NFV market forecast to grow 33% per year until 2020, driven by IoT

A new report has had a look at the market for network function virtualization (NFV) and reckons it’s due for a growth spurt.

The number crunching was done by Technavio, which scrutinised the NFV activities of a bunch of key players, including the major networking vendors. To get a sense of the size of the market it looked at revenue obtained from components such as NFV virtualization software and NFV IT infrastructure and services. The conclusion was that revenue associated with NFV will grow at a CAGR of 33% from now until 2020.

“The increasing adoption of internet-connected devices will provide a major boost to the global NFV market,” said the report. “A rise in the number of connected devices will lead to the generation of large blocks of data. The growing popularity of ideas such as connected car, connected home, connected health, and smart cities has led many industries such as manufacturing, utilities, retail, automotive, and social media to use IoT for increased data transfer.

“NFV can connect and manage the heterogeneous elements of IoT securely. It is adopted by telecom operators to use the power of virtualization and commercial servers, and open software to build, operate and manage these networks. It maintains the network resources by analyzing and managing the traffic flows throughout the network. Moreover, the deployment of VNFs in NFV platforms such as mobile core, DPI, routing, gateways, traffic management, and security provide the opportunity to customize network services for IoT, which also contribute to this market’s growth over the coming years.

“One of the recent trends gaining significant traction in the market is the increasing adoption of NFV by enterprises. Initially, telecom operators were the dominant adopters of NFV, but the market for NFV is expected to move towards enterprise cloud and internet service providers over the coming years. Private cloud is also one of the proposed areas for NFV deployment. For the private cloud to be more agile, network services have to be provisioned on-demand through NFV.”

OpenCloud, which to be fair has a major interest in the growth of NFV, unsurprisingly welcomed the findings. “Operators are beginning to realise the benefits of NFV, making significant investments to take advantage of the flexibility, price and performance of virtualised network functions (VNFs),” said Chris Haddock, Head of Marketing at OpenCloud.

“These software-based VNFs can be made to work together, breaking-open the fixed and closed nature of traditional hardware-based network appliances. However, to truly reap the benefits of the technology, operators need to be smart about how they choose to virtualise the various functions in their networks.

“Most operators are typically outsourcing NFV to a single network equipment provider, but doing this means following the same vendor equipment lock-in path that operators have always taken, with limited flexibility and opportunity for competitive differentiation. Locking themselves into a big, closed environment waters down the original aims and benefits of virtualisation.

“Instead, operators need to invest in a selection of best-in-class software building blocks, using a number of smaller components, to make best use of the computing resources available to them. Used in this manner, NFV can empower operators to evolve their networks and services at their own pace, ahead-of and in response to local competition.”

It’s fair to say the NFV market hasn’t grown as quickly as was initially expected, but that’s often the case with major new technological paradigms. They look great on PowerPoint but the grim reality of planning, implementing and paying for them is another matter entirely. It could be that industry is only now starting to get its head around what the point of NFV is and, as the report indicated, it could also just be that its time has come due to demand from IoT and better cloud infrastructure. Let’s see.