Carrier SDN and NFV market to reach $11B by 2018, report says

The global service provider software-defined networking (SDN) and network functions virtualization (NFV) market is projected to reach $11 billion in 2018, according to Infonetics Research.

For three years, the 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, according to Michael Howard, Infonetics' co-founder and principal analyst for carrier networks.

Infonetics Research has been busy gathering data in this emerging market for the past two years. To better understand spending in this market, the research firm classifies SDN and NFV hardware and software in three distinct categories.

The first category includes revenue from brand new SDN and NFV software, "which we expect to make up 20 percent of the total SDN and NFV market in 2018," Howard said in a press release.

The second segment includes 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.)," he said. This segment will make up about 12 percent of the market in 2018.

The third category is 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 percent in 2018.

Among the highlights of the report: 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-the applications-rather than the orchestration and control, according to the report. VNF makes up more than 90 percent of the NFV software segment, and SDN and NFV software is projected to make up of three-quarters of total SDN/NFV revenue in 2018

Infonetics plans to publish separate, more in-depth reports for the service provider SDN and NFV markets in 2015.

For more:
- see the press release

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