In the last couple years, network function virtualization (NFV) received a lot of attention, but generally remained in the “proof of concept” stage. Additionally, while a lot of talk has occurred around the necessity for improved NFV standardization efforts to develop requirements and architecture specifications for various functions within networks, that too has proven a complicated endeavor and put a drag on growth.
“In 2015 and 2016, the market experienced some early successes but mostly reconsiderations and failures with NFV,” Neha Pachade, senior analyst at ABI Research, observes. “Early adopters conducted proof of concept testing and NFV-integrated system demonstrations with the aim to understand the true impact of NFV in the technical, operational, and cultural domains. Our forecasts indicate that NFV will become a sizeable opportunity for vendors, although it is not yet clear whether it will cannibalize existing hardware-based product lines or create new market use cases.”
The research firm projects the NFV market will experience moderate growth through ongoing NFV investments by major telecommunications operators. North America will lead the market, accumulating $13 billion in NFV-related investments during 2022, according to the ABI forecast, while Europe will experience the highest growth rate at an estimated 53 percent CAGR between 2017 and 2022. Early adopters claim several benefits to NFV-enabled systems, which include reductions in network CAPEX and OPEX, service agility, and reduced deployment times for new network elements.
ABI Research estimates the total NFV market revenues will reach $38 billion in 2022. It also projects that hardware spending including servers, storage devices, and switches will reduce with time, while software and services will have higher growth rates of 55 percent and 50 percent respectively.
On the NFV standardization front, things have moved slower than many initially expected but efforts like those from ETSI have included pre-standardization studies, some specifications, early proof of concepts, and even some interoperability events. However, ABI Research suggests that standardization and multi-vendor involvement challenges will remain stagnant for the next couple of years.
“Early contracts and market trends illustrate the biggest winners are likely to be the established vendors, including Ericsson, Huawei, and Nokia, as well as specialists like Amdocs and Netcracker, with systems integration becoming more important each day,” Pachade says. “Several vendors also place heavy and risky bets on open source software, which may increase business opportunities but may also create difficult choices for them in the future, particularly if telco interest in specific open source projects fizzles out. For the time being, NFV is mostly considered as a cost-cutting exercise, since new revenue opportunities require a transformation in a much broader context, which is more likely to be driven by 5G, after 2020.”
More information on the “Network Functions Virtualization Tracker and Forecasts” report is here.
