Report: Carrier SDN and NFV hardware, software market could reach $11B by 2018

Nov. 6, 2014
Software-defined networking (SDN) and network functions virtualization (NFV) exemplify the telecom industry's shift from hardware to software, posits Infonetics Research.

Software-defined networking (SDN) and network functions virtualization (NFV) exemplify the telecom industry's shift from hardware to software, according the latest report from market research firm Infonetics Research, which finds that SDN and NFV software are projected to make up three-quarters of total SDN/NFV revenue in 2018. The firm's new Carrier SDN and NFV Hardware and Software market size and forecast report tracks SDN and NFV hardware and software used in service provider networks. Infonetics released a related report on the data center and enterprise segment of the market in September.

"For three years, the telecom industry has been abuzz over SDN and NFV, with anticipation and hard work developing the vision, goals, architectures, use cases, proof-of-concept projects, field trials, and even some commercial deployments. We've been gathering data in this early market for nearly two years and are projecting the global service provider SDN and NFV market to reach $11 billion in 2018," said Michael Howard, Infonetics Research's co-founder and principal analyst for carrier networks.

"To better understand spending in this emerging market, we classify SDN and NFV hardware and software in three distinct categories," Howard continued (see graph above). "First, revenue from brand new SDN and NFV software, which we expect to make up 20% of the total SDN and NFV market in 2018. Second, revenue that comes from products that companies will buy instead of buying something else-what we refer to as 'displaced' revenue, including NFV infrastructure (NFVI) hardware (servers, storage, switches) purchased instead of network hardware (routers, DPI, firewalls, etc.). This segment will make up about 12% of the market in 2018. And third, revenue that comes from newly identified segments of existing markets: mostly the virtualized network functions (VNFs), and also ports on routers, switches, and optical gear that have become SDN capable. This last segment makes up the largest slice of the SDN and NFV pie, 68% in 2018."

NFV represents the lion's share of the combined SDN and NFV market from 2014 out to 2018. The value of NFV is in the virtualized network functions software applications rather than the orchestration and control, says Infonetics. VNF makes up over 90% of the NFV software segment.

Infonetics' new 46-page report provides analysis of the SDN and NFV markets and their many facets, from SDN router and switch hardware and software, to the many categories of NFV, particularly the VNFs comprising policy and charging rules function (PCRF), deep packet inspection (DPI), the mobile packet core and evolved packet core (EPC), IP multimedia subsystem (IMS), and security.

The report provides worldwide and regional market size, forecasts through 2018, analysis, and trends for NFV and SDN. The report tracks NFV hardware (servers, storage, switches) and software (NFV MANO, VNF software). It also covers SDN-capable service provider telecom hardware (in-use and not in-use routers, switches, and other hardware) and SDN orchestration and controller software and network applications.

In 2015, Infonetics says it will publish separate, more in-depth reports for the service provider SDN and NFV markets. Learn more.

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