NFV = New Found Value

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Market Worth Over $15 Billion by 2020

The global network functions virtualization (NFV) market, which includes NFV hardware, software and services, will be worth $15.5 billion by 2020, according to the latest NFV Hardware, Software, and Services Annual Market Report from IHS Markit.

Between 2015 and 2020, the service provider NFV market will grow at a robust compound annual growth rate (CAGR) of 42% — from $2.7 billion in 2015 to $15.5 billion in 2020.

NFV represents the shift in the telecom industry from a hardware focus to a software focus, with operators making much larger investments in software than in server, storage and switch hardware. NFV software will comprise 80% of the $15.5 billion total in 2020 — or around $4 out of every $5 spent on NFV.  In 2020, only 11% of NFV revenue will be attributable to new software and services. Sixteen percent (16%) will come from network functions virtualization infrastructure (NFVI) — servers, storage, switches — acquired in place of purpose-built network hardware such as routers, deep packet inspection (DPI) products and firewalls. The remaining 73% will originate from existing market segments, primarily virtual network functions (VNFs).

The main value of NFV is in its applications, that is, the VNFs. The service provider NFV market is larger than the software-defined networking (SDN) market throughout our forecast horizon of 2020, due to the pre-existing and ongoing VNF market. We expect strong growth in NFV markets in 2020 and beyond, driven by service providers’ desire for service agility and operational efficiency.

The NFV report tracks what service providers spend on NFV hardware and software to deliver software-based services to customers via the consumer virtual customer premises equipment (vCPE) and enterprise vCPE use cases. The vCPE use case opportunity, including spending to deploy consumer and enterprise services, is forecast to reach over $1.5 billion worldwide by 2020.

The 2016 IHS Markit NFV Hardware, Software, and Services Annual Market Report tracks service provider NFV hardware, including NFVI servers, storage and switches; NFV software split out by NFV MANO and VNF software, including vRouters and the software-only functions of mobile core and EPC, IMS, PCRF and DPI, security, video CDN and other VNF software; NFV services outsourced services for NFV projects; and NFV uses cases. The report provides worldwide and regional market size, forecasts through 2020, in-depth analysis and trends. For more information about the report, please visit https://technology.ihs.com/578480?utm_campaign=PR_-114&utm_medium=press_release&utm_source=BusinessWire.

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About Author

Michael Howard is Senior Research Director, Carrier Networks, IHS Markit. Michael co-founded market research firm Infonetics Research in 1990, and today is recognized worldwide as one of the industry’s leading experts in emerging markets, network operator trends, and user buying patterns. Nicknamed the “Ethernet pope,” Michael leverages 40 years of communications industry experience to author research on carrier Ethernet, cloud access, SDN, NFV, carrier routers and switches, mobile backhaul, OpenFlow, and packet-optical transport. For more information, visit http://www.markit.com, www.ihs.com, email michael.howard@ihs.com, call 408.583.3351, or twitter @michaelvhoward.

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