Command and Control Systems Market | Revenue, Demand, Supply and Forecast

Market Summary and Growth Forecast

The global Command and Control Systems Market is valued at $44,800 million in 2026 and is expected to appreciate to $76,400 million by 2035, at a CAGR of 6.1%.

These estimates cover hardware, software, system integration, deployment, modernization and lifecycle support directly associated with command-and-control functions. They exclude standalone surveillance sensors, weapon platforms and general-purpose communication networks unless these elements are delivered as part of an integrated command architecture.

The valuation is based on a synthesized assessment of global military expenditure, identifiable C2 and C4I procurement programs, supplier contract values, modernization budgets and spending by homeland security agencies. Global military expenditure reached $2.887 trillion in 2025, including approximately $864 billion in Europe and $681 billion across Asia and Oceania. This expanding expenditure base supports sustained investment in battle management, tactical networking and decision-support infrastructure.

The Command and Control Systems Market includes digital and physical infrastructure used to collect operational information, build a common operating picture, issue instructions and coordinate personnel, sensors, vehicles and weapon systems. Solutions range from fixed strategic command centres to rugged tactical terminals carried in vehicles or deployed at forward operating locations.

Modern systems increasingly connect five operating domains: land, air, maritime, space and cyber. Their value is no longer measured only by the number of screens, radios or workstations installed. Buyers are placing more weight on decision speed, interoperability, cyber resilience and the ability to combine data from different sensors.

For example, an air-defence command centre may receive data from ground radar, airborne surveillance aircraft, satellites and counter-drone sensors. The system must remove duplicate tracks, identify threats and recommend a suitable response within seconds.

Business relevance during 2026–2035

Command-and-control infrastructure is becoming the digital layer that links otherwise separate military assets. Governments may purchase advanced aircraft, drones, radars and missiles, but these platforms deliver less operational value when they cannot exchange data or operate under a common mission plan.

This is pushing procurement away from isolated systems. Buyers now want connected architectures that can support joint forces, allied forces and autonomous platforms. NATO describes interoperability as the ability of different systems, organisations and nations to work together coherently. Its current digital strategy also calls for stronger integration across all operational domains and a shift toward shared, data-centric environments.

The United States continues to pursue Combined Joint All-Domain Command and Control. The approach is intended to connect sensors, decision-makers and operational assets through secure infrastructure, automation and artificial intelligence.

Europe is following a similar path, although programs are more distributed across national and multinational procurement structures. EU defence capability investment was estimated to have increased from roughly €59 billion in 2021 to €102 billion in 2024. Also, European NATO members raised their spending sharply during 2025. A material share of this investment is moving into air defence, tactical communications, battlefield digitisation, space awareness and command infrastructure.

Major forces shaping the market

Higher defence and security spending

Geopolitical instability is extending procurement pipelines. Governments are no longer treating command systems as supporting IT. They are being classified as operational infrastructure.

At the 2025 Hague Summit, NATO members committed to allocating at least 3.5% of GDP to core defence requirements by 2035, with up to another 1.5% directed toward defence-related infrastructure, resilience and security. This commitment does not translate entirely into C2 expenditure. Still, it creates a larger funding pool for networks, secure data infrastructure and interoperability programs.

Growth of unmanned and autonomous systems

Military users are adding drones, unmanned ground vehicles, autonomous maritime platforms and distributed sensors. Every new platform creates another stream of operational data.

This raises demand for software that can manage multiple assets without requiring a separate operator for each one. Command systems are therefore moving toward supervised autonomy. Human operators retain mission authority, while software handles routing, task allocation, track correlation and routine responses.

Shorter sensor-to-decision cycles

The commercial objective for suppliers is moving from equipment delivery to decision-cycle improvement. A system that reduces the time required to detect, classify and respond to a threat can carry more value than a larger but poorly integrated command centre.

Counter-drone and air-defence applications illustrate this shift. Low-cost drones may appear in groups and change direction quickly. Operators need automated filtering and prioritisation because manual monitoring cannot scale at the same rate.

Open architecture and software-defined capability

Historically, many C2 systems were built around proprietary hardware. Upgrades were slow and often required the original supplier.

Customers now favour modular architectures, open interfaces and software applications that can be upgraded independently. NATO’s 2026 industry cooperation strategy specifically highlights modularity, open architectures and interoperability as priorities for faster technology adoption.

This transition may reduce dependence on single hardware configurations. It may also create opportunities for smaller software, artificial-intelligence and data-engineering companies.

Cybersecurity and operational resilience

Command infrastructure is a priority target for cyberattack, electronic warfare and communications disruption. So, security is being built into the core architecture rather than added after deployment.

Demand is rising for distributed processing, encrypted data exchange, zero-trust access, redundant communication paths and systems capable of operating with limited connectivity. Buyers are also evaluating how quickly a system can recover after disruption.

Data governance and military cloud adoption

Data from different forces is often stored under different formats and security rules. That makes technical integration only part of the problem.

NATO’s Data Strategy calls for movement from isolated repositories toward controlled shared-data environments and federated data structures by 2030. This supports investment in military cloud, edge computing, data catalogues and access-control tools.

Regulation, sovereignty and export controls

C2 procurement is shaped by national-security rules. Source-code access, cybersecurity certification, data residency, encryption controls and local industrial participation can determine whether a supplier qualifies.

Countries are also trying to retain sovereign control over mission data. As a result, global vendors often need local partners, domestic hosting arrangements or technology-transfer agreements.

This makes the market less standardized than commercial enterprise software. A platform may be technically deployable across several countries but still require substantial localisation.

Key consumers and clients

The main customer groups include:

• Ministries and departments of defence
• Land, air, naval, space and cyber forces
• Joint and multinational military commands
• Intelligence and surveillance agencies
• National air-defence organisations
• Homeland security and border-protection agencies
• Coast guards and maritime-security authorities
• Emergency-management and civil-defence agencies
• Police, fire and public-safety command centres
• Critical-infrastructure protection organisations
• Defence prime contractors and platform integrators
• NATO, EU and other multinational security institutions

For the Command and Control Systems Market, future revenue will come from both new installations and continuous modernization. Software updates, cybersecurity hardening, data integration and operator support will account for a larger part of contract value through 2035.

Expert view: The strategic question is no longer whether forces need digital command infrastructure. It is whether existing systems can absorb new sensors, autonomous assets and allied data without creating another closed technology layer.

Market Segmentation and Forecast Scope

The Command and Control Systems Market can be assessed across four core dimensions: product type, application, end user and region. The segmentation is designed to avoid counting the same contract under multiple categories.

By Product Type

Hardware

Hardware remains the largest product category in 2026, accounting for approximately 44.2% of market revenue.

This category includes rugged servers, displays, workstations, tactical terminals and deployable command-post equipment. Hardware content is higher in new installations, naval combat systems and mobile command centres.

Growth will remain positive, but hardware revenue will rise more slowly than software. Customers are extending equipment life and shifting functionality into upgradeable software layers.

Software

Software is projected to be the fastest-growing product category through 2035.

Demand is moving toward data fusion, mission planning, automated threat assessment, multi-domain coordination and AI-assisted decision support. Software also supports more frequent upgrades than traditional hardware.

The commercial model is changing as well. Governments are gradually accepting modular software releases, continuous integration and recurring support arrangements. Procurement remains more controlled than normal enterprise software, but the direction is clear.

Services

Services cover architecture design, system integration, data migration, testing, operator training, cybersecurity and through-life support.

This category is commercially important because C2 installations are rarely delivered as standard products. Suppliers must connect legacy sensors, radios, weapons and information systems. Integration can therefore represent a substantial part of total contract value.

Services also produce stable revenue after the original equipment has been deployed. Many systems remain operational for 15–25 years, creating recurring opportunities for upgrades and sustainment.

By Application

Land and battlefield management

Land-based applications account for an estimated 33.8% of the market in 2026.

The segment includes tactical headquarters, vehicle-mounted systems, dismounted-soldier connectivity and battlefield-management software. Demand is being supported by force digitisation, artillery coordination and the growing use of unmanned aerial systems at brigade and battalion level.

The land segment has a large installed base. However, integration remains uneven because armed forces often operate equipment from different generations and suppliers.

Air command and air-defence management

Air applications include national air-surveillance centres, air-operations centres, ground-based air-defence systems and counter-unmanned aircraft command networks.

This segment is attracting substantial investment as countries rebuild layered air-defence capability. The requirement is moving beyond radar display. Customers need integrated systems that can compare targets, allocate interceptors and coordinate several sensor and weapon types.

In February 2025, Saab announced an approximately SEK 250 million order from a NATO country for its 9AIR C4I air command-and-control system. Deliveries began during 2025, showing active demand for deployable air-command capability.

Naval command and combat management

Naval applications combine navigation, surveillance, communications, fire control and weapons management.

Shipboard systems typically have long development and support periods. Contract values can be high because the C2 layer must be integrated with radars, sonar, electronic warfare and weapons.

In July 2024, Leonardo DRS received a U.S. Navy contract with a ceiling exceeding $417 million for submarine combat-control and sonar-system hardware. The scope included displays, processors, workstations, networks and engineering support.

Joint and multi-domain command

Joint and multi-domain applications represent the fastest-growing strategic segment.

These systems allow several military services and allied organisations to share information and coordinate actions. The architecture must work across different security levels, communication networks and equipment standards.

NATO’s 2025 Multi-Domain Operations Conference involved more than 200 decision-makers from over 30 allied nations and NATO commands. The discussions focused on shared operational understanding, cross-domain command and coordinated capability development.

Space and cyber operations

Space command includes satellite operations, space-domain awareness, launch monitoring and protection of space-based infrastructure. Cyber command includes mission planning, threat monitoring and coordination of defensive or authorised operational activities.

These are smaller revenue categories today. That said, they are becoming integral to joint command structures.

Public safety and emergency response

Civil applications include city emergency centres, border-security operations, disaster response and coordination of police, fire and medical services.

These systems use many technologies found in military C2, including mapping, video integration, resource allocation and secure communications. However, procurement requirements and security classifications are generally different.

By End User

Defence forces

Defence forces represent approximately 85.6% of global revenue in 2026.

Their systems require military-grade cybersecurity, rugged equipment, secure communications and integration with weapons and classified sensors. Contract periods are generally longer than in civil markets.

Homeland security and public safety

Homeland security users need command centres for border monitoring, counter-terrorism, maritime surveillance and major incident response.

Adoption is increasing as agencies combine drone feeds, biometric databases, video surveillance and geographic information systems. However, defence systems remain the primary revenue source.

Government and critical infrastructure

This category includes intelligence organisations, civil-protection agencies and operators responsible for energy, transport and communications infrastructure.

Demand is being shaped by hybrid threats, cyberattack risk and the need for coordinated national response systems.

By Region

North America

North America leads the market with an estimated 39.4% share in 2026.

The United States supports several large command, communications and battle-management programs. It also has a broad supplier base covering defence primes, cloud providers, software companies and specialist integration firms.

Canada contributes through air-defence, aerospace surveillance, maritime security and NATO-related modernization.

Europe

Europe is expected to record the highest regional CAGR through 2035.

The region is rebuilding command capability for territorial defence, integrated air and missile defence, cyber resilience and multinational operations. Procurement will remain fragmented, but NATO standards and EU collaboration should improve alignment.

European buyers are also prioritising sovereign data control. This will favour suppliers offering local hosting, source-code access and domestic integration.

Asia Pacific

Asia Pacific demand is supported by maritime disputes, missile threats, air-defence requirements and the development of national space capabilities.

China, India, Japan, South Korea and Australia are major contributors. Southeast Asian countries are also investing in coastal surveillance and integrated air pictures, although procurement scale differs widely.

LAMEA

LAMEA combines Latin America, the Middle East and Africa.

The Middle East represents the largest opportunity within this group. Demand focuses on integrated air and missile defence, border security and critical-infrastructure protection. Latin American procurement is more selective, with emphasis on maritime monitoring, public safety and ageing-system replacement.

Africa remains a smaller market. Opportunities are concentrated around border surveillance, peacekeeping, counter-terrorism and national emergency coordination.

Expert view: Software will capture a larger share of incremental market value, but system integrators will retain influence. Defence buyers still need one party to accept responsibility for performance across sensors, networks, software and operational procedures.

Market Trends and Business Innovations

The Command and Control Systems Market is shifting from platform-specific equipment toward distributed, software-led and data-centric operating environments.

The most important innovation is not a single new device. It is the ability to connect old and new assets under a common decision architecture.

R&D evolution

From system development to mission-thread development

Traditional R&D programs focused on individual products. A supplier developed a radar console, tactical terminal or combat-management system and then integrated it into the customer’s environment.

Current programs are increasingly organised around mission threads. These examine the complete sequence from detection to decision and response.

For example, a counter-drone mission thread may connect acoustic sensors, radar, electro-optical cameras, electronic warfare equipment, command software and an interceptor.

This approach allows buyers to test whether the full operational chain works. It also identifies delays caused by incompatible data formats or approval processes.

Digital engineering and virtual integration

Suppliers are increasing the use of digital twins, model-based systems engineering and synthetic testing.

A digital representation allows engineers to test interfaces before physical equipment is installed. This is useful for naval vessels, aircraft and national command centres, where late design changes are expensive.

Virtual test environments also support cyber testing. Engineers can simulate network disruption, false data and overloaded communication links without placing operational systems at risk.

Continuous software development

C2 software is moving toward shorter development cycles. Instead of waiting several years for a major upgrade, defence organisations are adopting controlled DevSecOps methods.

Updates can introduce new interfaces, threat libraries or analytical tools. However, continuous delivery must still pass cybersecurity, safety and operational certification.

This creates a hybrid commercial model. Development becomes faster, but release control remains more stringent than in ordinary commercial software.

Technology evolution

Data-centric architectures

Older command systems often moved data between specific applications through fixed interfaces. Each new sensor required additional integration work.

Data-centric architecture separates data from individual applications. Authorised users and software tools can access information through governed data layers.

NATO’s Data Strategy calls for a connected data-sharing ecosystem and a shift from isolated repositories toward shared spaces and federated data structures by 2030.

This may reduce integration time. It also creates demand for metadata management, data-quality controls and identity-based access.

Cloud and edge computing

Military cloud supports large-scale storage, processing and application deployment. Edge computing performs critical tasks closer to the sensor or operator.

Both are needed. Central cloud environments can support planning and historical analysis. Edge nodes can continue working when bandwidth is limited.

Airbus, for example, describes its multi-domain combat cloud as a decentralised and cyber-resilient network connecting land, air, sea, space and cyber assets. The architecture combines distributed processing with a common information environment.

Open interfaces and modular applications

Open architectures allow customers to replace individual applications without rebuilding the full system.

This is commercially disruptive. Established suppliers may lose some control over closed product ecosystems. At the same time, they can participate in larger programs as system integrators.

Smaller companies gain a route into defence procurement by supplying specialised applications for data fusion, AI, autonomy or user interfaces.

Distributed and mobile command posts

Large fixed headquarters can be detected and targeted. Armed forces are therefore exploring smaller, mobile and geographically distributed command nodes.

These nodes require lightweight equipment, rapid setup and resilient connectivity. They also need synchronized data so that different locations operate from the same information picture.

The result is growing demand for containerized software, rugged edge servers and deployable communications packages.

Resilient networking

Command systems must operate under jamming, cyberattack and damaged infrastructure.

R&D priorities include mesh networks, multi-path communications, automated rerouting, reduced bandwidth modes and local data processing. Systems are also being designed to operate with degraded positioning and timing signals.

AI integration

AI is relevant to this market and is already being introduced into operational and prototype environments.

The strongest near-term use cases are:

• Sensor-data fusion
• Object and threat classification
• Track correlation
• Anomaly detection
• Resource and asset allocation
• Course-of-action generation
• Mission planning
• Predictive maintenance
• Management of autonomous platforms

NATO’s revised AI strategy supports the secure and responsible adoption of AI across alliance capabilities. Allied Command Transformation has also identified AI integration as a core part of future operational and capability-development activity.

AI will not remove the commander from high-consequence decisions. The practical model is human-machine teaming.

Software can examine thousands of tracks, identify patterns and rank response options. The authorised operator then approves, changes or rejects the recommendation.

This distinction matters for procurement. Customers increasingly require explainability, audit trails, controlled autonomy and clear accountability.

The European Defence Agency has also highlighted trustworthiness as a central requirement for AI in C4I and multi-domain decision-making.

Autonomy and command of unmanned systems

The number of uncrewed platforms is increasing faster than the number of available operators.

Future C2 software must allow one person to supervise several assets. This means the system will manage navigation, sensor tasking and basic coordination while escalating important decisions.

In 2024, Airbus demonstrated software that autonomously managed a group of unmanned aerial vehicles during flight testing with Primoco platforms and a Helsing application.

The commercial opportunity extends beyond drone control. The same architecture can coordinate ground robots, maritime vehicles and expendable sensors.

User-interface innovation

Command centres historically relied on multiple displays and separate applications. Operators often needed to move between several systems to understand one event.

New interfaces aim to consolidate information around the mission rather than the source system. Touch interfaces, three-dimensional mapping, natural-language search and mixed-reality displays are entering development programs.

The challenge is information overload. More data does not automatically improve decisions. Interface design must show what matters and hide what does not.

Partnerships, investments and contract announcements

Recent activity shows that suppliers are combining established command platforms with specialist AI, autonomy and software capabilities.

Anduril’s next-generation command prototype

In July 2025, Anduril received a $99.6 million U.S. Army award to develop a Next Generation Command and Control prototype. The program involved deployment with the Army’s 4th Infantry Division and reflected the shift toward software-defined tactical command environments.

Palantir and Anduril AI partnership

In December 2024, Palantir and Anduril announced a consortium intended to accelerate AI capability for national-security users.

The partnership links data infrastructure, AI platforms and autonomous systems. It shows how defence software providers are building ecosystems rather than relying only on internal product development.

Saab investment in Comand AI

In 2026, Saab announced an investment of €11.1 million for a 10% stake in Comand AI, a battlefield-AI company.

The investment is intended to support AI-native planning and the further development of Saab’s C2 and C5ISR portfolio. This is a direct example of a traditional defence supplier adding specialist software capability through minority investment.

Airbus and Alta Ares partnership

In June 2026, Airbus Defence and Space and Alta Ares signed an agreement to integrate AI-enabled counter-drone capabilities with Airbus command-and-control and air-defence software.

The planned solution combines sensors, interceptors and battle-management software in a common sensor-to-response chain.

Saab air-defence command order

In November 2025, Saab received an approximately SEK 2.1 billion Swedish order covering sensors and command systems for brigade-level ground-based air defence. Deliveries were scheduled for 2027–2028.

Leonardo naval command integration

In July 2024, Leonardo and Intermarine secured a €1.6 billion committed contract for five new-generation Italian Navy minehunters, with further options of roughly €1 billion.

The program includes a cyber-resilient command-and-control system, sensors, sonar, data links and management of unmanned vehicles. It illustrates how C2 value is increasingly embedded in larger platform and combat-system contracts.

Business-model innovation

Suppliers are moving beyond one-time equipment sales.

Revenue models now include:

• Multi-year software support
• Capability upgrades
• Cybersecurity monitoring
• Data integration
• Simulation and operator training
• Mission-specific application development
• Availability-based support
• Managed private-cloud infrastructure
• Hardware technology refresh
• AI-model maintenance and validation

This produces a more recurring revenue profile. It also creates longer customer relationships.

However, defence buyers are cautious about permanent vendor dependence. Contracts may require sovereign hosting, source-code escrow, local maintenance capability and government ownership of mission data.

Outlook for innovation through 2035

By 2035, command systems will become more distributed and less dependent on one physical headquarters. Software will increasingly determine how sensors, personnel and autonomous assets are coordinated.

AI will shorten analysis time, but human authority will remain central for sensitive operational decisions. Open architectures will allow more suppliers to contribute applications, although integration responsibility will remain concentrated among experienced defence contractors.

Cyber resilience will become a standard performance measure. Systems will be judged on how they operate during disruption, not only under normal network conditions.

Expert view: The leading vendors in the Command and Control Systems Market will not necessarily be those with the most individual products. The advantage will sit with companies that can connect data, applications and operational assets while giving customers control over security, upgrades and mission information.

Competitive Intelligence and Benchmarking

The competitive landscape is led by large defence integrators with established access to classified programs, long-term government relationships and the ability to connect sensors, communications networks, command software and weapon systems.

Competition is not based only on software quality. Governments also assess security clearance, operational reliability, interoperability, local industrial participation and the supplier’s ability to support systems over a 15–25-year lifecycle.

Competitive Benchmarking

Lockheed Martin

Lockheed Martin holds one of the broadest positions in the market. Its portfolio covers missile-defence coordination, multi-domain operations, naval mission systems, air-defence command infrastructure and software used to manage space assets.

The company’s advantage comes from its position across both platforms and integration layers. It can connect aircraft, missile systems, radars, satellites and tactical networks under a common operational architecture.

It is also closely involved in the United States Army’s next-generation tactical command initiatives. During the Balikatan 2026 exercise, its prototype connected sensors, fire-control assets and airspace-management applications through a unified data environment.

Market position: Global Tier 1 leader

Key strengths:

• Large installed base across the United States and allied nations
• Strong position in missile defence and joint operations
• Access to classified and strategically sensitive programs
• Ability to combine platforms, sensors and software
• Long-term sustainment and upgrade capability

Its principal challenge is architectural complexity. Large legacy portfolios can be slower to standardise than software-native offerings.

Northrop Grumman

Northrop Grumman has a strong position in integrated air and missile defence, airborne mission management and advanced battle-management software.

Its command architecture is designed to link different sensors and weapons rather than limit operators to a fixed combination. This is important for governments seeking to use older radars alongside newer interceptors.

The company is also integrating artificial intelligence into target classification, sensor allocation and weapon assignment. Its battle-management portfolio supports real-time operational pictures and automated sensor-to-effector pairing.

Market position: Global Tier 1 specialist

Key strengths:

• Strong United States military program access
• Leadership in integrated air and missile defence
• Advanced sensor-fusion capability
• Experience with space and airborne command applications
• High-value system engineering capability

Northrop Grumman is less visible in public-safety command infrastructure than several European competitors. Its commercial focus remains concentrated on high-value defence missions.

RTX

RTX, through its Raytheon and Collins Aerospace businesses, covers air and missile defence, tactical communications, battle-management software and connected battlespace infrastructure.

The company benefits from ownership of sensors, interceptors, communications equipment and command software. This allows it to offer an integrated detection-to-engagement chain.

Its command systems are especially relevant for layered air defence, counter-drone missions and distributed operations. RTX has also tested mobile command concepts that reproduce functions traditionally performed from fixed operational centres.

Market position: Global Tier 1 competitor

Key strengths:

• Strong air-defence and radar portfolio
• Integrated sensor and weapon capability
• Broad tactical communications presence
• Established relationships with allied air forces
• Ability to support fixed and mobile command environments

Its portfolio spans several business units. So, maintaining a unified software and data architecture will remain commercially important.

BAE Systems

BAE Systems is strongly positioned in tactical land command, military electronics, communications and C4ISR systems.

Its tactical solutions track vehicles, individual soldiers and operational units across the command chain. This gives the company a solid position in army digitisation and deployable battlefield-management programs.

The company also has significant defence-electronics operations in the United States. This gives it access to both British-led and American military programs.

Market position: Strong transatlantic supplier

Key strengths:

• Established land-force digitisation portfolio
• Strong presence in the United Kingdom and United States
• Rugged tactical hardware and software capability
• Integration with electronic warfare and communication systems
• Long-term support experience

BAE Systems is particularly competitive where command-and-control capability is embedded within vehicles, soldier systems or tactical communication programs.

Thales

Thales supplies air, land and joint command systems, deployable command posts, secure communications and airspace-management infrastructure.

Its portfolio is suited to multinational and coalition operations. The company has a substantial presence across NATO countries, the Middle East and Asia.

Thales is also developing distributed command-post architectures. These allow forces to move away from large, easily detected headquarters toward smaller and more resilient command nodes.

Market position: Leading European supplier

Key strengths:

• Strong NATO interoperability experience
• Broad international customer network
• Airspace and ground-air-defence expertise
• Secure communication and cybersecurity capability
• Flexible domestic-partnership models

Thales must compete with national suppliers in markets where governments require sovereign source code, domestic data hosting or extensive local production.

Leonardo

Leonardo has a broad multi-domain portfolio covering naval combat management, strategic command centres, land-force digitisation and air-defence coordination.

Naval command systems are a particular strength. Leonardo can integrate surveillance sensors, communications, navigation, weapons and unmanned platforms within a single combat architecture.

The company is also the lead integrator for major Italian land-digitisation initiatives. These programs connect existing and future army platforms under one data and command structure.

Market position: Leading European integrator

Key strengths:

• Strong naval combat-system position
• Multi-domain integration capability
• Established Italian and European customer base
• Experience integrating crewed and uncrewed platforms
• Access to wider aerospace and defence-electronics technologies

Leonardo’s international growth will depend on export partnerships and its ability to adapt systems to different national communication standards.

Saab

Saab competes across air, land and naval command environments. Its strongest positions include air-surveillance coordination, ground-based air-defence control and modular tactical command systems.

The company has built its market position around flexible systems that can integrate third-party sensors and weapons. This is attractive to smaller countries that operate mixed equipment fleets.

Saab also participates in non-military command centres, including police and civil-security applications. This gives it a wider addressable customer base than defence-only suppliers.

Market position: High-growth European specialist

Key strengths:

• Modular and scalable architectures
• Strong air-surveillance heritage
• Competitive export positioning
• Integration with different sensor brands
• Suitable portfolio for medium-sized defence buyers

Competitive Direction

The traditional defence primes will remain dominant in classified, weapon-connected and safety-critical programs. That said, software-native firms are entering selected parts of the value chain.

New entrants are strongest in AI-enabled planning, autonomous-system coordination, data management and rapid software deployment. They may not replace established integrators, but they can capture specialist software contracts or participate as program partners.

Expert view: The market will gradually separate into two layers. Large contractors will remain accountable for mission-level integration, while smaller technology companies supply AI models, data applications and autonomous coordination tools.

Regional Landscape and Adoption Outlook

Regional adoption is shaped by threat perception, defence budgets, military doctrine, domestic industrial capability and access to secure communication infrastructure.

Military expenditure is not equal to command-and-control revenue. However, it provides a useful indicator of the available procurement base.

Global and country-level military expenditure figures are based on 2025 SIPRI estimates.

United States

The United States is the largest national market. It has the widest installed base of strategic, tactical, airborne, naval, missile-defence, space and cyber command systems.

The procurement focus is shifting toward joint and distributed architectures. The objective is to connect sensors and operational assets owned by different military services without requiring one closed system.

Current priorities include:

• Next-generation tactical command posts
• Joint sensor-to-effector networks
• Integrated air and missile defence
• Space-based command infrastructure
• Mobile and distributed battle management
• AI-supported planning and data fusion
• Resilient communications in disrupted environments

United States military spending stood at approximately $954 billion in 2025. SIPRI reported that approved spending for 2026 had moved above $1 trillion, maintaining a substantial funding base for modernization.

The country also has the deepest supplier ecosystem. It includes defence primes, cloud providers, AI developers, cybersecurity firms and specialist tactical-network companies.

Regulatory barriers remain high. Suppliers must address export controls, cybersecurity requirements, classified-data handling and restrictions on foreign ownership or technology access.

Adoption outlook: The United States will remain the largest market through 2035, although its percentage share may decline as European and Asian procurement grows faster.

Europe

Europe is expected to deliver the strongest regional growth rate over the forecast period.

Military expenditure across Europe increased by 14% to approximately $864 billion in 2025. European NATO members accounted for around $559 billion of this spending. Germany, the United Kingdom, France, Poland, Italy and the Nordic countries represent the main procurement centres.

At the 2025 NATO Summit, alliance members committed to a long-term target of 5% of GDP for defence and related security expenditure by 2035. At least 3.5% is intended for core defence requirements, while up to 1.5% may support infrastructure, network protection, resilience and industrial capacity.

This creates a favourable funding environment for:

• NATO-compatible tactical networks
• Integrated air and missile defence
• Joint operational headquarters
• Battlefield digitisation
• Cyber and space command centres
• Mobile command posts
• Shared surveillance pictures
• Multinational data-exchange infrastructure

Germany is likely to become one of Europe’s largest sources of new contracts. Its 2025 military expenditure reached approximately $114 billion.

Poland, Sweden, Finland and the Baltic states should record high modernization intensity relative to the size of their armed forces. France, the United Kingdom and Italy will remain important due to their domestic defence industries and major platform programs.

The main restraint is fragmentation. European countries operate different radios, security classifications, procurement rules and legacy systems. NATO standards improve interoperability, but they do not fully remove national differences.

Adoption outlook: Fastest-growing regional market, supported by air-defence requirements, NATO interoperability and replacement of ageing command infrastructure.

China

China operates a large, state-controlled defence technology ecosystem. Foreign commercial access is extremely limited, so the market opportunity is primarily captured by domestic research institutions, state-owned electronics groups and military technology suppliers.

China’s estimated military expenditure reached $336 billion in 2025, an increase of 7.4%. Its officially announced 2026 defence allocation was approximately 1.94 trillion yuan, representing a 6.9% increase over the previous budget.

Investment is directed toward:

• Integrated theatre-level command
• Naval and maritime surveillance
• Air and missile defence
• Space and counter-space operations
• Unmanned-platform coordination
• Cyber and electronic warfare
• AI-supported operational planning
• Secure military communication networks

China’s civil electronics, telecommunications, cloud-computing and AI industries provide a large domestic technology base. However, limited public contract disclosure makes supplier-level market sizing difficult.

Adoption outlook: Strong domestic growth, but limited addressable revenue for Western suppliers. Opportunities are mainly indirect, through regional responses to Chinese military modernization.

India

India is moving from imported command components toward nationally developed and integrated architectures.

Military expenditure increased by 8.9% to approximately $92.1 billion in 2025, making India the fifth-largest military spender globally.

A major area of progress is integrated air-defence command. India’s indigenous architecture combines radar feeds, communication networks and weapon-control information into a common operational picture.

The land-based air-defence command layer is designed to connect with the Indian Air Force and Indian Navy networks. This supports faster coordination across the three services.

India’s demand outlook is supported by:

• Border and mountain surveillance
• Integrated air defence
• Naval domain awareness
• Army battlefield digitisation
• Tactical communication replacement
• Space and cyber command infrastructure
• Domestic drone and counter-drone systems

Procurement rules increasingly favour domestic design, local manufacturing and Indian intellectual property. The government reports that around 65% of defence equipment is now produced domestically, supported by defence public-sector companies, licensed private companies and a large MSME network.

Adoption outlook: High-growth market. Domestic suppliers will capture a rising share, while foreign firms will need Indian production, technology-transfer or integration partners.

Japan

Japan is investing in joint command capability, maritime awareness, air and missile defence and cross-domain operations.

Military expenditure reached approximately $62.2 billion in 2025, rising by 9.7%. This was equivalent to around 1.4% of GDP, Japan’s highest military burden since 1958.

Priority areas include:

• Integrated air and missile warning
• Maritime and island surveillance
• Long-range sensor networks
• Space-domain awareness
• Unmanned-system coordination
• Joint command infrastructure
• Interoperability with United States forces

Japan has a strong domestic electronics and communication industry. That said, close military integration with the United States supports opportunities for American suppliers and joint-development partners.

Cybersecurity, classified-information protection and domestic industrial participation will remain important procurement conditions.

Adoption outlook: Strong growth from a sophisticated base, with spending focused on joint operations, maritime security and long-range threat detection.

South Korea

South Korea has mature demand for air-defence control, missile warning, joint command infrastructure and battlefield communications.

Its military expenditure reached approximately $47.8 billion in 2025, increasing by 2.6%. Spending remained focused on missile defence, pre-emptive detection and retaliatory capabilities associated with the North Korean threat.

South Korea also has a competitive domestic defence-industrial base. Companies such as Hanwha Systems, LIG Nex1 and Korea Aerospace Industries participate in sensors, communication systems and mission electronics.

Key areas of future investment include:

• Joint fire-control networks
• Missile-defence coordination
• AI-supported surveillance
• Tactical communication modernization
• Drone and counter-drone command
• Naval combat systems
• Space surveillance

Procurement is administered through a structured national acquisition system. Domestic industrial development is strongly encouraged, although United States technology remains important in selected areas.

Adoption outlook: Strong and stable demand. Domestic suppliers will expand internationally after building capability through national programs.

Middle East

The Middle East is highly relevant due to missile, drone and critical-infrastructure threats.

Regional military expenditure reached approximately $218 billion in 2025. Saudi Arabia alone spent around $83.2 billion, making it the world’s eighth-largest military spender.

The most attractive national markets include:

• Saudi Arabia
• United Arab Emirates
• Israel
• Qatar
• Kuwait

Demand is concentrated around:

• Integrated air and missile defence
• Counter-drone command
• Border and coastal surveillance
• National air-operation centres
• Protection of oil, gas and transport infrastructure
• Joint military command facilities
• Emergency and civil-security command centres

Israel has one of the region’s most advanced domestic ecosystems, especially in air defence, sensors, unmanned platforms and intelligence software.

Saudi Arabia and the United Arab Emirates remain major importers but are increasing local-content requirements. Foreign suppliers are expected to establish joint ventures, training centres and in-country maintenance capability.

The region has substantial funding capacity, but procurement can be uneven. Contract timing is influenced by political approvals, local partnerships and security relationships with supplier countries.

Adoption outlook: Selective but high-value growth, led by air-defence integration, counter-drone requirements and localisation programs.

Expert view: Europe will add the largest amount of new addressable demand outside the United States. India, South Korea and the Middle East offer strong opportunities, but access will depend heavily on local partnerships and sovereign-control requirements.

Recent Developments, Opportunities and Restraints

Recent Developments

• June 2026 – Airbus and Alta Ares partnership: Airbus Defence and Space and Alta Ares agreed to integrate AI-enabled counter-drone technology with European air-defence command software. The partnership targets a faster and more automated sensor-to-response chain.
• May 2026 – Indo-Pacific multi-domain demonstration: Lockheed Martin demonstrated a next-generation command prototype during the Balikatan exercise. The system connected sensors, fire-control assets and airspace-management functions through a shared data layer.
• July 2025 – United States Army prototype award: Anduril Industries received a $99.6 million award to develop a next-generation Army command-and-control prototype. The contract indicates rising demand for software-defined, rapidly deployable tactical systems.
• May 2025 – India operationalises indigenous air-defence coordination: India reported operational use of its domestically developed automated air-defence control architecture. The system integrates radar, communications and weapon information across the Army, Air Force and Navy.
• February 2025 – NATO air-command system order: Saab received an approximately SEK 250 million order from an undisclosed NATO country for an air-command-and-control system, with deliveries beginning during 2025.

Opportunities and Business Insights

AI-supported decision systems

AI can reduce the workload involved in track correlation, threat classification and course-of-action assessment.

The strongest commercial opportunity is not fully autonomous command. It is decision support with human approval, audit logs and clear operational limits.

Open and modular architectures

Governments want to add new sensors and applications without replacing the complete command environment.

Suppliers offering open interfaces, containerised applications and hardware-independent software can shorten upgrade cycles and lower lifecycle costs.

Emerging and mid-sized defence markets

Countries in Eastern Europe, Southeast Asia, India and the Middle East need modern systems but may not fund large strategic command centres.

This creates demand for scalable platforms that can start with air surveillance, coastal monitoring or tactical command and expand over time.

Market Restraints

• Long procurement and security-certification cycles
• Restrictions on technology transfer and source-code access
• Difficulty integrating legacy sensors and communication networks
• High cybersecurity and resilience requirements
• Shortage of cleared software and system-integration specialists
• National data-sovereignty and local-content rules
• Risk of supplier lock-in
• Limited interoperability between equipment from different countries