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Reports Indicate Brisk Service Provider Spending on NFV

By Paula Bernier July 20, 2016

Service provider spending on network functions virtualization, including hardware, software and services, is forecast to reach $15.5 billion by 2020. If that all plays out as expected, it would represent a 42 compound annual growth rate from last year’s $2.7 billion figure in this realm.

That’s the word from IHS Markit in its new NFV Hardware, Software and Services Annual Market Report.

“We expect strong growth in NFV markets in 2020 and beyond, driven by service providers’ desire for service agility and operational efficiency,” said the firm’s Michael Howard.

Not surprisingly, NFV software is expected to account for the bulk of that 2020 investment, at 80 percent, IHS Markit estimates. Of course, new service provider investments in servers, storage and switch hardware will also come into play.

IHS Markit expects that 73 percent will come from existing market segments, primarily virtual network functions; 16 percent will come from network functions virtualization infrastructure like servers, storage and switches (as opposed to the purpose-built network hardware like deep packet inspection solutions, firewalls and routers that service providers have traditionally employed); and 11 percent will come from new software and services. This breakdown in spending seems to make sense given, as IHS Markit notes, the main value of NFV is in its applications/VNFs.

Just last month IHS Technology came out with new data suggesting that NFV is also emerging as a driver of spending for subscriber data management software and services. Study author Shira Levine at the firm wrote, “Movement toward stateless virtual network functions is driving interest in the [user data repository] as a centralized repository of subscriber, state and session data, in turn pushing operators to implement these back-end systems as virtual network elements themselves.”

Also last month, NFV Essentials writer Steve Anderson posted an article about a new ABI Research report indicating that more than half the spending on mobile packet data core initiatives is expected to be on NFV solutions.

Edited by Alicia Young

Executive Editor, TMC

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