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SDN Market Size: Would You Believe $35B?

Craig Matsumoto
4/24/2013

So, how would you measure the software-defined networking (SDN) market? For a forecast being released Wednesday, the key was to focus on the economic impact -- in other words, counting equipment sales that depend on SDN, even if SDN isn't activated or even available at first. Using that criterion, the forecast comes out to $35.6 billion in equipment sales in 2018, up from about $1.5 billion estimated in 2013. The data was compiled by Roy Chua and Matt Palmer, who run the Wiretap Ventures consultancy and the SDNCentral blog, and is being released in a report that adds conclusions from Lightspeed Venture Partners and Plexxi, an SDN vendor. Now, you might be screaming about how inflated the figure is, considering it counts hardware that doesn't yet run SDN, but here's the rationale: Customers really are asking for SDN and insisting on it in requests for proposals (RFPs), says Mike Bushong, Plexxi's vice president of technical marketing. So, rather than guess at when each vendor will deploy SDN, the SDNCentral guys chose to focus on influence: What portion of sales are being triggered specifically by SDN? In other words, the $1.5 billion estimate for this year includes systems that don't have any SDN features right now but are being bought because of their SDN roadmaps. "Given that the technology's pretty nascent, we think the production [availability of SDN] will lag the buying decision by years, in some cases," Bushong says. Jumping ahead to 2018, the $35.6 billion figure would represent about 40 percent of all equipment sold. The study also predicts that the market for network virtualization software will be worth $1.2 billion in 2018, up from $10 million this year. Another finding is that venture investment in SDN-related companies grew nearly 50-fold since 2007, to $454 million in 2012. Of course, the 2007 figure was quite small ($10 million) and the definition of "SDN-related" might be rather generous. An infographic accompanying the report includes Xsigo, an Oracle Corp. acquisition that most people say doesn't count as SDN, even though Oracle put "SDN" in its headline. For more

— Craig Matsumoto, Managing Editor, Light Reading
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Craig Matsumoto
Craig Matsumoto
4/24/2013 | 5:04:48 PM
re: SDN Market Size: Would You Believe $35B?
-áThe methodology does create a bigger number, but I think I like it.-á Makes more sense than, say, counting OpenFlow-enabled ports and guessing what percentage of them will actually be used with OpenFlow.

Of course, any forecast here is going to be subject to the usual over-optimism of the respondents. SDN is definitely going up and to the right; the slope is debatable.
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