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NFV carrier spend to hit $15.5B – this inflection point is about to hit

News in August always tends to have a hard time getting noticed – unless you rent a plane and fly a banner along the beach coasts of the world. So I will try the next best method– posting a blog on the Openwave Mobility website!

… According to a report from the very well regarded IHS Markit and their top-notch analyst Michael Howard, the service provider network functions virtualization market will leap from $2.7 billion in 2015 to $15.5 billion by 2020. The report notes that software will comprise 80% of the spend, with 73% coming from existing network functions primarily in the form of Virtual Network Functions (VNFs). Many would say this is too bullish and not aligned with how the carrier market is purchasing today. They would have a valid point. However, I say watch out! The time is fast approaching when the inflection point will arrive on shore.

We track certain data points that are starting to align with a mass movement to NFV. In our own case POCs and production trials are up five-fold since Jan 16, with every RFP response we receive without exception now asking for NFV sizing and pricing. Four carriers we are close to have targeted specific timing in the next 12 months when they plan to migrate existing software to their NFV environment. I would suggest that the recent tough quarters reported by Ericsson and Nokia are partly a result of this inflection point fast approaching us. Carrier spend is slowed, halted, reduced as they strategize their NFV options and settle on their corporate mantra as to how long they will continue to buy capacity and new features in the physical world. Most are saying NOT much longer.

We have been making this bet and putting our money on that bet for four years running. No question it has taken longer -- and up until six months ago -- moved slower than we had planned. At times, this may have even looked like a bad idea to some pundits. But the move is on now. It is too late to try and invest and catch up now – the market will reward those who have the software DNA (and you can’t just invent one!), have made the steady investment to improve over time, have gained the hard lessons of field experience, and in turn, are leading with customers in production. After all, who wants to go to a heart surgeon who is doing his first bypass?

Buckle up as we ride the NFV wave.