The global market for network functions virtualization (NFV) is expected to reach $11.6 billion in 2019, up from $2.3 billion in 2015, according to IHS.
"NFV represents operators' shift from a hardware focus to software focus, and our forecasts show this," said Michael Howard, senior research director for carrier networks at IHS, in a release. "We believe NFV software will comprise over 80 percent of the $11.6 billion total NFV revenue in 2019."
He added that the software is always a much larger investment than the server, storage and switch hardware, representing about $4 of every $5 spent on NFV.
Service providers are still early in the long-term, 10- to 15-year transformation to virtualized networks, the research firm pointed out. In the U.S., AT&T (NYSE: T) and Verizon (NYSE: VZ) both are incorporating NFV into their networks, with AT&T aiming to have 5 percent of its network functions virtualized by the end of this year.
ACG Research also released a study last week showing that virtualizing the functions of mobile Evolved Packet Core (EPC) technology can save mobile operators up to 69 percent on capex and 67 percent on opex. In a study sponsored by VMWare and Affirmed Networks, the research firm conducted a five-year cost comparison between mobile network operators with traditional and virtualized network architectures. According to the research, operators that transitioned to an NFV-based platform began saving money in the first year and realized an investment payback in three years.
Mobile operators are not the only ones taking advantage of NFV and software-defined networking (SDN). CableLabs has been working on SDN and NFV since 2012, Phil McKinney, president and CEO of CableLabs, told sdxCentral.
Since many of the SDN and NFV use cases are common to both cable MSOs and telcos, CableLabs has been focusing on cable-specific use cases. "In particular, we're looking at virtualizing the Cable Modem Termination System (CMTS) and developing proof-of-concept Virtual CPE (customer premises equipment) to accelerate time to market for new services, and virtualizing the home network to simplify operations and create new services opportunities," he said in a Q&A.
He also said open source software is a key enabler for SDN and NFV, particularly in developing the platform, noting that the Open Platform for NFV (OPNFV), which CableLabs co-founded, is creating an open reference platform on which the industry can build solutions and share learning.
McKinney will deliver a keynote at the OpenDaylight Summit that runs July 28 and 29 in Santa Clara, Calif.
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