& cplSiteName &

Understanding the Market for Network Virtualization

Lee Doyle
Column
Lee Doyle
2/20/2014
50%
50%

Network virtualization is an emerging technology that enables datacenter managers to ease VM (virtual machine) provisioning challenges, improve automation, and support the scalability demands of large datacenters.

Network virtualization (NV) is in its very early stages of adoption and encompasses several competing standards, a large number of technology suppliers, and multiple open source options.

Key questions about the NV market include:

  • How rapidly will service providers and large enterprises adopt NV technology in their datacenters?

  • Does the NV develop into a distinct market (VMWare's view) or become a feature of broader software-defined networking (SDN) deployments (Cisco's view)?

  • Who will be the leading buyers of NV technology? Will sales be driven by network administrators, server administrators, or datacenter managers?

    Definition of network virtualization
    Network virtualization uses tunnels to create virtual networks on top of traditional (Ethernet) physical networks. Leveraging protocols such as VXLAN or NVGRE, NV provides Layer 3 tunneling which separates the virtual network from the underlying physical network hardware, thus enabling provisioning of virtual networks and accompanying services between servers in the datacenter.

    Benefits of network virtualization
    Implementation of network virtualization provides a number of key benefits for datacenter managers, including:

  • Scalability -- the ability to scale beyond vLAN limits to support hyper-scale datacenter network requirements.

  • Multi-tenancy -- each application or tenancy can have their own network and security policy via NV traffic isolation.

  • Ease of implementation -- no need to change the underlying physical network.

  • Improved performance of VM-to-VM traffic within the same server or rack.

    Technology options
    Network virtualization is offered by a significant number of technology suppliers. Each supplier has as different take on network virtualization with accompanying strengths, weaknesses, protocols, and pricing options.

  • VMWare offers its NSX product (via its Nicira acquisition) that leverages the VXLAN protocol to provide network virtualization.

  • Microsoft bundles network virtualization functionality (using the NVGRE protocol) in its Hyper-V product.

  • Nuage, a division of Alcatel-Lucent, offers the Virtualized Services Platform (VSP) network virtualization technology. Nuage offers a number of pricing options: per server or per VM, subscription or license.

  • PlumGrid offers its IO Visor technology, which enables the creation of virtual domains that replicate the physical network.

  • Juniper offers network virtualization via its Contrail by license or subscription. Juniper also offers Contrail via free open source software.

  • Midokura offers MidoNet, which virtualizes the network to let OpenStack and CloudStack create and manage virtual networks.

    There are a number of open source options for network virtualization, including OpenDayLight and Open vSwitch. Other NV technology suppliers include: ADARA, Big Switch, IBM, NEC, Cisco, Redhat, HP, and Arista.

    NV market variables
    Forecasting the market for network virtualization market involves a number of key variables, including:

  • Pricing models: What are the NV pricing models (by VM, server, or socket) and by license (one-time fee) or monthly subscription? A key variable here is the potential for NV functionality to be built into either the hypervisor (e.g. Microsoft) or included in the network infrastructure costs (e.g. Cisco).

  • Growth of cloud service provider infrastructure: The growth of new hyper-scale datacenter designs will fuel the requirements for NV functionality. Key metrics include the growth of OpenStack and Open Compute deployments.

  • Impact of open source: The SDN community is creating a lot of free, open source software, including OpenDayLight and Open vSwitch, which has the potential to offer NV functionality. Faster adoption of SDN open source would push NV spending from software towards support and professional services.

    Current and future market adoption
    Current adoption of NV technology is in its very early phases with a few leading-edge organizations in production use and more communications service providers and enterprises in the pilot phases. Running NV software as an overlay to existing network infrastructure provides a relatively easy way to alleviate VM networking challenges. As a result, I expect NV adoption to increase strongly during the 2015-2016 timeframe. The future adoption of NV technology will be dependent on a number of key variables, including pricing, standards, and the impact of open source. I forecast that spending on the SDN software market (of which NV is a subset) will reach nearly $1.2 billion worldwide by 2018.

    — Lee Doyle, Principal Analyst, Doyle Research

    (3)  | 
    Comment  | 
    Print  | 
  • Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
    mhhf1ve
    50%
    50%
    mhhf1ve,
    User Rank: Light Sabre
    2/27/2014 | 5:20:13 PM
    Large, conservative organizations... will adopt NV when it's mature
    As you noted, NV is in its early stages. So large companies will likely sit back a bit to see how standards pan out and make sure the risk isn't too high to deploy. I'd guess that part of the equation will be assessing the maturity of the open source projects -- because as soon as there is a quorum of developers working on stable open source projects, then companies will start to feel comfortable relying on NV in their datacenters.
    sam masud
    50%
    50%
    sam masud,
    User Rank: Light Sabre
    2/21/2014 | 11:15:31 AM
    Re: Timing
    It's interesting that most of the focus seems to be on NV based on encapsulation/tunneling as opposed to implementing NV via SDN flow tables--interesting because the network overlay approach doesn't (from what I understand) allow bandwidth reservation by network overlays.
    DOShea
    50%
    50%
    DOShea,
    User Rank: Blogger
    2/20/2014 | 8:53:40 PM
    Timing
    oIt sunds like there is not much more time for NV to develop as a distinct market. With SDN on the horizon, won't a lot of datacenter operators just tackle all of the above at the same time as part of upgrading to a next-generation datacenter architecture?
    More Blogs from Column
    New and exciting methods of automation – whether virtualization, the cloud, IoT or even best practices like network segmentation – tend to emphasize innovation over visibility. As such, networks develop blind spots that mask network problems and even faulty devices.
    Unlicensed spectrum will help the 3GPP's 5G specification proliferate.
    Outages are inevitable, but how can we deal with them better?
    The arrival of NFV and IoT is driving a greater need for Service Quality Management (SQM) capabilities, argues Sandeep Raina.
    An updated architecture, new approach to software and the ability to launch new services will give telcos a successful path to 5G within the next few years.
    From The Founder
    The time has come for a telecom app store to save the industry.
    Flash Poll
    Live Streaming Video
    Charting the CSP's Future
    Six different communications service providers join to debate their visions of the future CSP, following a landmark presentation from AT&T on its massive virtualization efforts and a look back on where the telecom industry has been and where it's going from two industry veterans.
    LRTV Documentaries
    Order From Chaos: The Steve Saunders BCE Keynote

    5|24|17   |   17:27   |   (0) comments


    Kicking off BCE 2017, Light Reading founder Steve Saunders lays blame for NFV's slow ramp-up and urges telecom to return to old-fashioned standards building and interoperability testing.
    Think of this as the video sequel to the recent columns he's written about NFV and the prospect of a telecom app store. (See

    LRTV Documentaries
    Service Provider Panel: Partnering in the Digital Era

    5|22|17   |     |   (0) comments


    Coopetition has always been part of telecom, but the ecosphere now includes data centers, vendors, apps developers, cloud service providers and Internet content providers. This BCE 2017 panel explores the new attitudes among network operators as to the value and variety of ...
    LRTV Interviews
    Site Demo: AT&T's IoT Flow Platform

    5|19|17   |   04:25   |   (0) comments


    At AT&T's R&D center in Tel Aviv, Israel, project leader Eyal Segev talks about the operator's Flow platform and how it helps to prototype IoT applications.
    LRTV Documentaries
    Agent of Change: A Q&A With AT&T's John Donovan

    5|18|17   |     |   (0) comments


    Carol Wilson talks with the man leading AT&T's transformation efforts about the challenge of change.
    LRTV Documentaries
    BCE Service Provider Panel: The New Business Realities

    5|18|17   |     |   (0) comments


    For virtualization to happen, the telecom industry first has to grapple with key functional aspects of SDN and NFV that need to be universal, such as onboarding of virtualized network functions and federation of software-defined networks.
    LRTV Interviews
    BCE Service Provider Keynote: CenturyLink

    5|16|17   |   22:32   |   (0) comments


    Aamir Hussain leads the Product Development and Technology organization at CenturyLink, which includes the company's information technology function. He is an experienced senior technology executive with more than 25 years of proven success in the implementation of global technology operations, operationalization of complex technology, infrastructures and business ...
    LRTV Interviews
    CenturyLink CTO on Transformation

    5|16|17   |   7:43   |   (0) comments


    The 50-year-old telco has already gone through several transformations, including every time it made an acquisition, but its purchase of Level 3 coupled with changes in technology and customer expectations necessitates its biggest transformation yet.
    LRTV Documentaries
    Light Reading Hall of Fame 2017

    5|15|17   |   5:05   |   (1) comment


    Find out who made it into Light Reading's Hall of Fame this year.
    LRTV Interviews
    Site Visit: AT&T's Tel Aviv R&D Center

    5|15|17   |   09:58   |   (1) comment


    Nir Shalom, general manager and VP of application development at AT&T Israel, talks about the key service developments undertaken at the AT&T R&D facility in Tel Aviv and how the team there has adopted new ways of working.
    Telecom Innovators Video Showcase
    Act on Your Intelligence With Amdocs aia!

    5|15|17   |     |   (0) comments


    Amdocs CMO Gary Miles explains how communications service providers can seize the AI opportunity with Amdocs real-time digital intelligence platform.
    LRTV Interviews
    Logtel CEO: Making Sense of IoT

    5|15|17   |   09:48   |   (0) comments


    Jacques Bensimon, founder and CEO of Tel Aviv-based training and consultancy Logtel, talks about the need to make IoT more than just a buzzword.
    LRTV Huawei Video Resource Center
    The Challenges of Mobile Banking Implementation

    5|12|17   |     |   (0) comments


    Kamal Quadir of bKash Limited explains the challenges and needs of implementing mobile banking in the Bangladesh market.
    Infographics
    With the mobile ecosystem becoming increasingly vulnerable to security threats, AdaptiveMobile has laid out some of the key considerations for the wireless community.
    Hot Topics
    AT&T's Donovan: Women Adapt Faster Than Men
    Sarah Thomas, Director, Women in Comms, 5/18/2017
    Verizon on M&A: Who Needs a Cableco?
    Mari Silbey, Senior Editor, Cable/Video, 5/17/2017
    Fright Wigs & Cocktails: BCE 2017 in Pics
    Mitch Wagner, Editor, Enterprise Cloud, 5/19/2017
    Standardization Needs Room for Innovation
    Mitch Wagner, Editor, Enterprise Cloud, 5/17/2017
    What's Blocking 4K TV Today
    Alan Breznick, Cable/Video Practice Leader, Light Reading, 5/22/2017
    Like Us on Facebook
    Twitter Feed
    BETWEEN THE CEOs - Executive Interviews
    One of the nice bits of my job (other than the teeny tiny salary, obviously) is that I get to pick and choose who I interview for this slot on the Light Reading home ...
    TEOCO Founder and CEO Atul Jain talks to Light Reading Founder and CEO Steve Saunders about the challenges around cost control and service monetization in the mobile and IoT sectors.
    Animals with Phones
    What Brogrammers Look Like to the Rest of Us Click Here
    Live Digital Audio

    Playing it safe can only get you so far. Sometimes the biggest bets have the biggest payouts, and that is true in your career as well. For this radio show, Caroline Chan, general manager of the 5G Infrastructure Division of the Network Platform Group at Intel, will share her own personal story of how she successfully took big bets to build a successful career, as well as offer advice on how you can do the same. We’ll cover everything from how to overcome fear and manage risk, how to be prepared for where technology is going in the future and how to structure your career in a way to ensure you keep progressing. Chan, a seasoned telecom veteran and effective risk taker herself, will also leave plenty of time to answer all your questions live on the air.