NFV market to jump 5X in four years says IHS

The market for network functions virtualization (NFV) hardware, software, and services will grow from an expected $2.3 billion this year to $11.6 billion in 2019, according to IHS (NYSE: IHS). The increase will come as service providers begin a transformation to virtualized networks that could take 10 to 15 years, the market research firm predicts in a new report, "NFV Hardware, Software, and Services."

"NFV represents operators' shift from a hardware focus to software focus, and our forecasts show this. We believe NFV software will comprise over 80 percent of the $11.6 billion total NFV revenue in 2019," said Michael Howard, senior research director for carrier networks at IHS."The software is always a much larger investment than the server, storage and switch hardware, representing about $4 of every $5 spent on NFV."

IHS expects revenue from outsourced services for NFV projects will increase at a compound annual growth rate (CAGR) of 71% from 2014 to 2019.

The march toward virtualization will touch a wide variety of networks. For example, IHS suggests that revenues from software-only video content delivery network (CDN) functions for managing and distributing data will increase 30-fold from 2015 to 2019.

IHS previously reported that a survey of carriers revealed that almost all respondents expect to add software-defined networking (SDN) capabilities to their networks at some point, although fewer than 50% thought these capabilities would be in place by 2017 (see "Carriers cooling on packet-optical transport?").

The 2015 IHS Infonetics "NFV Hardware, Software, and Services" market research report covers outsourced services for NFV projects; service provider NFV hardware, including NFV infrastructure (NFVI) servers, storage; and switches; and NFV software grouped by service management and orchestration (NFV MANO) software and virtual network function (VNF) software, including virtual routers and the software-only functions of mobile core and EPC, IMS, PCRF and DPI, security, video CDNs, and other VNF software. The research service provides worldwide and regional market size, forecasts through 2019, analysis, and trends.

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