Operators are under pressure to invest in these technologies
Operators will further adoption of virtualized network solutions by capitalizing on 5G use cases and strengthening security capabilities. Integrating NFV and SDN technologies will enable operators to more effectively support network technologies that will become prevalent in the 5G era, including network slicing and edge computing, which will play a pivotal role in supporting 5G use cases such as advanced Internet of Things (IoT). The flexibility and agility of network slicing will enable operators to remove unnecessary functionality (e.g., sunsetting a noncore service) while launching services on command. Edge computing will allow operators to support 5G use cases that require ultra-low latency, such as augmented reality (AR)/virtual reality (VR).
Operators are under pressure to invest in NFV and SDN to reduce total capex and opex spend as well as introduce new services and stay competitive as they prepare to offer 5G services and search for new network use cases. The flexibility and scalability offered by NFV and SDN is particularly appealing to operator enterprise customers, which are expanding their operations and are undergoing digital transformation initiatives such as utilizing multicloud environments, incorporating IoT solutions, and integrating digital customer service and sales portals. Software-mediated network services are enabling businesses to deploy applications and provide connectivity to new branches more quickly, which is particularly important to customers in verticals that frequently add new locations, such as retail.
The shift to software-defined network architectures is extremely disruptive to the vendor community. Incumbent network vendors are under increasing pressure to move up the network value chain, from hardware to software and software-related services. They are increasingly disrupted by the adoption of white-box hardware and the utilization of ODMs as operators search for avenues to reduce network costs. Deploying white boxes provides significant cost savings for operators as well as greater flexibility by allowing carriers to deploy the most appropriate virtual network functions for their environments without being limited by the constraints of propriety hardware. Though the ODM threat has not manifested in the telecom operator customer segment to the extent it has in the webscale segment, incumbent vendors must remain on alert and attempt to mitigate this threat. TBR believes the best course of action is for vendors to embrace the movement of value in the network from the hardware layer to the software layer. This could include embracing open-source code and layering in proprietary software to differentiate. For most incumbents, scaling quickly through acquisition is preferable.