Investments on network functions virtualization (NFV) and software defined networking (SDN) is expected to grow at a compound annual growth rate of 94.3 percent until 2022 to over $168 billion according to a new report, released by research company Technology Business Research (TBR).
The report indicates that spending on NFV and SDN will rise as operators work through internal challenges and as vendors increasingly align with the market shift.
“Though technology interoperability, human resource challenges and operator-vendor disagreements, among other issues, have limited adoption of NFV/SDN technologies thus far,” said TBR Telecom Senior Analyst Chris Antlitz. “The ecosystem will work through these challenges and the market will scale during the forecast period.”
TBR noted that operators are under increased pressure to improve financial results and remain competitive in the digital ecosystem, pushing operators to embrace NFV and SDN.
The report indicates that until now, the NFV and SDN market was driven by a small group of 20 to 25 Tier 1 operators. This group is expected to remain the key investor, with Tier 2 and 3 operators joining en masse in the future.
The report authors said that as the number of operators adopting NFV and SDN increases, the scope of transformations will also increase, providing further fuel to drive the rapid proliferation of this market.
TBR forecasts, however, that the telecom industry will begin to see meaningful and measurable cost savings starting in 2021.