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Spending for NFV/SDN Expected to Grow Over $168B by 2022

By Frank Griffin June 21, 2017

Network functions virtualization (NFV) and software defined networking (SDN) have introduced new levels of efficiency in the way network and data center operators, as well as telecoms and enterprises, run their organizations. These two technologies come at a time when massive amount of data is being generated and network bandwidth capacity is being stretched to the limit. And with 5G less than three years away, the efficiency NFV and SDN provide will be in greater demand. The latest NFV/SDN Telecom Market Forecast by Technology Business Research (TBR) is forecasting a remarkable compound annual growth rate (CAGR) of 94.3 percent from 2016 to 2022 to over $168 billion.

In its assessment of the market, TBR stated the spending is going to scale as operators address internal challenges and vendors continue to align with the shift taking place in the market through the forecast period.

According to TBR, the spending that has taken place in the NFV/SDN market so far is being carried out by 20 to 25 Tier 1 operators. These operators will be key to delivering the vast majority of the spending through the forecast period. However, Tier 2 and 3 operators will also play an important role, as the technology continues to mature and price points begin to decline, making it more affordable for small operators.

The transformative nature of NFV/SDN will drive increased adoption and faster proliferation in the marketplace, which, according to TBR telecom senior analyst Chris Antlitz, will push operators to seek and deploy the technology.

Antliz said, “Operators are under pressure to transform their businesses to improve financial results and remain competitive in the digital ecosystem. This pressure will push operators to embrace network virtualization because the traditional way of doing business in the telecom industry is not optimized for the data-driven digital economy, requiring operators to adapt or fade from relevancy.”

The challenges NFV/SDN solutions have been facing are issues of compatibility, human resource and operator-vendor disagreements. Antliz says these differences will be worked out during the forecast period and the market will scale as predicted. And even though the adoption of the technology will eventually result in cost savings across the board, it will take operators retiring legacy infrastructure and fully transitioning domains over to NFV or SDN.

After the transition has taken place, TBR expects operators to see meaningful and measurable cost savings beginning in 2021. The savings will be manifested in preliminary use-case areas, including customer premise equipment (CPE), evolved packet core (EPC), IP Multimedia Subsystem (IMS), content delivery network (CDN) and SDN domains.


Contributing Writer

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