NFV predicted to dominate virtualized space
In a new report, Infonetics Research said it expects the global service provider software-defined networking and network function virtualization market to grow from less than $500 million in sales last year to $11 billion in sales by 2018.
For its prediction, the firm broke down the market into three categories, with revenue from new SDN and NFV software to make up 20% of the market by 2018; “displaced” revenue from NFV-related products that a company buys instead of buying network hardware to make up 12% of the market; and revenue from newly identified segments of existing markets, including virtualized network functions, ports on routers, switches and SDN-capable optical gear making up 68% of revenues.
Between the two technologies, Infonetics said it expects NFV to represent “the lion’s share” of the market between 2014 and 2018, with the value of NFV coming mostly from VNF software rather than orchestration and control. The research firm noted that VNF makes up more than 90% of the NFV software segment, and that it expects SDN and NFV software to comprise three-fourths of the total revenues in 2018.
Earlier this year, Infonetics reported that based on conversations with telecom operators representing 51% of worldwide telecom capital expenditures, 29% of those surveyed are currently deploying SDN and 52% plan to evaluate SDN deployments by the end of the year. The survey also found that 97% of those questioned plan to deploy SDN at some point, with 93% saying they plan on deploying NFV.
Michael Howard, co-founder and principal analyst for carrier networks at Infonetics Research, explained that demonstrations at the recent Mobile World Congress event showed the progress being made in rolling out SDN and NFV.
“This is the year that SDN and NFV move from the lab to field trials,” Howard said. “Many carriers are in the process of moving from SDN/NFV proof-of-concept projects to working with vendors in the development and ‘productization’ of software that will become the basis for commercial deployments.”
Howard added that in the next few months he expects a few operators to move to actual commercial deployments of specific NFV use cases, but cautioned it won’t be until next year when commercial deployments begin to gain traction.
SNS Research estimated that by 2020, NFV and SDN investments across the radio access network market will account for $5 billion in sales, with investments focused on cloud-RAN deployments. The firm said those deployments were “based around the idea of replacing traditional base station nodes with a centralized baseband processing pool serving a number of distributed radio access nodes.”
Overall, SNS Research said that carriers are looking at increasing their software spend as a way to reduce their total cost of ownership, “targeting integration across a multitude of areas including RAN, mobile core, OSS/BSS, backhaul and CPE/home environment.”
Photo source: Nuage Networks
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