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Network Function Virtualization – Top 4 Drivers Promoting Growth until 2020

Technavio analysts forecast the global network function virtualization (NFV) market to grow at a CAGR of almost 33% during the forecast period, according to their latest report.
The research study covers the present scenario and growth prospects of the global NFV market for 2016-2020. The report has taken into consideration the revenue obtained from components such as NFV virtualization software and NFV IT infrastructure and services.

The concept of NFV surfaced in 2012. Since then, many telecom operators have been involved in the initial testing of the technology through proof of concepts implementation for few or more network functions that are to be virtualized. Most of the operators have already commercially deployed one or few virtualized services in their networks. The global NFV market had a real boost in revenue through commercial deployments in 2015, where pilot tests were conducted by operators in 2014. The technology has proven to be scalable and reliable for applications such as customer premises equipment (CPE), evolved packet core (EPC), deep packet inspection (DPI), analytics, edge routing, security, policy, and video servers.

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Technavio ICT analysts highlight the following four factors that are contributing to the growth of the global NFV market:

Growth in IoT
Increased adoption of SDN
Reduction in CAPEX and OPEX
Growing data center construction
Growth in IoT

The number of internet-connected devices is estimated to reach around 30 billion by 2019, which will give a major boost to the global NFV market. The use of radio-frequency identification sensors to tag, track, connect, and read objects in logistics and warehouses in the late 1990s popularized the concept of IoT. The growing number of connected devices will lead to the generation of large blocks of data. Ideas such as a connected car, connected home, connected health, and smart cities are gaining popularity. So, many industries such as manufacturing, utilities, retail, automotive, and social media are using IoT for increased data transfer.

Abhishek Sharma, a lead data center analyst at Technavio, says, “These connected devices through IoT are modifying the way networks are being developed and operated in recent times. These networks should can connect and manage these heterogeneous IoT elements securely. NFV is adopted by telecom operators to use the power of virtualization and commercial servers, and open software to build, operate and manage these networks.”

Increased adoption of SDN

SDN is an evolving network architecture in which the network control and the forwarding plane are decoupled and can be programmed directly. This transfer of control from specific network devices to manageable computing devices simplifies the management of network infrastructure in an enterprise environment. SDN provides control to enterprise business operations through a single logical point, simplifying network design and operation. In addition, this architecture streamlines operational functions of network infrastructure through instructions from SDN controllers.

“The complexity in carrying out traditional networking operations owing to increased demand from the use of cloud and big data technologies has led to the growing adoption of SDN worldwide. Owing to the increased business demands, enterprises are adopting IT infrastructure in their data centers and also service providers at their carrier network end to offer better network services,” adds Abhishek.

Reduction in CAPEX and OPEX

Virtualization is the well-known technology that is being adopted by enterprises and service providers to increase the utilization of the underlying IT infrastructure such as a server, storage, and network. Almost all data center operated worldwide is using virtualization to run applications. This technology has brought significant reduction in the capital expenditure (CAPEX) and operating expense (OPEX) for telecom operators’ data centers.

NFV is predominantly being adopted by service providers to reduce the need for hardware application for purposes such as firewall, CDN, WAN acceleration, radio access network (RAN), load balancers, and other such appliances. NFV deployment includes open software and servers that are virtualized to run instances of network function such as firewall and load balances. Through NFV, service providers can reduce both CAPEX and OPEX up to 70%, depending on the deployment of network services for customers on demand.

Growing data center construction

The emergence of technologies such as cloud computing and big data analytics demands the construction of data center facilities worldwide. The popularity of social media and the IoT has resulted in the need for data centers to store and process information accurately with fast retrieval times. Data centers include infrastructure such as server and storage, along with networking that connects the physical infrastructure and web-based interfaces. Enterprises are looking for modern design techniques to develop these facilities and make user access scalable, reliable, and efficient.

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