NFV to top $15bn by 2020

By:
Bill Boyle
Published on:

The global network NFV market is predicted to be worth $15.5 billion by 2020 according to IHS Markit

The global network functions virtualisation (NFV) market, which includes NFV hardware, software, and services is predicted to be worth $15.5 billion by 2020, according to research firm IHS Markit.

NFV represents a major shift in the telecom industry from hardware to software focus, with operators and carriers investing more in software than in server, storage and switch hardware.

“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,” says Michael Howard, senior research director: carrier networks at IHS Markit.

“NFV software will comprise 80% of the $15.5bn total in 2020 — or around $4 out of every $5 spent on NFV,” says Howard.

The report suggests that by 2020 the spend will be initially quite low, with only 11% of the $5bn will be software – 16% will be from NFV replacement infrastructure to replace outdated purpose-built network hardware such as routers, deep packet inspection (DPI) products and firewalls.

The remaining spend will come from the replacement kit which will be needed to run NFV such as primarily virtual network functions (VNFs).

According to IHS the main value of NFV is in these applications. Howard said: “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 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, which includes ing spending to deploy consumer and enterprise services, is forecast to reach over $1.5 bn worldwide by 2020.