We’ll take a look at the recent changes in the NFV market, particularly as it relates to the evolution of NFVI and VIM. We’ll start by examining the trends in cloud data centers and the general compute market, since these underlying trends are just as relevant for NFV and NFVI.
Server and Compute Market – Driven by Cloud
After a lost decade in which sales languished after the recessionary crash of 2008, the server market took off in the last half of 2017 with pent-up demand unleashed by a long-awaited Intel processor update. Intel bundled the Skylake microarchitecture and a host of other enhancements into a new portfolio of Xeon products christened the Scalable processor family that provided enough performance juice and workload-optimized SKUs to finally entice system buyers into opening their wallets. As we’ll explain, the update was particularly propitious for CSP, cloud providers and others using x86 servers as NFV platforms since it includes processor features and configurations tailored communications infrastructure, cloud services and virtualization. The combination proved to be the right catalyst to ignite a languishing server market.
The latest market estimates with sales from Q4 2017 show the extent of the demand as the market exploded on a wave of sales to both hyperscale cloud vendors, which have provided the only bright spot in the market for several years, and enterprise IT. Both Gartner and IDC pegged worldwide server sales increasing more than 25 percent over a year earlier, although Gartner said units sold only increased 8.8 percent, a sign of the growing dominance of commodity 2U systems preferred by hyperscale data centers.
According to an IDC researcher, “Hyperscalers remained a central driver of volume demand in the fourth quarter with leaders such as Amazon, Facebook, and Google continuing their datacenter expansions and updates,” Indeed, aside from IBM, whose numbers were skewed by a significant mainframe product refresh, white box ODMs were the fastest growing vendor segment according to IDC. Gartner’s figures showed the same trend with Inspur Electronics, a favorite source of cloud vendors for commodity hardware, taking the honors for the fastest growing vendor in both Q4 and all of 2017. Research firm Canalys found that the total sales of all IT infrastructure hit an all-time high in 2017, up 7.3 percent for the year, which they also attribute to data center expansion at cloud-service providers. Short of a recession, which few economists expect in the near term, expect 2018 to be another record year for server, network and storage vendors.