Software Defined Data Center Market Size, Share & COVID-19 Impact Analysis, By Component (Solution and Services), By Type (Software Defined Compute, Software Defined Networking, Software Defined Storage, and Others), By Deployment (Public, Private, Hybrid), By Industry (IT & Telecommunication, Government, Healthcare, Manufacturing, BFSI, Retail, and Others), and Regional Forecasts, 2021-2028

The global software defined data center market size was USD 32.73 billion in 2020 and is projected to grow from USD 39.38 billion in 2021 to USD 169.99 billion in 2028 at a CAGR of 23.2% during the 2021-2028 period. Based on our analysis, the global market exhibited a higher growth of 19.6% in 2020 as compared to the average year-on-year growth during 2017-2019. The global impact of COVID-19 has shown a positive impact on demand for the SDDC products and solutions across all regions amid the pandemic. The rise in CAGR is attributable to this market’s demand and growth, returning to pre-pandemic levels once the pandemic is over.

Growing internet usage and digitization are driving the market.  Further, the software defined data center (SDDC) market has grown in recent years, owing to a rising multi-cloud strategy among businesses and the introduction of new and existing technologies such as 5G and the Internet of Things (IoT) across numerous industrial verticals. The need to improve infrastructure durability and service uptime is driving demand for SDDCs, leading to SDDCs becoming more advanced. Also, companies are increasingly choosing SDDCs to store the critical corporate information that contributes to the software defined data center market growth.

COVID IMPACT

Rising Implementation of Remote Working Model to Drive Market Growth during Pandemic

The COVID-19 pandemic has affected several industries and caused economic disruptions all across the world. However, coronavirus has had a slightly positive influence on the market.

With ever-increasing data volumes and multi-cloud plans, SDDC is gradually becoming a must-have for businesses. Companies have lowered IT spending as a result of stalled projects and low profitability owing to global COVID-19 lockdowns, indicating a delayed adoption of premise-based SDDCs. The pandemic also pushed several firms to use the work from home (WFH) model to maintain business sustainability and continuity in the crucial period, resulting in a surge in cloud infrastructure adoption in demand for SDDC solutions.

Further, during the crisis, the decreasing availability of required resources for maintaining and monitoring SDDCs is projected to increase demand for managed services. For instance, in October 2020, Masergy Communications Inc., a managed service provider, introduced two new software-defined wide-area network services that make working remotely easier. The new services "SD-WAN Work from Anywhere solutions", and "SD-WAN On the Go" offers managed service to the millions of employees who work from home. It also allows organizations to provide employees with the same network and security services they would receive in the office.

Also, the widespread usage of a VPN for videoconferencing and the "WFH" strategy resulted in a massive increase in internet traffic. This prompted all IT infrastructure providers to adopt Software-Defined Networking (SDN), Hybrid Software-Defined Networking (HSDN), and Software-Defined Wide-Area Networking (SDWAN).

LATEST TRENDS

Hybrid Cloud Deployment to Meet Additional Needs and Aid Market Growth

With the remarkable development being made in the IT technology business on a near-daily basis, SDDCs, are the next step in the evolution of traditional data centers. It combines the most powerful and appealing features of cloud computing with the conveniences of on-site storage. To remain one step ahead of the competition, business owners and service providers are investing in the hybrid cloud and SDDC.

Since hybrid clouds enable businesses to store and maintain valuable data assets on private servers before transferring them to a public cloud for processing. Also, a network that provides convenient and secure access to cloud-based service platforms is critical for organizational effectiveness owing to the importance of big data analytics in today's market.

DRIVING FACTORS

Cost Reduction in Hardware to Augment Market Growth

Cost reductions in hardware are expected to drive the adoption of software defined data centers. With SDDC, companies do not need to buy hardware, learn vendor-specific skills to maintain and execute it, or handle physical machine upgrades. It improves the company's resource management, resulting in increased overall efficiency.

Also, to ensure greater control and management of both software and hardware, the adoption of software defined data centers is increased. For instance, according to a white paper released by Computer World, up to 13% of servers purchased in the next year would be used to manage predictive analytics, machine learning, and artificial intelligence in software defined data centers. Firms, on the other part, may overestimate the difficulties that come with using outdated platforms and managing new IT infrastructure.

RESTRAINING FACTORS

Lack of Acceptance of Virtualization Standards Globally to Obstruct Market Growth

Owing to the increasing popularity of SDDCs, no globally recognized software defined data center standard exists. Due to the unavailability of a unified virtualization standard in a multi-controller SDN architecture, SDN controllers created by various vendors may display conflicting or misleading behavior. Using multiple controllers at the same time can cause network traffic constraints. It encounters significant interoperability challenges while converting current data centers to SDDCs due to this lack of standardization. These integration issues and interoperability due to a lack of globally approved virtualization standards limit the use of multi-controller SDN architecture in SDDCs and are likely to restrict the growth of market.

SEGMENTATION

By Component Analysis

Increasing Demand for Managed Services to Boost Market Growth

Based on the component, the market is divided into solutions and services.

The services are projected to grow fastest during the forecast period. The expansion of the managed services is owing to organizations’ increasing desire to achieve optimized workload management with higher agility, efficiency, and security while avoiding the difficulties of training, integration and implementation, and support and maintenance.

Additionally, the demand for services owing to the utilization of software-defined services is a significant element of IT growth in organizations. Despite the benefits of software defined data centers, there are still difficulties, and these complexities necessitate the utilization of services beyond the capabilities of a traditional IT team. As a result, many companies are turning to as-a-service providers for assistance.

The SDDC solutions are predicted to hold the highest market share during the forecast period owing to increased hardware and software usage. Solutions can be implemented utilizing various hardware platforms, including converged infrastructure, standard hardware, hyper-converged infrastructure, and configurable infrastructure. Furthermore, it allows applications to run solely on logically defined resources isolated from the underlying hardware. The solution can be deployed on even the most basic hardware configurations because of its device-agnostic nature.

By Type Analysis

Rising Cloud Technology Acceptance across Major Sectors to Aid Market Growth

Based on the type, the market is classified into software defined compute (SDC), software defined networking, software defined storage (SDS), and others (software defined management, security).

Among all, SDC holds the major market share owing to the adoption of the cloud-native application. A cloud-native application takes advantage of cloud computing paradigms to reduce deployment risks and improve service flexibility, performance, and quality. Cloud-native applications support both on-premises and cloud platforms. 

During the forecast period, the SDN is predicted to increase at the highest growth rate. Increasing Demand for SDN for enhancing enterprise mobility, server virtualization, and data center consolidation fueling the market growth. As a result, of the growing adoption of Bring-Your-Own-Devices (BYOD), companies are increasingly relying on SDN solutions to modify and manage data accessed by employees and optimize the mobile workforce.

Various technical breakthroughs, such as the integration of the Internet of Things (IoT) with interconnected devices, are also contributing to the economy's expansion. SDS holds the second-largest share in the market due to increased data volume.

By Deployment Analysis

Increasing Implementation of Emerging Technologies such as Server Virtualization to Boost Market Demand

Based on the deployment, the market is divided into public, private, and hybrid.

Public deployment mode holds the major market share owing to emerging technologies such as server virtualization and edge computing, gaining traction, resulting in increased public cloud investment. Since many data centers and managed service providers (MSPs) have transitioned to an SDDC service model, that uses virtualization technologies to isolate processing hardware in software form to reduce infrastructure constraints.

According to Gartner, public cloud spending to grow 23% in 2021 worldwide, which includes cloud business process services, cloud application infrastructure services, and others. Further, according to January 2021, a report by vXchnge several organizations are adopting edge computing data center architecture to resolve requests and actions using the processing capacity of devices on the network edge rather than relying on centralized processing capabilities.

Private deployment mode holds the second largest market share during the forecast period. It is owing to the increased adoption of cost-efficient, scalable, and secure solutions. The hybrid deployment model is predicted to rise at the highest CAGR owing to the growing implementation of cloud-based solutions in SMEs.

By Industry Analysis

IT & Telecom Industry to Hold Maximum Market Share

Based on the industry, the market is divided into IT & telecom, government, healthcare, manufacturing, BFSI, retail, and others (education, automotive).

IT & telecom industry to hold the largest market share and is also expected to show the highest CAGR during the forecast period since it is a major industry for the market. BFSI and government are also likely to hold significant market share due to big data growth and the rising need for software-based data storage and services.

BFSI firms are implementing various cloud solutions to cope with important concerns such as data storage, recovery, and cybersecurity, as well as managing massive volumes of data that must be processed, saved, and reproduced repeatedly. For instance, In May 2021, İşbank a Turkey-based private bank appointed Huawei software defined data center network solution to meet changing business requirements.

The SDDC resulted in the emergence of technological advancement in the virtualization of healthcare industry systems. This technology is being adopted by a rising number of healthcare organizations to increase the automation, efficiency, and dependability of their networks. Also, manufacturers and retailers are using huge volumes of data for deriving valuable insights. The technology makes it easy to integrate data from various sources which in turn helps in profitability.

REGIONAL INSIGHTS

Based on the region, the market has been evaluated across five major regions, including North America, Latin America, Europe, the Middle East and Africa, and the Asia Pacific.

North America is expected to hold the largest market share during the forecast period. The growth is owing to the presence of major players such as VMware, Inc., Cisco Systems, Inc., IBM Corporation, and others. Furthermore, product launches and partnerships by key companies to extend their global footprint is likely to drive market growth in North America. For Instance:

In March 2021, Scality, a technlogy solutions provider, announced a significant expansion in the Asia Pacific, Europe, and Middle East & Africa with six senior executives as the company’s demand for large-scale multi-cloud storage and hybrid is increased.

During the forecast period, Asia Pacific is expected to grow at the fastest growth rate. The region's significant growth is due to the developing markets and increased industrialization. The need for increased power, resources, and responsibility in IT management will grow as the APAC region's core IT infrastructure develops faster. It generates a self-replicating cycle, promoting further investment and growth.

Throughout the forecasted period, Europe is expected to increase at a significant rate. Owing to favorable data security and privacy rules, corporations are quickly adopting software defined data centers in Europe. Regulatory norms such as the General Data Protection Regulation (GDPR) are encouraging corporations to build data centers in European countries as the regulation protects data security and privacy.

A region such as Latin America, the Middle East, & Africa is likely to grow considerably. The growth is primarily owing to increased investment in data centers in countries like Iran, Brazil, Israel, Turkey, and others. For Instance, In September 2021, Telco System, located in Turkey, opened a new data center in Tekirda's Kapakl area. The company invested USD 295 million in this project.

KEY INDUSTRY PLAYERS

Market Players Are Implementing Mergers, Acquisition, and Collaboration to Strengthen Position

Significant competitors in the market include VMware, Inc., Nutanix, IBM Corporation, Cisco System, Inc., among others. These companies are implementing multiple corporate strategies to boost their global expansion and deliver advanced solutions and services. For Instance:

• April 2021 - IBM Corporation launched an updated storage solution designed to simplify data availability and accessibility across the hybrid cloud. The company has announced plans to ship new container native SDS solutions to enable businesses to enhance data availability across complicated hybrid clouds for improved business performance and resilience.

List of Key Companies Profiled:

• VMware, Inc. (California, U.S.)


• IBM Corporation (New York, U.S.)


• Cisco Systems, Inc. (California, U.S.)


• Nutanix (California, U.S.)


• GreenPages, Inc. (Maine, U.S.)


• Dell Technologies (Texas, U.S.)


• Fujitsu (Tokyo, Japan)


• Hewlett Packard Enterprise Development LP (Texas, U.S.)


• Hitachi Vantara LLC (Tokyo, Japan)


• NetApp (California, U.S.)

KEY INDUSTRY DEVELOPMENTS:

• June 2021: NTT Limited launched updated global data center interconnect network services based on sophisticated SDN technology for optimizing hybrid cloud environments. A globally integrated network fabric service that enables private and secure connections between NTT's worldwide data centers and key cloud service providers.


• November 2020: BT launched a new generation of SDN services with VMware Inc. to broaden global client’s connectivity options. The initial service is built on VMware's SD-WAN technology. BT's latest digital service platform allows it to control or co-manage the service remotely. This enables customers to get a single view of their whole network and a variety of management controls.


• June 2020: Lightbits Labs launched LightOS 2.0 that provides Kubernetes with full cloud-native persistent storage integration, as well as unprecedented scaling and availability through clustering. LightOS 2.0 offers virtual NVMe volumes with low delay and excellent performance, as well as high reliability with frictionless target-side storage server failover. 

REPORT COVERAGE

The market research report delivers a detailed analysis of the market and focuses on key aspects such as leading companies, product and services types, and leading applications of the product. Besides this, the report offers insights into the market trends and highlights key industry developments. In addition to the aforementioned factors, the report encompasses several factors that have contributed to the market's growth over recent years.

Report Scope & Segmentations

ATTRIBUTE	DETAILS
Study Period	2017-2028
Base Year	2020
Estimated Year	2021
Forecast Period	2021-2028
Historical Period	2017-2019
Unit	Value (USD billion)
Segmentation	Component; Type; Deployment; Industry; and Region
By Component	Solution Services
By Type	Software Defined Compute Software Defined Networking Software Defined Storage Others (Software Defined Management, Security, etc.)
By Deployment	Public Private Hybrid
By Industry	IT & Telecom Government Healthcare Manufacturing BFSI Retail Others (Education, Automotive, etc.)
By Region	North America (By Component; Type; Deployment; Industry; and Country) U.S. (By Type) Canada (By Type) Latin America (By Component; Type; Deployment: Industry; and Country) Brazil (By Type) Mexico (By Type) Rest of Latin America Europe (By Component; Type; Deployment; Industry; and Country) U.K. (By Type) Germany (By Type) France (By Type) Italy (By Type) Spain (By Type) Russia (By Type) Rest of Europe Middle East & Africa (By Component; Type; Deployment; Industry; and Country) GCC (By Type) South Africa (By Type) Rest of the Middle East & Africa Asia Pacific (By Component; Type; Deployment; Industry; and Country) China (By Type) Japan (By Type) India (By Type) Southeast Asia (By Type) Rest of Asia Pacific