The global network functions virtualization (NFV) market (including hardware and software) will be worth $15 billion by 2020, with software comprising 80 percent of that $15 billion, according to an IHS Markit report on NFV.
Between 2015 and 2020, the NFV market is expected to grow at a compounded annual growth rate of 42 percent from $2.7 billion in 2015 to $15.5 billion in 2020, the report says.
According to the report, in 2020, only 11 percent of revenue will come from new software and services; 16 percent will come from NFV infrastructure (servers, storage, and switches), which are acquired in place of network hardware such as routers, deep packet inspection (DPI) products, and firewalls. The remaining 73 percent will come from existing market segments, which are primarily virtual network functions (VNFs).
This report also tracks what service providers spend on NFV hardware and software to deliver software-based services to customers via virtual customer premises equipment (vCPE). The vCPE use case, including spending to deploy consumer and enterprise services, is expected to reach more than $1.5 billion worldwide by 2020.
NFV represents a shift from hardware to software in the telecom industry, with operators investing much more in software. It says that the main value in NFV is its applications, which is the VNFs, the report says.
IHS Markit tracks service provider NFV hardware, including NFVI servers, storage and switches; NFV software split out by NFV management and orchestration (MANO) and VNF software, including vRouters and the software-only functions of mobile core and others, video CDN and other VNF software; NFV services outsourced services for NFV projects; and NFV uses cases. The report provides worldwide and regional market size, forecasts through 2020, in-depth analysis, and trends.