Virtual Extensible Local Area Network (VXLAN) Market - Forecast(2024 - 2030)

Virtual Extensible Local Area Network Market Overview

The global Virtual Extensible Local Area Network Market size is forecasted to reach $5.5 billion by 2027, growing at a CAGR of 10.86% during the forecast period 2022-2027. Globally, growing number of hyper scale data centers for purposes of storing, processing and disseminating data is set to drive the VXLAN Market. Hyper scale data centers are required to handle the increasing demand of big data, cloud computing, server virtualization and real-time applications, thus raising the adoptability of VXLAN to solve challenges such as network segmentation, flexible workload placement and dynamic provisioning. VXLAN is mainly overlay technology that support virtual tunnel endpoint (VTEP) which can be end hosts or network switches or routers. VTEPs encapsulate VXLAN traffic and de-encapsulate that traffic when it leaves the VXLAN tunnel EndPoint (VTEP). Furthermore, IP hosts in VXLAN EVPN must be learned by the VTEPs either through local learning or verify control-plane-based learning to reduce the network flooding caused by host address resolution protocol (ARP) learning behavior. Such factors can be considered vital in boosting the market growth of VXLAN during the forecast period 2022-2027.

Report Coverage

The report based on: “VXLAN Market-Forecast (2022-2027)”, by IndustryARC, covers an in-depth analysis of the following segments of VXLAN Market Industry Outlook.

By Components: Controller, Routers, Switches, Access Points, others. 
By location: Indoor, Outdoor. 
By Applications: Healthcare, Manufacturing, IT & Telecommunications, Retail, BFSI and Others. 
By Geography: North America (US, Canada, Mexico),Europe (U.K., Germany, Italy, France, Spain & Others), APAC (China, Japan, South Korea, India, Australia & Others),South America (Brazil, Argentina & Others),RoW (Middle East & Africa).

Key Takeaways

• Routers are analyzed to witness the fastest growth with the highest CAGR of 11.29% during the forecast period.
• Telecommunications is the fastest growing segment in VXLAN Market and is estimated to grow at around CAGR 12.05% during the forecast period, owing to benefits such scalability, agility, high performance and resilience needed for distributed cloud networking in telecommunication sector.
• North America VXLAN Market held the largest share of 36% in 2021, owing to factor such as growing shift towards cloud computing or cloud-based environments.

Global VXLAN Market Value Share, By Geography, 2021 (%)

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Virtual Extensible Local Area Network Market Segment Analysis-By Component

Based on component, the VXLAN market is segmented into Controller, Routers, Switches, AP and others. Routers are analyzed to witness the fastest growth with the highest CAGR of 11.29% during the forecast period 2022-2027, owing to increasing demand for faster internet connectivity. In VXLAN, routers provides IP routing between VXLAN VNIs in overlay networks. With new levels of built-in intelligent network capabilities and convergence, VXLAN routers specifically addresses the growing need for application-aware networking in distributed enterprise sites.  Moreover, VXLAN Routers also provides direct communication with both private data centers and public clouds across diverse links, including Multiprotocol Label Switching (MPLS) VPNs and the Internet, thus raising its adoptability. Such factors are further set to drive its market growth in the long run. In 2021, Arista Networks announced the availability of Arista 7050X Series. The 7050X series products provide high-density systems and support VXLAN routing without the need for additional ASICs, thus helping in recirculation of bandwidth. Such developments positively impact the growth of the market.

Virtual Extensible Local Area Network Market Segment Analysis-By Applications

Based on applications, IT & Telecommunications dominated the global VXLAN market with a share of 12.05% in 2021 and is also anticipated to witness significant growth during 2022-2027, owing to its wide use in telecommunication sectors. VXLAN is used for joining remote networks over a single connection for safe and secure communications, thus leading to its adoption in various multinational software industries for safe and secure communications. Moreover, VXLAN provides scalability, agility, high performance and resilience needed for distributed cloud networking in telecommunication sector. These features of VXLAN are aiding the growth of the VXAN market in field of telecommunications. Also, the increasing trend of BYOD and digital transformation is making telecom enterprises to adopt broader networking technology, which will fuel the growth of the VXLAN market in the coming years.

Virtual Extensible Local Area Network Market Segment Analysis-By Geography

North America region accounted for the largest share of 36% in the global VXLAN Market and is anticipated to have a significant growth during the forecast period the forecast period 2022-2027, owing to growing shift towards cloud computing or cloud-based environments. As per Cisco Systems Report, the cloud traffic is estimated to reach around 6844 Exabyte in 2021 in North America, compared to other regions in the world. Such increase in massive data traffic will increase the demand for VXLAN in North America region. Moreover, growing internet penetration, rise in industrialization and innovations of new generations cellular data are increasing the use of VXLAN thereby increasing the communication between the various servers fueling the growth of the VXLAN Market. Furthermore, high investment on setting up of hyper scale data centers by major market players in the region such as Google LLC, Amazon, Microsoft Corporation and others will increase the adoption of VXLAN as the most popular and effective overlay encapsulation protocols. For instance, According to Amazon recent study in 2020, Amazon Web Services (AWS) invested $35 billion in its last 10 years on its cloud computing infrastructure by setting up hyper scale data centers in Northern Virginia. Such investments can increase the implementation of VXLAN in data centers for the need of higher bandwidth, which can influence the market growth of VXLAN in the long run. 

Virtual Extensible Local Area Network Market Drivers

Growing preference towards VXLAN over VLAN positively impacts the market growth

Growing preference towards VXLAN over VLAN for its benefits such as sufficient links and capacity to handle massive data traffic, can be considered as a major factor driving the market growth of VXLAN. VXLAN provides the same Ethernet Layer 2 network services as VLAN but with greater extensibility and flexibility. Such advantages of VXLAN over VLAN, raises adoptability. Compared to VLAN, VXLAN extends Layer 2 segments over the underlying shared network infrastructure so that tenant workload can be placed across physical pods, thus increases the adoption rate among data centers which further influence the growth of the VXLAN Market. Moreover, VXLAN offers higher scalability by using a 24-bit segment ID i.e. VXLAN network identifier (VNID) that enables up to 16 million VXLAN segments to coexist in the same administrative domain and also provides a high level of security by segmenting the network. Owing to its benefits, VXLAN is no doubt a better solution as a future networking technology, thus accelerates the demand of VXLAN technology. Such benefits positively impacting the market growth. 

Rise in number of hyper scale data centers can drive the market forward 

Rising number of hyper scale data centers across the world for purposes of storing, processing and disseminating data is set to be one of the factors that can drive the market forward during the forecast period 2022-2027. Hyper scale data centers requires to handle the increasing demand of big data, cloud computing, server virtualization, and real-time applications. The data center network needs to scale up and down dynamically based on the growth of the workloads. A virtualized network overlay is extremely important in this scenario to solve challenges such as network segmentation, flexible workload placement and dynamic provisioning based on demand which leads to the adoption of VXLAN as the most popular and effective overlay encapsulation protocols. The VXLAN-based network design logically isolates tenants and applications in a data center environment. Additionally, high investment in cloud services by large enterprises increases during the pandemic period accelerates the adoption of VXLAN network among hyper scale data centers. For instance, according to a report from Nutanix Inc, a leader in private cloud, hybrid, and multi-cloud computing, 63% of India’s enterprises increased its investments in hybrid cloud data services in 2020 to mitigate the impact of Covid19 on business operations. Such investments can increase the implementation of VXLAN in data centers for the need of higher bandwidth, which can influence the market growth of VXLAN in the long run. 

Virtual Extensible Local Area Network Market Challenges

Deployment and initial VXLAN configuration is complicated which can hamper the market growth.

Though VXLAN have lot of advantages but deployment coupled with configuration complexities can act as a major challenge restraining the growth of VXLAN Market. VXLAN lacks real signaling protocols and has to be configured via SDN. SDN requires a centralized controller for configuration which can be extremely difficult to scale which decelerates its adoption. Moreover, VXLAN needs a multicast-enabled Underlay network for BUM traffic which can be another factor for hampering the market growth. Owing to the above mentioned factors, deployment of VXLAN will be significantly impacted, thus hampering its market growth.

Virtual Extensible Local Area Network Market Landscape

Partnership, Acquisitions, Collaboration, technology launches and R&D activities are key strategies adopted by players in the VXLAN Market. The VXLAN Market top 10 companies include:

1. VMware
2. Arista Networks
3. Cisco Systems
4. Huawei
5. Broadcom
6. Jupiter Networks
7. Red Hat
8. Cumulus Network
9. Ericsson
10. Big Switch Networks

Recent Developments

• In January 2021, Cisco Systems launched the Cisco Nexus® 9000 Series Switches that operate in one of two modes – Cisco Application Centric Infrastructure (Cisco ACI™) or Cisco NX-OS. In Cisco NX-OS mode, these switches offers the capability to use foundational layer 2/3 technologies, and modern technologies such as VXLAN, with a Border Gateway Protocol?Ethernet VPN (BGP-EVPN) control plane, Segment routing, Multiprotocol Label Switching (MPLS) and automation via NX-APIs. Such developments of switches will support the market growth.
• In September 2021, Juniper today announced a pair of updates to its Mist AI portfolio and Marvis artificial intelligence operations (AIOps) platform that helps in VXLAN deployments and diagnosing WiFi and SD-WAN disruptions. Such platforms will help in VXLAN deployments, thus accelerating the market growth positively.  

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Cloud Managed LAN Market – Forecast (2022 - 2027)
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Virtual Private LAN Service Market – Forecast (2022 - 2027)
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