Network Function Virtualization Market

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Network Function Virtualization Market

As new technologies such as 5G and Internet of things (IoT) are rising, Network Function Virtualization (NFV) is also growing. Below is a summary of key findings on market insights, trends/drivers, challenges and profiles of some noticeable players of the market.

Market Insights

  • The orchestration and automation segment of the NFV market is expected to hold the largest market size from 2019 to 2024.
  • This segment includes but is not limited to Software-Defined Networking (SDN) controllers, Wide Area Network (WAN) configuration, NFV orchestrator and virtual infrastructure managers.
  • Due to orchestration and automation usability and criticality, there has been a large scale of deployment of virtualized network functions (VNFs) particularly when there is no vendor lock-in and there are customized and off-the-shelves solutions.
  • Based on end users forecast, the enterprise vertical is projected to grow at the highest rate from 2019 to 2024.
  • Within the enterprise vertical, the most widespread developments of NFV are seen in Banking, Financial Services and Insurance (BFSI), retail, manufacturing, and healthcare.
  • By regional segments, Asia Pacific (APAC) is projected to grow at the highest rate for the same period.
  • Due to enhanced performance and declining costs of telecom service providers, NFV is projected to replace traditional network functions such as DHCP, DNS and IPAM.
  • Some growth strategies employed by the key participants include new product launches and enhancements, partnerships, agreements and collaborations. Increases in R&D spending, as well as merger & acquisition, are implemented by participants to gain grounds in the market.

Trends and Drivers

Globalization Driving Competition, Leading to Rising Needs for Cost and Time Saving
  • As globalization continues to intensify competition, businesses find themselves needing to cut costs in order to stay competitive. By decreasing the need to purchase and maintain network hardware equipment, NFV helps businesses to curb costs and improve ROI.
  • Furthermore, in a rapidly changing environment, businesses need the ability to adapt accordingly. Deployment of NFV can reduce the risk and time needed for the development and testing of new products and services.
  • Competition is also pushing for quality of service demanded by customers. By offering management and orchestration to perform automated actions on virtual functions, NFV lowers the time needed for solving service issues and therefore increases service availability.
Growing Network Traffic and Complexity Leading to Demand for Enhanced Network Management Systems
  • As network traffic and complexity grows, there are rising threat and compliance issues that require real-time alerts, auditing, correction and analysis.
  • NFV has the capacity to "transform the way that network operators architect networks by evolving standard IT virtualization technology to consolidate many network equipment types on to industry standard high-volume servers, switches and storage, which could be located in the data center, in the network or at end-customer premises."
  • While manual operations would be impossible for very large volume of traffic, the automation provided by NFV can rapidly spin up "VMs, containers, routers, firewalls, and intrusion prevention systems (IPS), to elastically scale your network functions to match dynamic demand."
Key Growth Drivers
  • In regions such as North America, the market growth is driven by early and speedy adoption of technologies, such as Software Defined everything (SDx), cloud computing and IoT.
  • In addition, North America also has favorable standards and regulations, which drive growth in the NFV market.
  • The deployment of 5G is also expected to be a key driver of the adoption of NFV. In APAC, for example, the technology is expected to push for rapid growth in digital transformation.
  • The rising need for cloud-based services and data intensive-applications is also expected to drive demand in the NFV market. The mobile sector, for instance, has required more data-intensive applications. Thus, as the sector rises, the demand for NFV rises.
  • According to Markets Insider, enterprises spend over 70% of resources and budget on maintenance and operations due to server, storage infrastructure and related complexity issues. With NFV, resources can be shifted from maintenance and operations to innovation.
  • A market report by Markets and Markets identifies three opportunities for the NFV market: adoption of NFV for IoT, rising demands for private cloud solutions and services, and development of open-source SDN and NFV.

Challenges

  • One of the main challenges for NFV is the lack of strong business cases. One of the reasons for this is, while vendors like to present the benefits of NFV, they are less likely to set the scope of their solutions and therefore fail to present a compelling case.
  • In addition, the benefits of NFV--such as optimizing networks, quicker time-to-market and innovative services--are not easy to measure. As a result, making a business case based on these benefits is difficult.
  • Another challenge for NFV is the lack of standards for communications among NFV components. While there have been proposals for various standards, the industry has not yet to come with a consensus.
  • Currently, there is one noticeable standard, which is the European Telecommunications Standards Institute (ETSI).
  • A number of other challenges arise from limited transparency in virtualized infrastructure--for example, the lack of monitoring visibility over traffic.
  • While traffic can be monitored on a legacy network, it is difficult for NFV administrators to monitor as traffic interacts with virtual machines instead of physical devices.
  • Since network monitoring, management or security tool cannot operate at 40Gbps or 100Gbps, the rising need for faster networks is another challenge for market growth.
  • According to Gertner research, hesitation remains in the market for NFV-based WAN edge as the technology is perceived as immature, complex and not cost-effective.

List of Noticeable Players

Overview
  • Major players that provide a full range of solutions (NFVi, VNFs, MANO and integration services) include Ericsson, Nokia, Huawei and Cisco.
  • Examples of leading players that offer NFVi solutions are HPE, Dell-EMC, VMware, and Red Hat.
  • Smaller companies tend to offer specialized products. For instance, Affirmed Networks offers virtual EPCs while Metaswitch has specialized offering in virtual IMS.
  • A list of top 26 companies, with brief descriptions, projected by TechNavio to fuel the VNF market may be found here.
  • A market report by Markets and Markets identifies the following as key players: Cisco (US), Ericsson (US), Huawei (China), VMware (US), Nokia (Finland), HPE (US), Dell EMC (US), Juniper Networks (US), Affirmed Networks (US), NETSCOUT (US), NEC (Japan), Ribbon Communications (US), ZTE Corporation (China), Fujitsu (Japan), Ciena (US), ECI Telecom (Israel), Metaswitch (UK), Mavenir (US), Radisys (US), and Wind River (US).
  • It is reported that Microsoft has acquired Affirmed Networks on April 23, 2020. The move is consistent with the growth strategy mentioned in an earlier section of this report.
  • Examples of NFV products include Cisco Routers, Cisco 5000 Series Enterprise Network Compute System (ENCS 5000), Lumina VNF Manager, Versa FlexVNF, Cisco NFV, Titanium Cloud, Blue Planet V-WAN, Eltima Port Virtualization Technology, CenturyLink® SD-WAN, CenturyLink® Cloud Connect, Altran (formerly Aricent) VNF Manager, Mavenir CloudRange, Ribbon Virtual Network Function Manager (VNFM), F5 Gi Firewall Solution, F5 Gi LAN VNF Service, DXC Virtual Network Functions QuickStart, AudioCodes Universal CPE (uCPE), AudioCodes Mediant Virtual Edition (VE), Cisco Secure Agile Exchange (SAE), Cisco SD-WAN Cloud OnRamp for Colocation, and Juniper Contrail Networking.
Cisco
  • Identified by Markets and Markets as a leading player along with Huawei, Cisco offers products globally with a large amount of R&D spending.
  • According to TechNavio, "Cisco Evolved Services Platform provides a comprehensive multivendor NFV solution that is based upon open standards and APIs. It is extensible by offering comprehensive modular capabilities that span the entire network operator architecture: cloud, video, mobile and fixed. Cisco’s NFV portfolio has the most extensive set of virtual network functions available on the market. The Cisco solution is offered through four alternative purchasing models that allow operators to fit the NFV solutions to their tolerance for implementation, operational and financial risk.
  • Among its wide range of products is Cisco Network Services Orchestrator (NSO), a software for automating services across traditional and virtualized networks. It allows users to "add, change, and delete services without disrupting overall service, and help ensure that services are delivered in real time."
  • A list of its NSO pricing may be found here. The list includes a total of 185 NSO products--some are offered free of charge while some can be as expensive as $360,000 depending on the capacity.
  • Cisco offers free trials for its products and pay-as-you-go flexible subscriptions. Details may be found here.
Huawei
  • Another leading provider identified by Markets and Markets, Huawei offers comprehensive NFV portfolio and is pushing for global NFV adoption.
  • According TechNavio, “Cloud Edge is part of Huawei’s SoftCOM roadmap for introducing advances in Cloud, NFV and Software-Defined Networking (SDN) technologies into the global telecoms market over the next ten years. SoftCOM provides a path for operators to leverage existing network infrastructure and core service capabilities while continuing to cost-effectively implement 'revolution-in-evolution' technology innovations. Huawei is a leading proponent of NFV standardization. The company is an active member of the European Telecommunications Standards Institute’s NFV Industry Specification Group (ETSI NFV ISG).”
  • A list of pricing for its NFV products may be found here. The list contains five types of NFV products.
  • All of its cloud core network is built with virtualized software functions and network architecture.
  • A list of pricing for its cloud products may be found here.
Juniper
  • Juniper Contrail Networking is among the key NFV products mentioned earlier in this report.
  • According to TechNavio, "“Contrail is the industry’s first NFV solution that provides comprehensive management of the infrastructure (compute, storage, and networking) and virtualized or physical networking services. In addition to support for both Juniper and any third-party service instantiation, the controller does scale-outs of the networking services based on network demand. These networking services are then automatically chained using MPlS and BGP so that there is no disruption to the operational paradigm of the physical network.”
  • Juniper also offers a 30-day free trial for its Contrail products.
  • Its Contrail pricing list for 2020 is still being updated. The full pricing list may be found here (for future reference once it's updated).
  • One of the product licenses for two virtual machines may be purchased at a discounted price of $3,701.99.

Research Strategy

To carry out this research, we compiled information from relevant market reports to provide insights, trends and other information on the market. Through our search for articles by experts, we identified a number of key players in the market, as well as some top NFV products. We chose to profile three companies (Cisco, Huawei and Juniper) according to the frequency that their names being mentioned whether because of their wide range of offerings or the popularity of their products.
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