NFV market set for fivefold growth by 2019, as operators play long game, outsource

The value of the network functions virtualisation market will increase fivefold by 2019, as operators look to shift from hardware to software, new research has claimed.

A report from IHS said the move towards virtualised networks is in its infancy, with the shift likely to take between 10 and 15 years.

In 2015, the market, comprising hardware, software and services, is worth $2.3 billion (€2.1 billion) but this figure will hit $11.6 billion (€10.7 billion) by 2019.

The compound annual growth rate of outsourced services for NFV projects will hit 71 percent between 2014 and 2019. Meanwhile, sales from software-only content delivery network functions for the management and distribution of data will grow 30-fold over the next four years.

Michael Howard, Senior Research Director for Carrier Networks at IHS, said: “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.  

“The software is always a much larger investment than the server, storage and switch hardware, representing about $4 of every $5 spent on NFV.” 

Operators and vendors have been speeding up the rate of NFV deployments and research, with NEC and HP most recently announcing a partnership to deliver solutions.

Also this month, Ericsson opened a new cloud lab in Germany to help encourage innovation within the sector and Alcatel-Lucent and China Mobile held a live network demo using NFV.

Mobile Europe’s next issue, to be published in September, features an in-depth look at the virtualisation space, featuring an examination of Telekom Austria Group’s NFV strategy and exploring the best route into virtualisation.