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$32 Billion Bonanza from SDN and Open Hardware

Software Defined Networking (SDN) and network virtualization benefits are known in the enterprise IT and data center world. Both technologies will also help to transform telecom service provider's infrastructure -- and the final transition will result in a bonanza of financial savings.

When combined with the movement towards open hardware, these trends have the potential to significantly disrupt the legacy networking vendor status-quo. Industry analysts have already begun to uncover the facts.

Not only can SDN and network virtualization help address the explosive capacity demand of mobile traffic, they can also reduce the CapEx and OpEx burden faced by service providers -- by diminishing their reliance on expensive proprietary hardware platforms.

SDN and network virtualization solutions have been widely deployed in data center and enterprise environments, and several service provider deployments are already underway.

Network Functions Virtualization (NFV) is a operator led initiative aimed at optimizing network components in a service provider network.

While NFV is still a developing technology with its first set of specifications published in October 2013, many vendors have already developed commercial-grade solutions that align well with the NFV initiative.

Driven by the thriving ecosystem, the SDN, NFV and network virtualization market will account for nearly $4 Billion in 2014 alone.

Despite barriers relating to standardization and co-existence with legacy networks, with further growth at a CAGR of nearly 60 percent over the next 6 years, according to the latest market study by SNS Research.

Key findings from the latest study include:

  • Although network virtualization in the enterprise IT and data center domain has received significant attention in the past years, service provider network virtualization is still at a nascent stage -- but the upside growth potential is huge.
  • SDN and NFV empower a multitude of network functions to be implemented cost effectively in software -- ranging from standard mobile IP Multimedia System (IMS) services to features such as Deep Packet Inspection (DPI).
  • By 2017 SNS Research expects to see significant price and gross margin erosion for traditional hardware-based network switching equipment -- driven by alternative software based solutions.
  • By 2020 SNS Research estimates that SDN and NFV can enable service providers (both wireline and wireless) to save up to $32 Billion in annual CapEx infrastructure investments.

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