates private and cloud systems has sped up the adoption of virtual applications technology. It is more suitable for virtualized software to operate on virtual infrastructure since it makes IT infrastructure more flexible, agile, and safe. Also, compared to conventional imaging methods, virtual desktop infrastructure makes it much faster to control machines centrally. Hence providing profitable chances for business expansion. Yet, the rise of virtualized software driven by AI is accelerating the development of the network function virtualization industry. Also, concepts like multi-cloud platform-based virtualized software have become increasingly popular, which is expected to increase the adoption of virtualized software among businesses like service providers and data centers.
By utilizing commercial off-the-shelf Technology, network services virtualization tackles the challenges of high capital investment, support & maintenance, and end-of-life events of the hardware networking equipment. By integrating several network devices, virtualization enables the deployment of high-capacity, industry-standard servers, switches, and storage in data centers, network nodes, and end-user facilities.
To keep up with the shifting requirements of the consumer base, the market is defined by new technical developments. Some of the most recent advancements in the telecom sector include technologies like virtualization and SD-WAN. The development of the for-network functions virtualizations sector in the U.S. is largely driven by significant investments in infrastructure modernization and the rising use of automation technologies like the Internet of Things (IoT) and artificial intelligence (AI). Thus, driving the Network Function Virtualization market revenue.
Based on deployment, the Network Function Virtualization market segmentation includes Cloud and On-premise. The cloud segment dominated the market, accounting for 70% of market revenue. Several of the VNFs offered by VNF providers have transitioned to a container-based design. These VNFs, sometimes referred to as Cloud-Native Network Functions (CNF), make use of several technologies that are frequently used in Internet infrastructure. They include platform-to-platform service sharing for increased efficiency, auto-scaling, and support for continuous delivery and DevOps deployment models. A network built on CNFs will be more resistant to infrastructure resource failures through service discovery and orchestration. Using containers and doing away with the overhead associated with traditional virtualization by removing the guest OS may significantly improve the use of infrastructure resources.
Based on components, the Network Function Virtualization market segmentation includes Solution & Services. The solution category generated the most income (73%). Its expansion can be ascribed to the rising use of automation and virtualization technologies. The need for mobility services is predicted to increase, and businesses' importance in lowering operational costs using NFV will likely expand. The solution comprises automation, orchestration, and other elements, including virtual infrastructure managers, SDN controllers, NFV orchestrators, and wide area network (WAN) settings.
Figure 2: Network Function Virtualization Market, by Component, 2022 & 2032 (USD billion)
Source: Secondary Research, Primary Research, MRFR Database and Analyst Review
Based on connectivity, the Network Function Virtualization market segmentation includes Virtual Appliances and Core Networks. The Virtual Appliance category generated the most income. Virtual appliances are generally used for various network functions, including domain name services, traffic forwarding, security, monitoring, and caching. The Virtual Consumer Home Appliance is mostly used to send these processes over the edge (VCPe). Because this has allowed businesses to simplify their networks, the market is anticipated to grow strongly over the next years.
Based on end users, the Network Function Virtualization market segmentation includes service providers, data centres, and enterprises. The enterprise's segment held the majority share in 2022, contributing around ~38% concerning the Network Function Virtualization market revenue. Enterprise clients are embracing NF virtualization technology swiftly due to its many benefits, including greater grid capability through improved IT speed and centralized management. The enterprise market is divided into several sub-segments: manufacturing, banking, financial services and insurance (BFSI), healthcare, government and defense, retail, education, and IT-enabled services. The healthcare, BFSI, manufacturing, and retail industries now use NF virtualization.
Asia-Pacific, North America, Europe, and the rest of the world are covered in the study's market insights by region. The Asia-Pacific Network Function Virtualization market area will dominate this market; the adoption of technologies like Software Defined Everything (SDx), cloud computing, and the Internet of Things is the main factor driving the rise. Additionally, the area includes nations like China, India, and Japan, contributing to the increase of the subscriber base, favorable governmental laws, and the need for greater data storage and security in the region, all of which are anticipated to fuel the market's progress. Moreover, China’s Network Function Virtualization market held the largest market share, and the Indian Network, Function Virtualization market, was the fastest-growing market in the Asia-Pacific region.
Further, the major countries studied in the market report are Canada, German, France, the UK, Italy, Spain, China, Japan, India, Australia, South Korea, and Brazil.
Figure 3: NETWORK FUNCTION VIRTUALIZATION MARKET SHARE BY REGION 2022 (%)
Source: Secondary Research, Primary Research, MRFR Database and Analyst Review
Europe Network, a Function Virtualization market, accounts for the second-largest market share due to NFV adoption in the area will rise as 5G installations expand. Further, the German Network Function Virtualization market, held the largest market share, and the UK Network Function Virtualization market, was the fastest-growing market in the European region.
The North America Network Function Virtualization Market is expected to grow at the fastest CAGR from 2023 to 2032. This is because technologies like Software Defined Everything (SDx), cloud computing, and IoT are increasing, supporting the expansion. Moreover, the US Network Function Virtualization market held the largest market share, and the Canada Network Function Virtualization market was the fastest-growing market in North America.
The market for network function virtualization will grow even more due to major market players spending a lot of money on R&D to diversify their product offerings. Market players also engage in various strategic initiatives to expand their worldwide reach. Significant market developments include introducing novel products, agreements, mergers and acquisitions, greater investments, and collaboration with other organizations. The network function virtualization industry has to supply affordable products to grow and thrive in a more competitive and challenging environment.
Producing locally to lower operation costs constitutes one of the primary business strategies companies utilize in the international Network Function Virtualization industry to serve consumers and grow its market sector. In recent years, the Network Function Virtualization industry has offered some of the most significant advantages. Major players in the Network Function Virtualization market, including VMware, Ericsson, Nokia, and others, are attempting to increase market demand by investing in research and development operations.
With headquarters in Palo Alto, California, VMware, Inc. is an American cloud computing and virtualization technology business. The x86 architecture was virtualized for the first time by a commercially successful firm, VMware. VMware's desktop software supports Microsoft Windows, Linux, and macOS. In November 2019, To facilitate massive, multi-cloud operations, VMware and Nokia expanded their relationship. Together with technical collaboration and cutting-edge research & development, this alliance also intends to increase investments to create integrated solutions. One of the primary business strategies manufacturers employ in the Network Function Virtualization industry to assist customers and expand the market sector is local manufacturing to reduce operating costs.
Telefonaktiebolaget, A Swedish networking and telecommunications corporation headquartered in Stockholm, is LM Ericsson (lit. "Telephone Stock Company of LM Ericsson"). For telecoms service providers and businesses, the firm supplies infrastructure, software, and services in information and communications technology, including, among other things, 3G, 4G, and 5G equipment, as well as Internet Protocol (IP) and optical transport systems. In October 2019, Ericsson developed 5G radio access networks (RAN) along with NVIDIA. As part of this partnership, both businesses will concentrate on creating the technology to let communication service providers create virtualized 5G RAN. It will hasten the rollout of fresh IoT and Al-based services.
Nokia Corporation (Finland)
Juniper Networks (U.S.)
Accenture PLC (Ireland)
Cisco Systems Inc. (U.S.)
Amdocs Inc. (U.S.)
Alcatel-Lucent S.A. (France)
Huawei Technologies Co. Ltd. (China)
NEC Inc. (Japan)
Intel Corporation (U.S.)
Connectem Inc. (U.S.)
September 2023: Cisco wanted to take when it announced its plan to buy Viptela, which is a privately held company providing software-defined WANs, for $610 million.
October 2023: After waiting for eighteen months, Broadcom has successfully completed this transaction of buying VMware at $69 billion dollars. The deal garnered industry-wide attention because VMware had to be inside it as part of the cloud software program and networking environment; however, Broadcom has made a number of notable acquisitions before now.
For example, the US-based telecom analytics firm Mobileum and VoerEir, a Sweden-based cloud technology company, partnered in February 2022 to create an impactful test platform for network functional virtualization infrastructure. The combination of Mobileum’s SITE active test solution and VoerEir’s Touchstone test suite provides a vertically integrated solution that allows communication service providers to fully automate the testing of services from the lab to the live network, as well as virtual and cloud-native network functions.
In September 2021, Comba Telecom Systems Holdings’ partnership with Telecom Infra Project (TIP) was resumed and reinforced with the purpose of assisting Comba Telecom in testing Open RAN radio product offerings as well as simplifying and expediting procurement procedures of service providers.
May 2021 saw the Canadian Government announce what spectrum would be available for development or competition enhancement across wireless services. It also contributes to more efficient deployment of 5G Technologies. Canada’s network data traffic growth is contributing to the development of the Network Function Virtualization (NFV)industry just like the USA does.
March 2020 – The association developing global standards related to 5G technologies, known as 3GPP, declared that the COVID-19 pandemic would delay finalizing decisions on specifications for 5G by three months. Delayed releases slow down commercial development and NFV-based device deployment in relation to 5G technology.
December 2022- The largest telecom company in the UK, Virgin Media O2, has selected Charmed OSM, as its production-ready orchestrator for the implementation of hybrid workloads. By offering a standardized approach to network function virtualization and streamlining their initial configuration and daily operational activities, Charmed OSM assists VMO2 in lowering expenses from Day-0 to Day-N. Mavenir, a vendor of cloud-native network software, is supplying VMO2 with NFV solutions.
For the community, partners, and telcos, Charmed OSM is a model-driven, carrier-grade OSM with enterprise support and ongoing security updates. By automating actual production complexity and encompassing the entire lifetime of network services through service and resource orchestration, it speeds up the transition to NFV. A subscription from Canonical that provides telco-grade SLAs supports Charmed OSM. It is possible to deploy Charmed OSM in a highly accessible mode that is resilient to outages and helps telecoms achieve their availability target. For of this, Charmed OSM is an excellent choice to lead initiatives for digital transformation in telco.
August 2022: Red Hat OpenShift Container Platform and Intel Smart Edge Open work together with Intel to enable RAN intelligence. Fujitsu will provide new software vRAN technology in February 2022 that supports 5g and might result in over 50% CO2 emission savings. Nokia stated in May 2021 that it would provide its airframe servers, cloud infrastructure software, and digital operation software to improve PLDT's network.
June 2020: Microsoft Corporation, a US-based technology corporation, purchased Metaswitch Networks for an unknown sum. This acquisition will assist service providers' data, voice, and communications needs and Microsoft's virtualized networks.
Cloud
On-premise
Solution
Services
Virtual Appliance
Core Network
Service Providers
Data Centers
Enterprises
North America
US
Canada
Europe
Germany
France
UK
Italy
Spain
Rest of Europe
Asia-Pacific
China
Japan
India
Australia
South Korea
Australia
Rest of Asia-Pacific
Rest of the World
Middle East
Africa
Latin America
| Report Attribute/Metric | Details |
| Market Size 2023 | USD 8.23 billion |
| Market Size 2024 | USD 10.11 billion |
| Market Size 2032 | USD 42.85 billion |
| Compound Annual Growth Rate (CAGR) | 19.78% (2024-2032) |
| Base Year | 2023 |
| Market Forecast Period | 2024-2032 |
| Historical Data | 2019- 2022 |
| Market Forecast Units | Value (USD Billion) |
| Report Coverage | Revenue Forecast, Market Competitive Landscape, Growth Factors, and Trends |
| Segments Covered | Deployment, Component, Application End USer, and Region |
| Geographies Covered | North America, Europe, Asia Pacific, and the Rest of the World |
| Countries Covered | The U.S., Canada, German, France, UK, Italy, Spain, China, Japan, India, Australia, South Korea, and Brazil |
| Key Companies Profiled | Juniper Networks (U.S.), Accenture PLC (Ireland), Cisco Systems, Inc. (U.S.), Alcatel-Lucent S.A. (France), Nokia Corporation (Finland), Huawei Technologies Co. Ltd. (China), NEC Inc. (Japan), Intel Corporation (U.S.), Connectem Inc. (U.S.), Amdocs Inc. (U.S.), 6WIND (France), Ericsson (Sweden), Open Wave Mobility Inc. (U.S.), Oracle Corporation(U.S.), an Oracle Corporation(U.S.),d Allot communications (U.S.). |
| Key Market Opportunities | The network function virtualization market offers a variety of growth prospects in the worldwide market thanks to the rapid development of technologies like the internet of things (IoT) and artificial intelligence. |
| Key Market Dynamics | The market size and infrastructure network complexity are expected to grow throughout the anticipated period, which makes it possible for the market share of network function virtualization to expand. |
Network function virtualization Market Highlights:
Frequently Asked Questions (FAQ) :
The Network Function Virtualization market size was valued at USD 8.23 Billion in 2023.
The market is projected to grow at a CAGR of 19.78% during the forecast period, 2024-2032.
North America had the largest share in the market
The key players in the market are Juniper Networks (U.S.), Accenture PLC (Ireland), Cisco Systems, Inc. (U.S.), Alcatel-Lucent S.A. (France), Nokia Corporation (Finland).
The solution Network Function Virtualization category dominated the market in 2023.
The enterprise had the largest share in the market.
Senior Research Analyst Ankit gupta is an analyst in market research industry in ict and semi industry. with post-graduation in "telecom and marketing management" and graduation in "electronics and telecommunication" vertical he is well versed with recent development in ict industry as a whole. having worked on more than 150+ reports including consultation for fortune 500 companies such as microsoft and rio tinto in identifying solutions with respect to business problems his opinions are inclined towards mixture of technical and managerial aspects.
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