Network Function Virtualization Market Report 2025

This Network Function Virtualization report covers market characteristics, size and growth, segmentation, regional and country breakdowns, competitive landscape, market shares, trends and strategies for this market. It traces the market’s historic and forecast market growth by geography.

The network function virtualization market size has grown rapidly in recent years. It will grow from $26.31 billion in 2024 to $31.41 billion in 2025 at a compound annual growth rate (CAGR) of 19.4%. The growth in the historic period can be attributed to need for cost reduction in network infrastructure, demand for scalability and flexibility, advances in virtualization technologies, growth in data traffic and network complexity, transition to software-defined networking (SDN).

The network function virtualization market size is expected to see exponential growth in the next few years. It will grow to $70.33 billion in 2029 at a compound annual growth rate (CAGR) of 22.3%. The growth in the forecast period can be attributed to focus on edge computing, increased demand for network automation, emphasis on network security in virtualized environments, reduction in capital and operating costs, optimization of networks and related processes. Major trends in the forecast period include containerization in NFY deployments, network slicing for customized services, multi-vendor NFY solutions and interoperability, integration of NFY with cloud-native technologies, dynamic orchestration for service agility.

The growth of the network function virtualization market is being significantly influenced by the increasing demand for cloud-based services. Cloud refers to servers provided over the Internet, along with the software and databases running on those servers. Instead of installing new hardware, network operators can dynamically acquire new network services through cloud solutions. According to the 2022 State of the Cloud Report by Flexera, which surveyed 753 technical professionals, small to midsized businesses (SMBs) experienced substantial growth in cloud spending, reaching 53% and totaling $1. 2 million annually in 2022, up from 38% in 2021. Consequently, the surge in demand for cloud-based services is a driving force behind the growth of the network function virtualization market.

The anticipated growth of the network function virtualization market is also attributed to the increasing popularity of Internet of Things (IoT) devices. IoT devices are physical objects embedded with sensors, software, and connectivity capabilities to collect and exchange data over the internet. These devices utilize network function virtualization for remote management, configuration, and the creation of service chains in a specific order to process IoT data effectively. According to the CRO Forum's 2022 report on IoT risks from an insurance perspective, it is expected that the number of IoT devices will reach 24. 1 billion by 2030. Furthermore, in March 2023, Exploding Topics reported an anticipated increase to 25. 4 billion IoT devices by 2030. Therefore, the rising adoption and popularity of IoT devices contribute significantly to the growth of the network function virtualization market.

Technological advancements have emerged as a prominent trend gaining traction in the network function virtualization market. Major companies in the NFV sector are concentrating on developing the latest technologies to maintain their market position. For instance, in February 2022, Mobileum, a US-based telecom analytics company, and VoerEir, a Sweden-based cloud technology company, collaborated to create a robust test platform for network function virtualization infrastructure. This integrated solution, combining Mobileum's SITE active test solution and VoerEir's Touchstone test suite, enables communication service providers to fully automate testing of services from the lab to the live network, including virtual and cloud-native network functions.

Innovations in technological products, such as the ATBeX NFV Service, are being introduced by major companies to enhance profitability in the network function virtualization market. ATBeX NFV Service is a network virtual appliance service designed to establish a virtualized infrastructure for network functions. For example, in November 2022, AT TOKYO Corporation and Uniadex Ltd., both Japan-based companies, launched ATBeX NFV Service. This collaborative service provides SD-WAN, router, and firewall functions on a virtual appliance, allowing access to multiple providers and services through a single physical port or line, connecting to various services like cloud computing and the Internet.

In April 2024, BMC, a US-based company that specializes in IT management solutions, acquired Netreo for an undisclosed amount. BMC offers a variety of products for automation, performance management, and service management across different industries. The acquisition of Netreo aims to enhance BMC's capabilities in network function virtualization and improve its IT management solutions, enabling better performance monitoring and optimization of network services for clients. Netreo is also a US-based company that focuses on network performance monitoring and management solutions, assisting businesses in optimizing their IT infrastructure and operations.

Major companies operating in the network function virtualization market include Cisco Systems Inc., Telefonaktiebolaget LM Ericsson, Huawei Technologies Co. Ltd., Nokia Corporation, Hewlett Packard Enterprise Company, Dell Technologies Inc., Juniper Networks Inc., Affirmed Networks Inc., NEC Corporation, Ribbon Communications Operating Company Inc., ZTE Corporation, Fujitsu Limited, Ciena Corporation, Amdocs Limited, Mavenir Systems Inc., Radisys Corporation, Accenture plc, ECI Telecom Ltd., Wind River Systems Inc., Comba Telecom Systems Holdings Ltd., Intel Corporation, Redline Communications Group Inc., Arista Networks Inc., Broadcom Inc., F5 Networks Inc., Fortinet Inc.

North America was the largest region in the network function virtualization market in 2024. Asia-Pacific is expected to be the fastest-growing region in the forecast period. The regions covered in the network function virtualization market report are Asia-Pacific, Western Europe, Eastern Europe, North America, South America, Middle East, Africa. The countries covered in the network function virtualization market report are Australia, Brazil, China, France, Germany, India, Indonesia, Japan, Russia, South Korea, UK, USA, Italy, Canada, Spain.

Network Function Virtualization (NFV) is an approach employed by network operators to expedite service deployment by separating functions like firewalls or encryption from dedicated hardware and migrating them to virtual servers. This model enables network services to be installed and managed by software operating on standardized compute nodes, which were traditionally reliant on proprietary hardware. NFV incorporates virtualization and cloud technologies to facilitate the development of new network services with elastic scale and automation, ultimately enhancing network responsiveness, flexibility, and scalability.

The primary components of Network Function Virtualization include solutions, orchestration and automation, and services. Solutions encompass a comprehensive system that integrates people, processes, information, and technologies to support a set of business or technical capabilities aimed at resolving one or more business problems. Solution providers are engaged by various industries to address business challenges. The infrastructure utilized involves both hardware resources and virtualized resources. Applications of NFV span virtual appliances and core networks, catering to diverse end-users such as service providers, data centers, and enterprises.

The network function virtualization market research report is one of a series of new reports that provides network function virtualization market statistics, including network function virtualization industry global market size, regional shares, competitors with a network function virtualization market share, detailed network function virtualization market segments, market trends and opportunities, and any further data you may need to thrive in the network function virtualization industry. This network function virtualization market research report delivers a complete perspective of everything you need, with an in-depth analysis of the current and future state of the industry.

The network function virtualization (NFV) market consists of revenues earned by entities by providing virtual network functions such as tunneling gateway elements, signaling and switching. Values in this market are ‘factory gate’ values, that is the value of goods sold by the manufacturers or creators of the goods, whether to other entities (including downstream manufacturers, wholesalers, distributors, and retailers) or directly to end customers. The value of goods in this market includes related services sold by the creators of the goods.

The market value is defined as the revenues that enterprises gain from the sale of goods and/or services within the specified market and geography through sales, grants, or donations in terms of the currency (in USD, unless otherwise specified).

The revenues for a specified geography are consumption values that are revenues generated by organizations in the specified geography within the market, irrespective of where they are produced. It does not include revenues from resales along the supply chain, either further along the supply chain or as part of other products.

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