It's no secret by now that network functions virtualization (NFV) has seen enormous gains in the last few years. A growing fascination with the technology from corporate users eager to do more with less money has pushed a lot of NFV-based projects forward. Recently, ABI Research took a closer look at that market and discovered that the market was likely to gain substantially just for the next five years.
The ABI Research study found that the ongoing investment of major telecom firms would likely result in significant new levels in the market. Through 2022, the market was set to reach a total of $38 billion in NFV-related investments. The North American market was set to lead the market, with an extra $13 billion in investment, but the largest percentage growth rate was set to be Europe's prize with a 53 percent compound annual growth rate (CAGR) through 2022.
This is a market where it pays to be an early adopter, reports note, as early adopters are already reporting drops in both capital and operational expenses, as well as lower deployment times for new network operations, providing greater service agility.
Hardware as a percentage of the market was expected to drop—which is reasonable as initial setups start to decline as more companies have material in place, and only pick up occasional upgrades and replacements—but software and services would take over the gap in a big way. The NFV software market is poised to have a CAGR of 55 percent, while services would post 50 percent growth.
ABI Research senior analyst Neha Pachade commented, “Early contracts and market trends illustrate the biggest winners are likely to be the established vendors, including Ericsson, Huawei, and Nokia, as well as specialists like Amdocs and Netcracker, with systems integration becoming more important each day.” Pachade further noted “For the time being, NFV is mostly considered as a cost-cutting exercise, since new revenue opportunities require a transformation in a much broader context, which is more likely to be driven by 5G, after 2020.”
It's immediately clear that the NFV market will see plenty of change in just the next five years, which is reasonable as it's seen plenty in the last five. From a market of skeptics and some light involvement to a market of substantial growth, the NFV market is seeing big change as businesses discover the inherent power in a system that allows for faster deployments, reduced manhour costs, and improved profitability. Lowering costs commonly means increasing profit, as long as revenues stay neutral, and given what NFV has already done for the market, it's not likely to change that proposition much.
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