The global network functions virtualisation market will break through the $15 billion mark by 2020, driven by widespread adoption of NFV software, a new report has claimed.
IHS said the market, which includes hardware, software and services will grow at a "robust" compound annual growth rate of 42 percent from $2.7 billion in 2015 to $15.5 billion.
Michael Howard, Senior Research Director, Carrier Networks at IHS, said operators will spend more cash in software compared to server, storage and switch hardware. He said: "NFV software will comprise 80 percent of the $15.5 billion total in 2020 — or around $4 out of every $5 spent on NFV."
Almost three quarters (73 percent) of NFV revenue will be derived from existing markets in 2020, such as virtual network functions.
Only 11 percent of sales will come from new software and services, with the remaining 16 percent derived from NFV infrastructure. This comprises the the servers, storage and switches that will replace the existing routers, deep packet inspection products and firewalls.
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.”
IHS also said it expects the consumer and enterprise virtual customer premises equipment (vCPE) markets to be worth $1.5 billion alone by 2020.
Earlier this year, Tele2 put vCPE at the centre of its virtualisation strategy, as it started its shift to the cloud.