Growing need for digitization and telecommunication technology advancement is changing the way the telecom companies of the world operate. While the demand for advanced telecommunication infrastructure is propelling the telecom industry to do more, the existing telecom infrastructure and the operational costs involved in managing and maintaining them has turned out to be a painstaking process. The telecom companies are now facing the challenge of providing quality services to their customers at optimized costs and at the same time see that this would not create additional burden to them as a company. Advent of virtualization technology has to a large extent solved the problem faced by the telecom companies. With the introduction of Network Functions Virtualization (NFV) technology, telecom companies have been able to minimize the high telecom infrastructure investment costs to the end users and simultaneously have been able to provide quality communication services. According to the experts in the field of NFV, the whole idea behind the emergence of this technology was to provide simplified telecommunication functions to user, which are otherwise complex and tough to manage. Introduction of NFV is providing the necessary scaling of telecom infrastructure and also allowing the reduction of CAPEX and OPEX costs. Above all, the major driving force behind the growth of the technology is the great flexibility and speed that this solution is expected to provide. The market for Network Functions Virtualizations is slowly catching up and this report provides deep insights on how the market is expected to fare in the next five years. It also presents interpretative and easy-to-understand facts on how the current market is segmented based on the geography, the end-user and the type of customers using it.

1. Network Functions Virtualization (NFV) Market - Outlook
(2016-20)
for Telco
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3. Table
of Contents
1. Introduction
1.1. Report Description
1.2. Objective
1.3. Scope of the Research
1.4. Regions Covered
1.5. Key Takeaways
1.6. Key Stakeholders
1.7. Key Terminologies
1.8. List of Abbreviations
2. Executive Summary
2.1. Executive Overview
3. Research and Forecasting
3.1. Research Methodology
3.2. Forecasting Methodology
4. Industry Landscape
4.1. Market Size and Growth
4.2. Competitive Landscape
4.3. Market Share
4.4. Company Classification
4.5. Region Outlook
4.6. Market Metrics
4.7. Porter's Five Forces Model
4.8. Key Drivers Analysis
4.9. Key Constraints Analysis
4.10. Key Opportunities Identified
4.11. Key Challenges Identified
5. Market Segmentation
5.1. Customer Segment
5.1.1. Telco
5.1.1.1. Market Size and Forecasting
5.1.1.2. Key Drivers Analysis
5.1.1.3. Key Constraints Analysis
5.1.1.4. Key Opportunities Identified
5.1.1.5. Key Challenges Identified
5.1.1.6. Sub Segments
5.1.1.6.1. Region : North America
5.1.1.6.2. Region : Europe
5.1.1.6.3. Region : ROW
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Introduction 01 4

5. 1. Introduction
1.1. Report Description
As, the need for NFV is growing in developed countries like North America and Europe, enterprises are the
major adopters of NFV and benefited with reduction in operation cost and improve the performance and
efficiency.
Technical advancements and improved application for networking allowed the network function to go
virtual, with the introduction of cloud infrastructure has helped the mid-size and small business to adopt
cloud based NFV. This report presents interpretative and easy-to-understand facts on how the current NFV
market is segmented based on End Users, customer segment and geographies. It cuts through several
facets of the NFV market such as market size, market share for each segment, the drivers and constraints of
NFV marketplace. Report also provides information on the challenges and opportunities that lie ahead for
these NFV Applications.
1.2. Objective
1. To understand the Network Function Virtualization(NFV) market across the globe by addressing the
challenges faced by the industry with regards to adoption of NFV.
2. To estimate the present size of the NFV market and to forecast its future values.
3. 4. Realize how drivers, constraints, opportunities and challenges would impact various business functions
across regions.
1.3. Scope of the Research
Scope of the research was limited to understanding the market share across segments. Key drivers,
constraints and challenges along with their impact on various business functions in both short term and
long term were addressed. Segmentations and forecasting were done based on:
1. End Users
2. Customer segment and
3. Region based segmentation.
1.4. Regions Covered
1. North America (USA, Canada and Mexico)
2. Europe ( Uk, Italy, France, Germany and others)
3. ROW(South America, APAC , Middle East and other countries).
1.5. Key Takeaways
The research conducted to understand Network Function Virtualization (NFV) markets in different regions of
the globe have revealed some valuable insights. Some of the key take away points involve information given
below:
1.
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6. North America has the highest market share whereas Europe is growing at a good pace.
2. The market share of Network Function Virtualization(NFV) market is over USD 292.0 million in 2015 and
growing at an impressive CAGR of over 53.81%.
3. Enterprises are adopting Network Function Virtualization(NFV) more compared to Mid Size and Small
Businesses.
4. Telcos are the more adoptors of NFV in order to provide better service to their customers.
1.6. Key Stakeholders
1. NFV providers: Network Function Virtualization (NFV) providers will be able to assess the market mood
and accordingly develop applications as per the changing requirements of customers.
2. Global Investors: Those investors who look to fund new and budding Network Function
Virtualization(NFV) startups will get clearer picture about the market and its trends.
3. Industry Watchers: Industry and trend watchers are always referred to as trusted advisors who follow
markets. The report would add to their knowledge repository, creating value for their know-how.
4. Network Function Virtualization (NFV) providers across the different regions.
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7. 1.7. Key Terminologies
1. NFV: is a network architecture concept that proposes using IT virtualization related technologies to
virtualize entire classes of network node functions into building blocks that may be connected, or chained,
to create communication services.
2. Virtual Private Network (VPN): VPN is a private network across a public network, such as internet. It
enables network enabled devices to send and receive data across public networks.
3. North America: North America includes the countries - USA (United States of America), Canada and
Mexico.
4. Europe: Europe includes countries - UK (United Kingdom), France, Italy, Germany and Spain.
5. APAC (Asia Pacific): Asia Pacific includes countries - India, China, Japan, Philippines, and Australia.
6. South America: South America includes the countries - (Brazil, Argentina and Colombia)
7. Rest of World (ROW): Rest of World includes Middle East and Africa, Russia and other countries.
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8. 1.8. List of Abbreviations
1. NFV: Network Function Virtualization
2. NEP's: Network Equipment Providers.
3. ISV's: Independent Software Providers.
4. ETSI: European Telecommunications Standards Institute.
5. CAPEX: Capital Expenditure.
6. OPEX: Operating Expense.
7. 4G: Fourth generation cellular Connectivity
8. LTE: Long term evolution.
9. TTM: Time-to-market
10. SDN: Software Defined Network.
11. SaaS: Software as a Service.
12. POC: proof-of-concepts
13. 3G: Third generation cellular network.
14. CAGR: Compound Annual Growth Rate.
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Executive Summary 02 9

10. 2. Executive Summary
2.1. Executive Overview
Network Function Virtualization market is growing which is grabbing attention for some time now, with
growing need to cut cost the operation cost has provided an optimistic picture to NFV market.
North America is home to some of the major virtualization companies and IT conglomerates like HP and
Dell. While these companies have proved their mettle in virtualization, NFV offers to be a bridge between IT
and CSPs. Cloud infrastructure in North America has seen greater adoption than its counterparts in rest of
the world. A developed infrastructure is one of the advantages of this region. NFV on the other hand is all
about emergence of technology into the telecom industry.
NFV has been doing the rounds ever since in European region. A governing body in European
Telecommunications Standards Institute (ETSI) has been leading the issue of policy standardization for NFV
along with other associations. However, the adoption of NFV here is yet to witness a surge.
A developed cloud infrastructure is already in place in major European regions thereby allowing telcos to
utilize the same to build NFV. The factor of cloud integration with NFV will be a major booster for this region.
NFV in telcos across APAC is behind North America. However, companies here are looking up to their
contemporaries in North America and Europe. Many NFV vendors have expressed that telecom vendors in
APAC are excited about this technology and are handing out requests for information. With a number of
projects in the pipeline, this region is expected to witness good number of adoptions in the years to come
by. Rest of the world is yet to embrace NFV. Technology related discussions have been going on for quite
some time now but nothing substantial has resulted from it. However, with a miniscule contribution to the
overall market.
Dominated by Asia Pacific including Australia and New Zealand, the RoW regional segment will take some
time before NFV gets into the mainstream mainly due to the need for acceptance of the technology coupled
with the developed infrastructure necessary. However, with a lot of investments, PoCs in place, the Asia
Pacific region will dominate the adoption in the years to come by.
Currently the Network Function Virtualization market is USD 292.0 million and expected to grow more at a
CAGR of 53.81% till 2020.
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Research and Forecasting 03 11

12. 3.1. Research Methodology
Base Year: 2015
Forecasting Period: 2016 - 2020
3.1.1. Sampling
The leading suppliers of each end-user product categories that were chosen to provide a larger
representative sample.
Purposive unit sampling was adopted for every service segment such as verticals, regions, end-users and
others. This was resorted to, in order to elicit the appropriate inputs with regard to the qualitative growth
aspects of the market.
3.1.2. Secondary Research
The research methodology that was carried out was desk research through various journals, association
reports, and in house database to build a knowledge base on various market service segments, product
categories and industry trends.
Various fact based data was analyzed. Some of the sources included:
a. ResearchFox Knowledge Base:
Previous data on the market has been put through a rigorous and comprehensive analysis to analyze
the current state.
b. Desk Research:
Industry reports, annual reports, press releases, webinars, journals and publication, independent rating
agencies and government statistics.
3.1.3. Primary Research
Primary interviews were conducted among various stakeholders:
Product and service companies
Members of associations and alliances
Subject Matter Experts and Evangelists
Consultants and Strategists
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13. 3.1.4. Industry Information
It was essential to understand the current industry landscape, market dynamics, security ecosystem and
competitor metrics. To estimate the global market, Chief Experience Officers (CXOs), Marketing Heads, Sales
Managers and product stakeholders were interviewed.
3.1.5. Technical Information
In addition to the interviews with leading participants for industry-related information, ResearchFox
conducted interviews with Research and Development (R&D) and Design and Development teams to
understand the current usage of the products by service type and also to find out the emerging trends.
Finally, interviews with suppliers were conducted to cross check the validity of information and also to
understand the emerging trends in the end-user segment.
The detailed methodology for primary research is outlined below.
3.1.6. Primary Interview Questionnaire Design
ResearchFox developed a detailed questionnaire, which was used by the analysts as a guide for their
discussions. This process ensured the collection of all necessary data. The questionnaire was designed to
elicit unbiased industry level data (market size, production, sales, and others), that had check points
(questions such as company level information and their position in the industry acted as check points) to
ensure accuracy of the data. The questionnaire included the following sections:
1. Industry level information
2. Characteristics and Dynamics
3. Company-specific information
4. Market segmentation data
3.1.7. Interview Questionnaire Test and Validation
Following the design of the questionnaire, ResearchFox carried out some initial interviews to verify that the
appropriate market and technology data was generated. After the final design of the questionnaire,
ResearchFox began full scale primary research. Specific companies targeted for primary research interviews
were selected based upon market participation. Higher was the entity's profile, more attractive was the
entity.
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14. 3.1.8. Interview Process
As participants respond in the course of an interview, ResearchFox analysts are trained to move from lower
priority and/ or sensitive topics to increasingly key and/or sensitive topics in response to the interviewee's
behavior. This responsive and reflective interview process, combined with the analysts' ability to discuss the
industry and technical issues in an open and sharing environment, allows ResearchFox to probe for key
data, operations, and competitive information. Multiple contacts within a single organization and with an
individual are often planned and/or staged in order to optimize and complete the information gathering
process.
3.1.9. Research Validation
At a point, when 20 percent of the research interviews and/or data collection had been completed,
ResearchFox consultants evaluated the preliminary findings to assure that up-to-date results are in line with
project objectives. The analyst team analyzed the information from the interviews and information was
validated through a combination of the following validation techniques:
Cross checking with other primary data and previously developed in-house research
Review of secondary information, such as trade journals, annual reports and industry directories
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15. 3.2. Forecasting Methodology
3.2.1. Step-by-Step Methodology for Market Estimation and Forecasting
Market Estimation and Forecast Methodology, 2016
Step Method
1
Understand the market mechanism for the market through structured, systematic and theoretically established
norms of analyzing, designing, introducing and quality assurance of the market estimation
2 Measuring the various market drivers, constraints, opportunities and challenges at regular intervals of time
3 Integrate expert-opinion of discussions in consultation with the ResearchFox Analyst team
4 Market estimation and forecast calculation
5 Delphi method and Causal Analysis used as and when required
6
Rigorous quality check with heads of Research Team, Subject Matter Experts and Consultants before final
publication
Source: ResearchFox
Significance and Importance of the Market Forecast, 2016
Sr. No. Significance and Importance
1 Helps revisit on the company's R&D investments
2 Keeps the Sales and Marketing team posted on the market prospects
3 Strategize investment and expansion plans
4 Improve business planning
5 Helps create business aims and set sales figures within the company
6 Aware of the current market competition
7 Support plans for Merger and Acquisition (M&A)
Source: ResearchFox
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