& cplSiteName &

Understanding the Market for Network Virtualization

Lee Doyle
Lee Doyle

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
    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
    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.
    User Rank: Blogger
    2/20/2014 | 8:53:40 PM
    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
    5G could ride the traditional wireless hype cycle, or – quite possibly – break the chain, suggests Nokia's North American CTO.
    NFV feels like it's going nowhere fast, suggests Napatech's Dan Joe Barry.
    The NG-PON2 standard is the key to the future of ultra-broadband, believes Calix's Alan DiCicco.
    Amazing new 5G innovations are coming below 6GHz -- it's not just about mmWave.
    5G is about more than just faster mobile broadband, notes Tom Sawanobori, SVP and chief technology officer at the CTIA.
    Light Reading’s Upskill U is a FREE, interactive, online educational resource that delivers must-have education on themes that relate to the overall business transformation taking place in the communications industry.
    Wednesday, October 26, 1:00PM EDT
    Security: Tackling DDoS
    Gary Sockrider, Principal Security Technologist, Arbor Networks
    Friday, October 28, 1:00PM EDT
    Security: The Plusses and Minuses of Open Source Software
    Nick Feamster, Acting Director, Center for Information Technology Policy, Princeton University
    Wednesday, November 16, 1:00PM EST
    SDN 101
    John Isch, Practice Director, Network & Voice, Orange Business Services
    Friday, November 18, 1:00PM EST
    SDN & Open Source
    Christopher W. Rice, Senior Vice President of AT&T Labs, Domain 2.0 Architecture and Design
    in association with:
    From The Founder
    Light Reading today starts a new voyage as part of a larger Enterprise.
    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 Custom TV
    Next-Generation Technology Beyond DOCSIS 3.1

    10|20|16   |     |   (0) comments

    At SCTE 2016, Huawei's Liu Jianhua speaks with Alan Breznick for an exclusive interview.
    LRTV Custom TV
    Hybrid Video Solutions to Change TV, Change Future

    10|20|16   |     |   (0) comments

    At SCTE 2016, Huawei's Ian Locke speaks with Alan Breznick for an exclusive interview.
    LRTV Custom TV
    Huawei Future-Oriented Giga Coax Network

    10|20|16   |     |   (0) comments

    At SCTE 2016, Huawei's Allen Wang speaks with Alan Breznick for an exclusive interview.
    LRTV Custom TV
    Huawei at SCTE 2016

    10|20|16   |     |   (0) comments

    Join Alan Breznick of Light Reading and take a sneak peek at the Huawei booth at SCTE 2016.
    LRTV Custom TV
    Assuring Network Quality in a Rapidly Changing Environment

    10|20|16   |     |   (0) comments

    As the rate of change and complexity increases in agile networks, the importance of introducing DevOps methodologies for integrating active test and assurance solutions throughout the full service lifecycle becomes critical to ensure that customers are experiencing the service quality they demand. The industry landscape is changing, and software-based test and ...
    Telecom Innovators Video Showcase
    A10 Networks on Service Providers' Industry Needs

    10|20|16   |     |   (0) comments

    Light Reading's Steve Saunders hears how A10 enables service providers to accelerate, secure and optimize their application delivery to drive down costs, enhance service availability, and better respond to customer requirements, so they can improve customer satisfaction, monetize their network, and grow revenues.
    LRTV Custom TV
    New NFV Use Cases for Cable TV

    10|19|16   |     |   (0) comments

    A large number of NFV use cases are focused on the enterprise domain, looking at virtualization of customer-premises equipment (CPE). To date, there has been little focus on the use cases and business case for virtualization of the video content delivery networks required to deliver unicast and streaming video to consumers. Amdocs commissioned Analysys Mason to ...
    Women in Comms Introduction Videos
    Meet the Future Workforce: New Faces, Expectations & Motivations

    10|19|16   |   5:33   |   (1) comment

    Millennials and their younger peers, Gen Z, expect more out of their network and more out of their work. Intel's Lynn Comp shares how the industry can prepare for this new generation of workers.
    LRTV Custom TV
    ZTE Global Services User Congress 2016 Highlights

    10|19|16   |     |   (0) comments

    ZTE held its 2nd Global Service User Conference in Dusseldorf on October 13-14. Representatives from network operators, leading industry analysts and ZTE senior expertsattended the event, exploring the best practice in managed services and the vision to transform network operations into the operations center of the future (OpCF) in the software-defined networking ...
    LRTV Custom TV
    Cliff Grossner on Cloud & Network Synergy From Carrier Service

    10|18|16   |     |   (0) comments

    Local carriers offer the collaborated cloud and network service that benefits from their understanding of the regulations operating in different vertical markets.
In this interview, Cliff Grossner from IHS Technology talks about how this advanced service can support business agility and flexibility.
    LRTV Custom TV
    VeEX: Live from SCTE Cable-Tec Expo 2016

    10|17|16   |     |   (0) comments

    Cyrille Morelle, VeEX's President and CEO, talks with Light Reading's Alan Breznick live from the SCTE Cable-Tec Expo 2016. They discuss DOCSIS 3.1 technology, deployments and early lessons learned. New products on display include the CX350s-D3.1, CX380s-D3.1, CX310, AT2500-3G, FX150 OTDR and MTT WiFI Air Expert.
    LRTV Custom TV
    Smith Micro's Carrier-Grade WiFi Component

    10|17|16   |     |   (0) comments

    Join Carol Wilson of Light Reading as she interviews the CTO of Smith Micro, Dave Sperling.
    Upcoming Live Events
    November 3, 2016, The Montcalm Marble Arch, London
    November 30, 2016, The Westin Times Square, New York City
    December 1, 2016, The Westin Times Square, New York, NY
    December 6-8, 2016, The Westin Excelsior, Rome
    May 16-17, 2017, Austin Convention Center, Austin, TX
    All Upcoming Live Events
    Hot Topics
    Attacks Have Major Internet Sites on the Ropes
    Brian Santo, Senior editor, Test & Measurement / Components, Light Reading, 10/21/2016
    Trump: Dump AT&T/TW & Comcast/NBC
    Alan Breznick, Cable/Video Practice Leader, Light Reading, 10/24/2016
    Layer3 TV Comes to Town, Hints at Future
    Mari Silbey, Senior Editor, Cable/Video, 10/21/2016
    Verizon Wants More Data on Yahoo Breach
    Alan Breznick, Cable/Video Practice Leader, Light Reading, 10/20/2016
    WiCipedia: Grace Hopper Promotes Diversity, Girl Scouts Code & How to Thrive
    Eryn Leavens, Special Features & Copy Editor, 10/21/2016
    Like Us on Facebook
    Twitter Feed
    BETWEEN THE CEOs - Executive Interviews
    Join us for an in-depth interview between Steve Saunders of Light Reading and Alexis Black Bjorlin of Intel as they discuss the release of the company's Silicon Photonics platform, its performance, long-term prospects, customer expectations and much more.
    There's no question that, come 2020, 5G technology will turn the world's conception of what mobile networking is on its head. Within the world of 5G development, Dr. ...
    Animals with Phones
    'Oh, Were You Looking for This?' Click Here
    'I was just playing some games...'
    Live Digital Audio

    A vital part of increasing the number of women in comms is transforming the ways companies can support and empower women. While progressive company policies that support both men and women in achieving work-life balance are a step in the right direction, creating a company culture that supports those policies can at times be more challenging.

    During this show, we'll talk to Lynn Comp, Senior Director of Industry and Sales Enabling (ISE) in the Network Platforms Group at Intel, about why those challenges exist and how companies can overcome them. She'll provide insight into how Intel has worked to create a culture that supports work-life balance, and provide steps and guidance for other companies wishing to do the same. We will also leave plenty of time to get your questions answered live on the air.