Telecom NFV growth spurred by operational efficiencies, SDN by enterprise
A new report from Mind Commerce finds that telecom network revenue tied to network functions virtualization could reach $8.7 billion by the end of 2020, as operators continue to push toward virtualized deployments using NFV. That expected growth is based on a compound annual growth rate of 83.1% over the next five years.
The report also found that virtualization moves will be dominated by pilot and trial software-defined networking installations through the end of next year, with the total SDN market set to post a CAGR of 53% on its way to $11.3 billion in total revenue by 2020. Enterprise-grade SDN deployments are expected to pace that growth, hitting 56.5% CAGR on its way to $8 billion in revenue over the next five years, with carrier-grade SDN expected to generate a 45.9% compound annual growth rate on its way to posting $3 billion in revenue by 2020.
Mind Commerce echoed comments that the virtualization move will allow telecom operators to improve network performance and lower cost structures.
“Communications service providers will benefit from improved economics brought forth by [NFV] as carriers leverage CPU virtualization and other cloud techniques to migrate previously expensive network functions to cheaper general-purpose hardware running virtual machines,” the report noted.
A report earlier this year from Argus Insights found that SDN maintained a healthy mindshare lead over NFV through the last couple months of 2014, which it said “reflects the expected revenue growth over the next two to three years.” That mindshare data was culled from blogs, message boards, Facebook and Twitter.
Infonetics Research late last year predicted the global service-provider SDN and NFV markets will grow from less than $500 million in sales last year to $11 billion in sales by 2018. 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 revenue in 2018.
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