Virtual Network Functions Market Summary
As per MRFR Analysis, the Virtual Network Functions Market is set to experience significant growth, expanding from USD 39.69 billion in 2024 to USD 176.9 billion by 2032, with a CAGR of 20.54% during the forecast period. The market was valued at USD 32.06 billion in 2023, driven by the rising demand for cloud computing technology and the increasing adoption of telecom services across commercial and data center applications. The solutions segment is the largest revenue generator, while the network functionality is the most lucrative segment due to the demand for mobile broadband and 5G technology. North America leads the market, followed by Europe and Asia-Pacific, with the latter expected to grow at the fastest rate.
Key Market Trends & Highlights
Key trends driving the Virtual Network Functions market include technological advancements and increasing demand for virtualization.
- Market size in 2024: USD 39.69 billion; projected to reach USD 176.9 billion by 2032.
- CAGR of 20.54% during the forecast period (2024 - 2032).
- Solutions segment generated maximum revenue due to rising automation and visualization technologies.
- Service providers are the largest end-users, driven by increasing data volume and connectivity demands.
Market Size & Forecast
2023 Market Size: USD 32.06 billion
2024 Market Size: USD 39.69 billion
2032 Market Size: USD 176.9 billion
CAGR: 20.54%.
Major Players
Key players include Alcatel-Lucent (France), Cisco Corporation (US), Ericsson (Sweden), Huawei (China), Tech Mahindra (India), and Verizon Communications (US).
Increased demand for cloud computing technology, and increasing acceptance of telecom equipment and services across commercial and data center applications are the key market drivers enhancing the market growth.
Figure 1: Virtual Network Functions Market Size, 2024 - 2032 (USD Billion)
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Source: Secondary Research, Primary Research, MRFR Database and Analyst Review
Virtual Network Functions Market Trends
Growing demand for cloud computing technology is driving the market growth
Market CAGR for virtual network functions is driven by the rising demand for cloud computing technology. Cloud computing technology is a major driver for supporting the virtual network functions to grow in double folds. It is offering the much-required virtualization infrastructure a boost through investment and funding that will go on and play a significant role in achieving the expected growth in the projected period.
Additionally, virtual network functions aid grid-related processes by lowering power usage and equipment costs. As a result, it offers access to several applications on a single appliance. The rapid development of the virtual network functions technology is due to growing investment in 5G technologies, cloud computing, IoTs, AI, server virtualization, and the desire for data center consolidation.
Moreover, a sharp increase in market growth has been caused by installing routers and VPNs, mostly in households and offices. The virtual network functions industry is expanding due to the growing distribution of virtualized software among data centers, including Internet Service Providers (ISP) and cloud Services Providers (CSPs). As the functionalities are designed to assist carriers in moving away from proprietary hardware, separating software from hardware increases service speed and lowers cost. Thus, driving the Virtual Network Functions market revenue.
Virtual Network Functions Market Segment Insights
Virtual Network Functions Components Insights
The global Virtual Network Functions market segmentation, based on components, includes solutions, orchestration & automation, and services. The solutions segment generbated the maximum revenue. Solution segment expansion can be ascribed to the rising use of automation and visualization technologies. The need for mobility services is predicted to increase, and businesses’ importance in lowering operating costs with virtual network functions is expected to expand.
Virtual Network Functions Functions Insights
The global Virtual Network Functions market segmentation, based on functionalities, includes computing, storage, and network. The network segment generated the most income due to its demand for mobile broadband speed, wireless services, and mobility. The relevance of the grid function is also increased by the quick investment in 5G technology popularization.
Virtual Network Functions Applications Insights
The global Virtual Network Functions market segmentation, based on applications, includes virtual appliances and core networks. Virtual appliances category is dominated the market revenue. Virtual appliances are generally used for various network functions, including domain name services, traffic forwarding, caching, security, and monitoring. The Virtual Customer Home Appliance (vCPE) is the main method to send these actions over the edge.
Virtual Network Functions Organization Size Insights
The global Virtual Network Functions market segmentation, based on organizations size, includes SMEs and large enterprises. The large enterprise segment generated the most income. The segment is anticipated to grow as network operations, virtualization tools, and services become more widely used by large businesses. Major organizations are also driving the need for network functions, virtualization solutions, and services because they are the early adopters of cutting-edge technologies like virtualization, orchestration and automation.
Virtual Network Functions End-User Insights
The global Virtual Network Functions market segmentation, based on end-user, includes service providers, data centers, and enterprises. The service provider’s category generated the most income. The service providers is under a lot of pressure from rising data volume and diversity, connectivity for IoT/ M2M devices, and rising smartphone penetration leading to higher data consumption per consumer. As a result, the service providers can easily upsurge capacity to match the growing demand.
Figure 2: Virtual Network Functions Market, by End-User, 2022 & 2032 (USD Billion)
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Source: Secondary Research, Primary Research, MRFR Database and Analyst Review
Virtual Network Functions Regional Insights
By region, the study provides market insights into North America, Europe, Asia-Pacific and the Rest of the World. The North American Virtual Network Functions market will dominate this market, owing to the increasing adoption of technologies include cloud computing, Software Defined Everything (SDx), and IoT. In addition, the growing favorable standards and regulations will boost market growth in this region.
Further, the major countries studied in the market report are The US, Canada, German, France, the UK, Italy, Spain, China, Japan, India, Australia, South Korea, and Brazil.
Figure 3: VIRTUAL NETWORK FUNCTIONS MARKET SHARE BY REGION 2022 (USD Billion)
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Source: Secondary Research, Primary Research, MRFR Database and Analyst Review
Europe's Virtual Network Functions market accounts for the second-largest market share due to the rising demand for virtual networks. Further, the German Virtual Network Functions market held the largest market share, and the UK Virtual Network Functions market was the fastest growing market in the European region.
The Asia-Pacific Virtual Network Functions Market is expected to grow at the fastest CAGR from 2023 to 2032 due to the rising adoption of technologies such as the IoT, cloud Computing and Software Defined Everything (SDx). Moreover, China’s Virtual Network Functions market held the largest market share, and the Indian Virtual Network Functions market was the fastest growing market in the Asia-Pacific region.
Virtual Network Functions Key Market Players & Competitive Insights
Leading market players are investing heavily in research and development to expand their product lines, which will help the Virtual Network Functions market grow even more. Market participants are also undertaking various strategic activities to expand their global footprint, with important market developments including new product launches, contractual agreements, mergers and acquisitions, higher investments, and collaboration with other organizations. The virtual Network Functions industry must offer cost-effective items to expand and survive in a more competitive and rising market climate.
Manufacturing locally to minimize operational costs is one of the key business tactics manufacturers use in the global Virtual Network Functions industry to benefit clients and increase the market sector. In recent years, the Virtual Network Functions industry has offered some of the most significant advantages to technology. Major players in the Virtual Network Functions market, including Alcatel-Lucent (France), Cisco Corporation (US), Ericsson (Sweden), Huawei (China), Tech Mahindra (India), Ribbon Communications (US), Telefonica (Spain), Trend Micro (Japan), Verizon Communications (US), Fujitsu (Japan), HP Enterprise (US), NEC Corporation (Japan), F5 Networks (US), Aricent Incorporation (France), and others, are attempting to increase market demand by investing in research and development operations.
HP Inc. is an American international information technology business, formerly known as Hewlett-Packard, based in Palo Alto, California. It produces 3D printing solutions in addition to personal computers, printers, and related accessories. HP is a technology business founded on the idea that organizations should strive to achieve more than just financial access. Companies ought to contribute to improving the planet. For Instance: In June 2021, Hewlett Packard (HP) rolled out a new 5G software solution into its existing 5G portfolio. The new solution comprises the ability to monitor and orchestrate the infrastructure, network functions, and services and automatically identify and resolve issues to ensure service continuity.
Fujitsu Limited is a global Japanese firm that provides hardware and services for information and communications technology. Fujitsu was established in 1935, and its headquarters is in Tokyo. The company and its subsidiaries offer a variety of products and services in the areas of data storage, telecommunications, advanced microelectronics, and air conditioning; Fujitsu’s hardware offerings are primarily comprised of personal and enterprise computing products, including x86, SPARC, and mainframe compatible server products. The company employs about 1, 26,400 people, and its goods and services are offered in about 180 nations. For Instance: In February 2022, Fujitsu introduced new software vRAN technology with support for 5g to potentially achieve CO2 emission reductions of over 50%.
Key Companies in the Virtual Network Functions market include
Virtual Network Functions Industry Developments
March 2023: H3C Technologies Co. Ltd., a digital solution provider, joined hands with Fortesys Sdn Bhd, a digital networking solution provider. The partnership allows Fortesys to distribute H3C’s products, such as hyper-converged infrastructure (HCI), Application-Driven (AD) campus, and virtual desktop infrastructure (VDI) solutions in Malaysia. AD- Campus is a campus network solution comprising SDN and NFV to offer security, traffic management, and analytics.
July 2022: NEC Corporation purchased Aspire Technology, a provider of complete network optimization services solutions. This acquisition aimed to expand NEC’s SI offering for Open RAN 5G applications. This acquisition would also boost the ability of NEC to offer End-to-End Open RAN ecosystems.
Virtual Network Functions Market Segmentation
Virtual Network Functions Component Outlook
Virtual Network Functions Network Functions Outlook
Virtual Network Functions Applications Outlook
Virtual Network Functions Organization Size Outlook
Virtual Network Functions End-User Outlook
Virtual Network Functions Regional Outlook
| Report Attribute/Metric |
Details |
| Market Size 2023 |
USD 32.06 Billion |
| Market Size 2024 |
USD 39.69 Billion |
| Market Size 2032 |
USD 176.9 Billion |
| Compound Annual Growth Rate (CAGR) |
20.54% (2024-2032) |
| Base Year |
2023 |
| Market Forecast Period |
2024-2032 |
| Historical Data |
2018- 2022 |
| Market Forecast Units |
Value (USD Billion) |
| Report Coverage |
Revenue Forecast, Market Competitive Landscape, Growth Factors, and Trends |
| Segments Covered |
Component, Functions, Applications, Organization Size, End-User, and Region |
| Geographies Covered |
North America, Europe, Asia Pacific, and the Rest of the World |
| Countries Covered |
The US, Canada, German, France, UK, Italy, Spain, China, Japan, India, Australia, South Korea, and Brazil |
| Key Companies Profiled |
 Alcatel-Lucent (France), Cisco Corporation (US), Ericsson (Sweden), Huawei (China), Tech Mahindra (India), Ribbon Communications (US), Telefonica (Spain), Trend Micro (Japan), Verizon Communications (US), Fujitsu (Japan), HP Enterprise (US), NEC Corporation (Japan), F5 Networks (US), Aricent Incorporation (France) |
| Key Market Opportunities |
Increasing service providers |
| Key Market Dynamics |
Increasing demand for cloud computing technology Rising demand for telecom equipment |
Virtual Network Functions Market Highlights:
Frequently Asked Questions (FAQ) :
The global market is projected to grow at a CAGR of 20.54% during the forecast period, 2024-2032.
North America had the largest share in the global market
The key players in the market are Alcatel-Lucent (France), Cisco Corporation (US), Ericsson (Sweden), Huawei (China), Tech Mahindra (India), Ribbon Communications (US), Telefonica (Spain), Trend Micro (Japan), Verizon Communications (US), Fujitsu (Japan), HP Enterprise (US), NEC Corporation (Japan), F5 Networks, Aricent Incorporation (France).
The hardware category dominated the market in 2023.
The large enterprise had the largest share in the global market.
