IHS predicts robust SDN and NFV investments, though deployment challenges remain
The financial implications for telecom operators as they size up their virtualization plans are still somewhat nebulous, though most agree they will be vast. The migration towards increased use of software to control network functions using software-defined networking and network functions virtualization is set to be a transformative move with corresponding costs.
On this week’s NFV/SDN Reality Check we spoke with Michael Howard, senior research director for carrier networks at IHS, to get some insight into those potential investments as well as challenges that still lay ahead for telecom operators looking to deploy SDN and NFV platforms.
The firm recently predicted the global market for NFV hardware, software and services was set to surge from $2.3 billion this year to $11.6 billion in 2019, but claimed service providers are still “early” in their transformation toward virtualized network platforms, which it said is a 10- to 15-year process.
Revenues from outsourced services geared towards NFV projects is expected to post a 71% compound annual growth rate from 2014 to 2019, with revenue from software-only video content delivery network functions for managing and distributing data forecast to grow 30-fold between 2015 and 2019.
“NFV represents operators’ shift from a hardware focus to software focus, and our forecasts show this,” explained Howard on the report. “We believe NFV software will comprise over 80% of the $11.6 billion total NFV revenue in 2019. … The software is always a much larger investment than the server, storage and switch hardware, representing about $4 of every $5 spent on NFV.”
IHS earlier this year reported that 35% of telecom operators are planning to deploy NFV this year, yielding yet more evidence that despite its still nascent nature, carriers are moving rapidly toward NFV and virtualization platforms.
In terms of SDN, IHS research found carriers were on track to spend $5.7 billion on SDN hardware, software and services by 2019, an increase from $103 million spent last year.
target=_blank>IHS also found 82% of service providers have either deployed SDN, are in the process of deploying SDN or plan to evaluate SDN deployments this year. IHS said the survey included carriers garnering 49% of the world’s telecom capital expenses and 46% of telecom revenue.
IHS found the top reason for SDN investments is carriers looking to simplify and automate service provisioning, “which they believe will lead to service agility” and a quicker return on investment. IHS added that other top “domains for deployment” include cloud services offered to customers within and between data centers and access for businesses.
Make sure to join us on Oct. 9 for our next live episode of NFV/SDN Reality Check when we speak with Anand Gonuguntla, CEO at Centina Systems on the importance of service assurance for SDN and NFV.
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