Light Reading
Network virtualization is emerging as a potentially key carrier datacenter trend, but what's it all about?

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
    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
    Don't let new technologies and whizz-bang gadgets keep you from respecting those speaking to you and giving them the full attention they deserve.
    Defining SDN realistically will help carriers cut through the hype, says Sunil Khandekar, CEO of Alcatel-Lucent's Nuage Networks.
    They can go from also-rans to leaders -- if they don't mess up.
    The benefits of SDN are hard to grasp because they're so big. But NFV provides a nice, finite-value proposition.
    Intensive end-to-end test and measurement is essential to ensure the smooth rollout of new services like VoLTE.
    Flash Poll
    LRTV Custom TV
    VeEX – Live from the Show

    8|21|14   |   5:58   |   (0) comments


    An overview of VeEX Test and Measurement solutions including TX300S multi-service test set with VeExpress cloud-based management system, UX400 universal modular platform supporting 100G testing, and the redesigned RXT modular platform.
    LRTV Custom TV
    Transitioning CE 2.0 Networks Into the SDN & NFV Era With Telco Systems

    8|19|14   |   5:19   |   (0) comments


    Telco Systems' Ariel Efrati (CEO) and Moshe Shimon (VP of Product Management) discuss virtualization and how the company's new Open Metro Edge solution utilizes the SDN and NFV concepts to accelerate and orchestrate service delivery through its innovative product portfolio and software applications.
    LRTV Custom TV
    NFV Myths: Is NFV Still Several Years Away?

    8|11|14   |   1:13   |   (0) comments


    Some say that NFV (network functions virtualization) is still several years away from being implemented on mobile operator networks. This isn't the case. Operators can get started on their paths to NFV now, as this short video from Skyfire shows.
    LRTV Custom TV
    A New Security Paradigm in SDN/NFV

    7|28|14   |   02:54   |   (0) comments


    Paul Shaneck, Global Director Network Solutions for Symantec, discusses the evolving virtualized network, explaining how Symantec is leading the security discussion as it relates to SDN and NFV, and helping to ensure the network is protected and compliant.
    LRTV Documentaries
    Sprint's Network Evolution

    7|24|14   |   14:59   |   (0) comments


    Sprint's Jay Bluhm gives a keynote speech at the Big Telecom Event (BTE) about Sprint's network and services evolution strategy, including Spark.
    LRTV Documentaries
    BTE Keynote: The Software-Defined Operator

    7|24|14   |   18:43   |   (1) comment


    Deutsche Telekom's Axel Clauberg explains the concept of the software-defined operator to the Big Telecom Event (BTE) crowd.
    Light Reedy
    Numbers Are In: LR's 2014 Salary Survey

    7|24|14   |   1:25   |   (7) comments


    Our fourth annual Salary Survey paints a picture of who's hiring, firing, earning, and yearning for a change in the telecom industry.
    LRTV Custom TV
    Driving the Network Transformation

    7|23|14   |   4:29   |   (0) comments


    Intel's Sandra Rivera discusses network transformation and how Intel technologies, programs, and standards body efforts have helped the industry migration to SDN and NFV.
    LRTV Custom TV
    Distributed NFV-Based Business Services by RAD

    7|18|14   |   5:38   |   (0) comments


    With the ETSI-approved Distributed NFV PoC running in the background, RAD's CEO, Dror Bin, talks about why D-NFV makes compelling sense for service providers, and about the dollars and cents RAD is putting behind D-NFV.
    LRTV Custom TV
    MRV Accelerating Packet Optical Convergence

    7|15|14   |   6:06   |   (0) comments


    Giving you network insight to make your network smarter.
    LRTV Custom TV
    NFV-Enabled Ethernet for Generating New Revenues

    7|15|14   |   5:49   |   (0) comments


    Cyan's Planet Orchestrate allows service providers and their end-customers to activate software-based capabilities such as firewalls and encryption on top of existing Ethernet services in just minutes.
    LRTV Custom TV
    Symkloud NVF-Ready Video Transcoding, Big Data

    7|9|14   |   3:41   |   (0) comments


    Kontron and ISV partner Vantrix demonstrate high-performance video transcoding and data analytic solutions on same 2U standard platform that is ready for SDN and NFV deployments made by mobile, cable and cloud operators.
    Upcoming Live Events!!
    September 16, 2014, Santa Clara, CA
    September 16, 2014, Santa Clara, CA
    September 23, 2014, Denver, CO
    October 29, 2014, New York City
    November 6, 2014, Santa Clara
    November 11, 2014, Atlanta, GA
    December 9-10, 2014, Reykjavik, Iceland
    June 9-10, 2015, Chicago, IL
    Infographics
    Today's Cartoon
    Hot Topics
    Level 3 Does Big Data Differently
    Carol Wilson, Editor-at-large, 8/21/2014
    IoT Alert: Samsung Snaps Up SmartThings
    Mari Silbey, Independent Technology Editor, 8/15/2014
    Comcast Streams Back to School
    Mari Silbey, Independent Technology Editor, 8/21/2014
    Line-Powered Phone Lines: A Hot Topic Again
    Carol Wilson, Editor-at-large, 8/20/2014
    Analyst: Ericsson, Oracle Top Shrinking SDP World
    Carol Wilson, Editor-at-large, 8/19/2014
    Like Us on Facebook
    Twitter Feed