Carrier SDN spend to reach $8.7bn by 2020

18 May 2016 |


New research on the carrier software-defined networking (SDN) market claims it is forecast to reach $8.7 billion in 2020.

A new report from research firm IHS on the carrier software-defined networking (SDN) market claims it is forecast to grow from $289 million in 2015 to $8.7 billion in 2020, with a 2015–2020 compound annual growth rate (CAGR) of 98%.

For the past period, the telecom industry has been moving toward a major network and operational transformation epitomized by SDN and network functions virtualization (NFV) with the top goals of automation and service agility.

Software-defined networking (SDN) is an approach to computer networking that allows network administrators to manage network services through the abstraction of higher-level functions. This is done by decoupling the system that makes decisions about where traffic is sent (the control plane) from the systems that forward traffic to the selected destination (the data plane).

Carriers have been in the process of defining the vision, goals, and architectures and are progressing through use cases, proof-of-concept projects, field trials and a small but growing number of commercial deployments at with different levels of success.

The partially proven promise keeps the industry moving as fast as it can, but we are still early in this long-term, 10- to 15-year transformation of service provider networks.

Bengt NordstrÖm, CEO of Northstream AB, said: “There is no doubt that progress is being made across the board with SDN and NFV, but the major implementations will only start occurring as the big players agree basic standards and that will take place over the next few years. It will not be a quick process.”

SDN deployments started in Japan with NEC and NTT, and the country has been active in deploying real but small commercial deployments. China is coming on strong, says IHS, with many sizeable commercial deployments in 2015 and 2016. Service providers in North America and Europe are also leading the charge to deploy SDN and are anticipated to account for 13 percent of total 2015–2020 SDN revenue.

Given these factors, the service provider SDN market, including hardware, software, and services, IHS forecasts that the market will grow from $289 million in 2015 to $8.7 billion in 2020, with a 2015–2020 compound annual growth rate (CAGR) of 98 percent.

Additional market highlights


  • SDN and NFV represent the shift from a hardware-focused approach to a software one: Software and outsourced services will make up 46 percent of SDN revenue by 2020.
  • SDN orchestration and controller software revenue is forecast to grow to over $1.8 billion in 2020. SDN orchestration is the ability to program automated behaviours in a network to coordinate the required networking hardware and software elements to support applications and services.
  • However, IHS claims that by 2020 there will be more value in SDN applications than in orchestration and control, the price of which will be driven down due to competition.