There is no question that the SDN arena is a hotbed of new ideas, well funded start ups, and established vendor SDN plans. However, there is a significant question about how big (in terms of revenue) the SDN market will be in the future. VMware’s $1.2B acquisition of Nicira (an SDN start with minimal current revenues) speaks volume about the potential market size.
The 1st challenge of sizing any market is defining what is and what is not included in the market. For some markets (e.g. PCs), this may be relatively straightforward. For SDN, definitions are complex and evolving. For example, everyone includes OpenFlow controllers in SDN – but they tend to disagree on the rest.
Here is my short list of market factors for a SDN forecast:
- Enterprise vs. Telecom. These are 2 very different markets with enterprise SDN focused on public and private cloud data centers. SDN’s impact on the telecom market will include a wide range of optical, 4G wireless, and OSS/BSS technologies.
- Software, Hardware, and Services. Everyone includes software as part of software defined networking. And this software needs to run on specialized or general purpose (new) hardware that supports SDN (e.g. OpenFlow controllers). But what about Ethernet switches or routers that now support OpenFlow? Services is another important market in terms of size (over 20% of the enterprise network HW market). Professional and support services will no doubt be a big part of the SDN opportunity in the future.
- Layer 2-7. Ethernet switches, routers, server load balancers, WAN optimization, SSL acceleration, IP VPNs, firewalls, etc. are all part of a potential SDN stack. A sizing must define which of these functional markets to include.
Growth in public cloud services is a primary driver of the massive expansion of hyper-scale data centers (and the resulting need for SDN technology). Enterprise adoption of private clouds in their data centers will likewise impact the need to change the underlying network to SDN technology. Therefore, any SDN forecast will need to identify specific assumptions related to the growth of public and private cloud.
The SDN market can be sized by using appropriate market definitions and assumptions. Demand will 1st be driven by hyper-scale data centers built by public cloud providers. Additional demand will be generated over time by private cloud data centers and changes in campus/branch network architectures. The SDN ecosystem will take time to develop especially for software applications and services.
So how large is the SDN market opportunity? According to Doyle Research, the market for Enterprise SDN software and new hardware (including Layers 2-7) will be $1.6B by 2017.
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