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Exploring the Impact of Network Functions Virtualization

The forward-looking effects of Software Defined Networking (SDN) and Network Functions Virtualization (NFV) on the traditional wireline and wireless broadband service provider sector will truly be unprecedented. Vendors of deeply-rooted proprietary technologies are most at risk.

Moreover, plans for open-source hardware and software adoption will potentially reshape the whole value-chain, as major service providers start to procure new equipment and services that are based upon open innovation-related business models.

By leveraging virtualization and cloud technologies, SDN and NFV is looming as a disruptive force that is leading some telecom service providers to evaluate new network architectures and driving traditional equipment vendors to dramatically shift product development, according to the latest market study by Dell’Oro Group.

Some traditional networking vendors have already made dramatic shifts in their go-to-market strategy. Indeed, the Open Hybrid Cloud era has ushered in new thinking that was previously considered "unthinkable" just twelve months ago.

Market Outlook for Network Functions Virtualization

A new report published by Dell’Oro analyzes the potential effects of NFV, in particular, on the legacy telecom equipment market over the next five years.

"Over the past 18 months, NFV has rapidly gained attention across the industry as the future of network design, but the effect of this movement on equipment vendor and service provider businesses is largely unknown," said Shin Umeda, vice president at Dell’Oro Group.

According to their assessment, Dell’Oro now sees NFV as potentially affecting a change of technologies, business processes, and financial models in a way that can have either positive or negative results -- depending on where a vendor is positioned within the rapidly evolving industry.

Dell’Oro Group’s "NFV Advanced Research Report" assesses the NFV market over the next five years as it relates to telecom service providers and their equipment vendors.

The report includes a revenue forecast for NFV in selected technology segments and discusses the technology, business, and financial implications of this burgeoning technology.

Questions addressed in their report include:

Will NFV cannibalize or compliment network equipment?
Will NFV create a Service Provider evolution or revolution?
How will vendors implement – open or proprietary?
Will there be cross-vendor interoperability?
What are the long-term financial implications for SP CAPEX, OPEX, and revenue?
Will there be security, network stability or disruption issues?

One more very significant question needs to be answered -- what happens to the status-quo when SDN and NFV introduces open-source vendors directly into the core networking and data center infrastructure category of the telecom equipment marketplace?

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