Global Custom Virtual Router Market Size, Forecast, and Trend Highlights Over 2025-2037
Custom Virtual Router Market size was valued at USD 322.5 million in 2024 and is projected to reach USD 2.1 billion by the end of 2037, expanding at a CAGR of 15.4% during the forecast period, i.e., 2025-2037. In 2025, the industry size of custom virtual routers is estimated at USD 370.3 million.
The market is linked with the broader digital trade landscape, which has undergone robust transformation in recent years. Additionally, the International Telecommunications Union (ITU) has highlighted that more than 7 billion broadband subscriptions exist globally, connecting around 4 billion people and devices by the end of 2024. The heightened focus on improving connectivity is predicted to ensure a sustained demand for virtual router services.
To understand the growth potential of the custom virtual router market, the expansion potential of lucrative regional markets such as North America is considered. For instance, the U.S. Customs and Border Protection reported a total import value for digital technology-related goods of over USD 3.0 trillion in the FY 2024. This figure is a reflection of the heightened trade of technology products, which in turn bodes well for deployment opportunities of virtual routers. An additional facet of the trade data was reported by the United Nations Conference on Trade and Development (UNCTAD)’s database in 2023, by mapping the growth of cross-border digital services by 8.1% against the backdrop of rising international demand.
Custom Virtual Router Sector: Growth Drivers and Challenges
Growth Drivers
-
Increasing government support for network infrastructure modernization: The rising government push to bolster network infrastructure in a bid to digitalize economies is a major driver of the custom virtual router market. Modernization of network infrastructure creates a favorable ecosystem for the heightened deployment of custom virtual routers. Major such initiatives include the USD 42.5 billion commitment by the U.S. National Telecommunications and Information Administration (NTIA) under the aegis of the BEAD program. A key push by the program is to create scalable routing technologies that can support next-generation networks and mitigate dependency on traditional routers. The table below highlights recent major investments across the world in a bid to modernize network infrastructure:
|
Country |
Initiative |
Investment Amount |
Focus Areas |
|
India |
National Quantum Mission |
₹6,003.65 crore (USD 730 million) |
Quantum technologies, secure communication, digital infrastructure |
|
Australia |
National Broadband Network (NBN) Upgrade |
AUD 3 billion (USD 2 billion) |
Fiber network expansion, internet speed enhancement |
|
India |
Assam Digital Infrastructure Investment |
AUD 3 billion (USD 2 billion) |
Fiber network expansion, internet speed enhancement |
- Reduction in capital expenditure via network virtualization: The adoption rates of custom virtual routers have been bolstered due to their lowering hardware costs. Additionally, these routers allow multiple virtual network functions (VNFs) to run on shared infrastructure, which in turn streamlines the network management. This boosts the reduction in energy usage as well as in capital outlay. With a large number of enterprises seeking leaner network operations amidst fluctuating trade duties, such as USD 87 billion collected by the U.S. Customs in FY 2024, the demand for software-defined routing increases. A supporting facet of the rise in demand is the emergence of software-defined routing as a financially strategic choice.
Technological Trends Shaping the Custom Virtual Router Market
The global custom virtual router market is bolstered by technological advancements in virtualization and network automation. For instance, network function virtualization (NFV) and software-defined networking (SDN) have enabled telecom operators to decouple network functions from hardware. An example of a successful use case is 6WIND introducing its virtual host-based router in July 2024 to provide Kubernetes integration. The table below highlights a few major advancements in the market.
|
Industry |
Technology Adoption |
Example |
|---|---|---|
|
Manufacturing |
5G integration for smart manufacturing and real-time data processing |
Cisco's 800G innovations enable significant space and power savings for AI/ML workloads. |
|
Finance |
Cloud-based virtual routers for secure and scalable network infrastructure |
Equinix's fabric cloud router facilitates multi-cloud networking with up to 25 Gbps scalability. |
|
Defense |
Secure virtual routers for rapid deployment over various communication networks |
Persistent Systems' cloud relay virtual hub router enables global connectivity for military applications. |
Challenges
-
Security vulnerabilities in virtualized environments: With a number of organizations proactively adopting virtualized networking solutions, the attack surface of cyber threats has expanded. Custom virtual routers introduce additional layers of complexity that can cause challenges if proper configuration solutions are not accessible. Additionally, the dual challenge of securing virtualized infrastructure and meeting compliance mandates has pushed vendors in the market to inculcate cybersecurity features in their offerings.
Custom Virtual Router Market: Key Insights
| Report Attribute | Details |
|---|---|
|
Base Year |
2024 |
|
Forecast Year |
2025-2037 |
|
CAGR |
15.4% |
|
Base Year Market Size (2024) |
USD 322.5 million |
|
Forecast Year Market Size (2037) |
USD 2.1 billion |
|
Regional Scope |
|
Custom Virtual Router Segmentation
Component (Software, Services)
The software segment of the custom virtual router market is slated to hold a 60.4% revenue share by the end of 2037. A major driver of the segment’s expansion is the push towards SDN and NFV to reduce dependency on hardware. Successful use cases include Estonia’s e-Governance model, exemplifying the use of cloud-based software solutions to deliver 100% of public services online. Additionally, in August 2024, Equinix launched a fabric cloud router available on AWS Marketplace, allowing enterprises to set up private connections across hybrid multi-cloud architectures.
Deployment Mode (Cloud-Based, On-Premise)
The cloud-based deployment segment of the custom virtual router market is poised to hold a revenue share of 57% by the end of 2037. A major factor bolstering the segment’s growth is the increasing traction of the pay-as-you-go model due to its scalability. As per Flexera’s Flexera 2023 State of the Cloud Report, more than 90% of enterprises were actively utilizing cloud services in 2023 due to the model allowing organizations to optimize costs. The market directly benefits from the heightened cloud-based deployment as the accessibility improves to SMEs, creating a new segment of end users in the established as well as in emerging markets.
Our in-depth analysis of the global custom virtual router market includes the following segments:
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Component |
|
|
Deployment Mode |
|
|
End user |
|
|
Application |
|
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North America Market Forecast
The North America custom virtual router market is projected to register a dominant revenue share of 40.7% throughout the anticipated timeline. Multiple factors have converged to ensure a sustained growth of the sector in North America, such as the heightened adoption rates of both SDN and NFV, and nationwide 5G infrastructure development. Trends indicate that in both the U.S. and Canada, two premier regional markets in North America, investments will remain high on improving the broadband infrastructure, which ties up with the growth of virtual routers.
The U.S. custom virtual router market is positioned to expand its revenue share by the end of 2037. The U.S. market's growth curve is supported by a surge in demand for flexible networking solutions across a number of industries. Moreover, proactive investments from the government to modernize network infrastructure boost the sector. In May 2024, the U.S. released a revised international cybersecurity strategy, which is expected to converge with the heightened demand for flexible networking solutions in the region.
APAC Market
The APAC custom virtual router market is projected to register the fastest expansion at a CAGR of 11.4% throughout the forecast timeline. The regional market’s growth curve is heightened by the accelerated adoption of 5G, NFV, and SDN across APAC in established economies such as China and in emerging economies ranging from India to Vietnam. In September 2024, the Asia-Pacific Network Information Centre (APNIC) outlined its strategic initiatives for the 2024 Activity Plan and Budget, detailing a commitment to bolstering digital infrastructure across the region. Such proactive initiatives are expected to create a rise in demand for network optimization.
The China custom virtual router is projected to maintain its leading revenue share throughout the anticipated timeline. The Made in China 2025 initiative is a major factor in the regional market’s growth curve, as China seeks to improve digital connectivity across the nation. The demand for virtual routers has also increased against the backdrop of nationwide 5G deployment and widespread adoption of cloud-based services. The Ministry of Industry and Information Technology (MIIT) of China announced in January 2023 its intention to push the onset of 6 G. The advent of next-generation communication technologies is slated to ensure sustained demand for custom virtual routers.
Major Players in the Custom Virtual Router Landscape
- Company Overview
- Business Strategy
- Key Product Offerings
- Financial Performance
- Key Performance Indicators
- Risk Analysis
- Recent Development
- Regional Presence
- SWOT Analysis
The custom virtual router market is poised to remain highly competitive, with major players such as Juniper Networks, Huawei Technologies, Cisco Systems, etc., expanding their product portfolios through strategic acquisitions. The dynamic push to create an established network infrastructure across the world has allowed key players to tap into the heightened demand for virtual router solutions and expand their revenue shares. The table below highlights the major players in the custom virtual router market.
|
Rank |
Company Name |
Country of Origin |
Revenue Share (%) |
|
1 |
Cisco Systems, Inc. |
USA |
18.5% |
|
2 |
Huawei Technologies Co., Ltd. |
China |
15.2% |
|
3 |
Juniper Networks, Inc. |
USA |
12.4% |
|
4 |
Ericsson AB |
Sweden |
10.6% |
|
5 |
Nokia Corporation |
Finland |
8.8% |
|
6 |
Arista Networks, Inc. |
USA |
XX |
|
7 |
Dell Technologies, Inc. |
USA |
XX |
|
8 |
ZTE Corporation |
China |
XX |
|
9 |
NEC Corporation |
Japan |
XX |
|
10 |
Samsung Electronics Co., Ltd. |
South Korea |
XX |
|
11 |
HPE (Hewlett Packard Enterprise) |
USA |
XX |
|
12 |
Riverbed Technology, Inc. |
USA |
XX |
|
13 |
TP-Link Technologies Co., Ltd. |
China |
XX |
|
14 |
Extreme Networks, Inc. |
USA |
XX |
|
15 |
Radwin Ltd. |
Israel |
XX |
Below are the areas covered for each company that is a key player in the custom virtual router market:
In the News
- In February 2025, Juniper launched the AI-driven WAN solutions, which include 800GE-capable routers and AIOps for WAN. The new solutions are poised to boost network efficiency. In Q4 2024, the company achieved more than a 25% YoY increase in GAAP net income.
- In November 2024, Arista introduced advanced data center switches to support AI workloads. The new solution has boosted the network performance in AI-centric environments. Additionally, the company reported a 20.4% revenue increase in Q3 2024, with the impact felt from the adoption of its new data center switches.
Author Credits: Abhishek Verma
- Report ID: 2921
- Published Date: May 19, 2025
- Report Format: PDF, PPT
