Software-defined Networking Market (2026-2036)

The growth of this market is mainly driven by an artificial intelligence networking build-out in which hyperscale fabric orders have reached multi-billion-dollar quarterly run rates, data centre fabric automation that no longer admits manual configuration at the port counts now being deployed, the migration of network control from on-premise controllers to cloud-delivered software-as-a-service, telemetry and assurance replacing device-by-device management, and a new Ethernet transport specification that standardises fabric behaviour for artificial intelligence and high-performance computing at scale. However, the dissolution of the standards body that created software-defined networking and the transfer of its projects elsewhere, a shortage of networking professionals able to operate programmable infrastructure, interoperability gaps across vendor control planes, and the concentration of demand in a small number of hyperscale buyers restrain the growth of this market.

Furthermore, intent-based operation with artificial intelligence for network operations, disaggregated open network operating systems, sovereign and defence network modernisation, and managed network services delivered against the installed enterprise estate are expected to offer growth opportunities for the stakeholders in this market. However, the deprecated architectural vocabulary used in procurement, vendor lock-in through control plane ownership, margin pressure as value shifts toward silicon, and the difficulty of operating multi-vendor fabrics without a governing specification remain major challenges impacting the growth of this market. Additionally, the relocation of growth to artificial intelligence fabric, consolidation concentrating control planes under fewer owners, the faster growth of services than software, and the movement of specification authority to industry consortia are prominent trends in this market.

The Software-defined Networking Market comprises the software that separates the decision about where traffic goes from the device that forwards it, together with the services that design, deploy and operate that software. The control function runs in software holding a view of the whole network, while forwarding devices execute instructions instead of running independent protocol calculations. The market includes controllers and fabric managers, policy and segmentation engines, overlay and tunnelling software, telemetry and assurance platforms, and orchestration and intent translation software, alongside consulting, integration, support and managed services. These capabilities support data centre fabric, wide area networking and SD-WAN, campus and branch networking, and carrier transport across enterprises, cloud and hyperscale service providers, and telecommunications operators. Switches, routers and the silicon inside them fall outside this measurement. The market ecosystem extends from merchant silicon and programmable data plane suppliers to incumbent full-stack networking vendors, fabric specialists, virtualisation and security software vendors, disaggregated software suppliers, the open-source foundations hosting the reference projects, and the system integrators and managed service providers that deliver and operate these networks.

The market is experiencing strong growth as networking software subscription and services revenue expands faster than the hardware it controls. Cisco Networking revenue reached USD 34,668 million in fiscal 2026, up 22%, with remaining performance obligations of USD 46,734 million, and Broadcom Infrastructure Software revenue reached USD 8,752 million in a single quarter. Arista Networks total deferred revenue rose to USD 6,865.9 million from USD 5,372.4 million across six months. Market value is estimated at USD 32.60 billion in 2026 and is projected to reach USD 138.00 billion by 2036, at a CAGR of 15.5%. Increasing investments in data centre fabric software, cloud-delivered controllers, telemetry and assurance platforms, and network integration and managed services are significantly increasing demand across both offerings in this market.

Artificial intelligence fabric build-out is further strengthening market growth, as the port counts and bandwidths now being deployed require software-defined control. Cisco Systems reported fourth-quarter fiscal 2026 revenue of USD 17,252 million, up 18%, within full-year revenue of USD 63,325 million, up 12%, with Networking revenue of USD 9,791 million in the quarter, up 28%, and artificial intelligence infrastructure orders from hyperscalers of USD 4 billion in the quarter and USD 9.3 billion across fiscal 2026 against approximately USD 4 billion of recognised artificial intelligence infrastructure revenue. Fiscal 2027 guidance was set at USD 72.2 billion to USD 73.4 billion. Arista Networks reported second-quarter 2026 revenue of USD 3,035.7 million, up 37.7%, with a GAAP operating margin of 45.4% and GAAP net income of USD 1,212.9 million, and introduced the 7060XE7 Series as a 1.6-terabit portfolio for artificial intelligence fabrics.

Fabric specification is being reshaped by the arrival of a vendor-neutral transport standard. The Ultra Ethernet Consortium released Specification 1.0 on 11 June 2025, covering a comprehensive Ethernet-based communication stack across all layers of the networking stack including network interface cards, switches, optics and cables, with modern remote direct memory access for Ethernet and IP, transport protocols, congestion control, link and physical layer technologies, network security, and routing, provisioning, operations and testing, scaling to millions of endpoints. Technical Advisory Committee Chair Hugh Holbrook described it as a landmark development for the industry. Specification authority previously sat with the Open Networking Foundation, formed in 2011 by Deutsche Telekom, Facebook, Google, Microsoft, Verizon and Yahoo, which dissolved its operations in mid-December 2023 and transferred its project portfolio to the Linux Foundation, which launched LF Broadband, Aether, P4 and Open Network Modeling and Interfaces on 31 January 2024 with USD 5 million of transferred funding.

Another major growth driver is the migration of network control from on-premise controllers to cloud-delivered software-as-a-service. A controller delivered as a service removes installation, patching and scaling from the customer and converts a perpetual licence into a recurring subscription, which increases recognised revenue per network without any change in device count. This model is now the default for campus and branch estates, and its importance was recognised in the Department of Justice settlement attached to the Hewlett Packard Enterprise acquisition of Juniper Networks, which required the auction of a perpetual, non-exclusive licence to the Juniper AI Ops for Mist source code with optional transitional support and personnel transfers. Streaming telemetry has also replaced device polling, and Cisco reported remaining performance obligations of USD 46,734 million at the end of fiscal 2026, up 7%, with product up 9% and services up 6%.

Supplier structure is being reshaped by consolidation across the networking software base. Hewlett Packard Enterprise completed the USD 14 billion acquisition of Juniper Networks in early July 2025 after a Department of Justice settlement requiring divestiture of the Instant On campus and branch wireless business within 180 days and licensing of certain Juniper software to independent competitors. Former Juniper Chief Executive Officer Rami Rahim leads the combined business, which carries the HPE Aruba Networking and HPE Juniper Networking brands, with at least USD 450 million of annual cost savings expected within three years. Broadcom reported third-quarter fiscal 2026 revenue of USD 29,591 million, up 86%, within which Infrastructure Software contributed USD 8,752 million, up 29% and 30% of the total, against Semiconductor Solutions of USD 20,839 million, up 127%.

At the same time, the growing use of intent-based operation, disaggregated open network operating systems and programmable data plane silicon is reshaping the networking ecosystem and creating new opportunities for suppliers. Translating a stated business intent into device configuration, and verifying continuously that the network still matches it, is a capability most customers cannot build or staff internally. Separating the network operating system from the switch allows an operator to select silicon and software independently, and the institutional base for this approach is now held by the Linux Foundation projects launched on 31 January 2024. Broadcom artificial intelligence semiconductor revenue reached USD 16.7 billion in the third quarter of fiscal 2026, up 221% year on year and 54% sequentially, with fourth-quarter guidance of approximately USD 21.7 billion, which indicates the scale of fabric capacity now being equipped.