SDN Market Size Projections Exceed GDP of Ecuador

Gartner recently issued its latest Networking Hype Cycle,” which “tracks and analyzes the 35 most important networking technologies, product categories and services that network planners must account for” from an enterprise perspective. How did SDN fare, you ask? Gartner places it near the bottom of the “Trough of Disillusionment.”

This may sound like a bad thing, but in Gartner-speak it really means that the hype is wearing off and reality is setting in finally. Introducing the hype cycle, Gartner Research Director Andrew Lerner wrote that SDN’s position “…is the result of too much marketecture, and not enough real-world implementations as we estimate there are under 2,000 production SDN enterprise deployments. Maybe next year it starts up the slope of enlightenment.”

Writing in The Register, Richard Chirgwin said SDN’s slide into the trough means “…that people for whom it has no appeal beyond marketing will give up and leave the technology for those that actually need it.”

To me this means real-world traction is closer than I thought. Service providers have certainly emerged as early adopters more so than enterprises. As our Distinguished Engineer Hariharan Ananthakrishnan wrote on the blog last week, the talk at the recent OpenDaylight Summit was much more about production deployments than merely why organizations should use SDN.

Then there’s the slew of projections about the SDN/NFV market size. While these are all over the place (the term “spitballing” comes to mind), they do paint a picture of a technology everyone seems to agree is on the rise. Here is a summary of the most recent projections that I could find from five different analyst and research firms, from lowest to highest (of course, they all define the market and technologies a bit differently). As I wrote on the blog recently, Gartner itself claims that SDN is not a market .

Transparency Market Research: Estimates the global SDN market to reach a value of $3.52 billion by 2018. That’s a CAGR of 61.5% during the forecast period from 2012 to 2018.

IHS: Predicts the global market for carrier SDN software, hardware and services to grow from $103 million in 2014 to $5.7 billion in 2019. (I am heartened by the fact that at least the IHS research acknowledges that management software will be a key piece of their market prediction.)

IDC: Forecasts the worldwide SDN market, both enterprise and service providers, to reach $8 billion in revenue by 2018.

MarketsandMarkets: Projects the SDN and NFV markets to grow from $2 billion in 2015 to $45 Billion in 2020. This represents a CAGR of 86.1% from 2015 to 2020.

SDxCentral.com: Expects the combined revenue of SDN, NFV and other next-generation networking initiatives (SDx Networking or SDxN) will exceed $105 billion per annum by 2020. They may have summed up SDN’s disruptive potential best in their recent report:

“The rapid emergence of SDxN as an influencer in network purchasing decisions will dramatically impact what has been a largely stagnant network vendor competitive landscape. It’s expected these technologies will influence almost 80% of the purchasing decisions associated with all networking revenue by the end of 2020, affecting virtually every customer segment within the networking space. New SDxN use cases could open the market to new entrant for the first time in more than a decade. Combined with the trend towards more converged IT organizations, SDx Networking could enable a new type of networking decision maker who has less experience with and weaker ties to incumbent vendors.”

So there you have it. The size of the SDN/NFV market will be anywhere from $3.52 billion to $105 billion by 2020. That’s a whole lot of bananas. At any rate, everyone seems bullish on SDN’s future.