ACG Research

ACG Research
We focus on the Why before the What

Thursday, July 21, 2016

Existing Skills Are Not Enough to Run Virtualized Networks

So you have got your network virtualized! What’s next?

If it’s business as usual, we would move to operation phase and start reaping the virtualization benefits.

But here is a point. It is not just about implementing a technology like SDN or NFV; rather, it’s about the skills to run a network that is virtual, elastic and not hardware centric. Isn’t it quite different from the physical networks we traditionally deal with on a day-to-day basis?

And this point emerged strongly when I talked to multiple executives of Tier 1 and Tier 2 telcos recently about how they foresee the operation of their virtual networks in the future. In particular, what are their big concerns about operating the software-based networks?

Click to read the blog.

For more information about ACG's services, contact sales@acgcc.com.

What DevOps Isn’t!

Future virtual networks will bring the much-needed business agility, network agility and service agility to telcos.

But this raises a question:

Are telcos’ operational structures, processes and operation teams ready to handle such agility?

And if not, what do telcos need to meet such challenges?

In fact, organizations need to evolve, one way or the other, to the DevOps model—the agile operational model effectively used by many cloud-based companies.

Click to read the blog.

For more information about ACG's services, contact sales@acgcc.com.

You’d Love to Have DevOps, But Don’t Know Where to Start!

O.K., so you have got your network virtualized! What’s next?

If it’s business as usual, we would move to operation phase and start reaping the virtualization benefits.

But here is a point. It is not just about implementing a technology like SDN or NFV; rather, it’s about the skills to run a network that is virtual, elastic and not hardware centric. Isn’t it quite different from the physical networks we traditionally deal with on a day-to-day basis?


For more information about ACG's services, contact sales@acgcc.com.

Wednesday, July 20, 2016

Webinar: Secure and Scale the Gi-LAN at 80% Lower TCO

Mobile network traffic is expected to increase 45% annually with video representing 60% of all mobile traffic. To meet the demand, networks will need to be intelligently and cost effectively scaled for secure services delivery, especially the Gi-LAN. As volumes grow, the number of concurrent users, connection rates, and throughput will all need to scale together. But how can operators evolve their architectures to support this growth while lowering TCO?

Join F5‘s Misbah Mahmoodi, and ACG’s Paul Parker-Johnson and register for this webinar to learn about:
  • The market and business challenges IoT devices, applications and the growing number of users are placing on mobile networks.
  • The key criteria to use when architecting for massive scale in application delivery infrastructures.
  • Three TCO sizing models you can reference to dimension our network performance needs.



Service Provider Transformation: Adapting and Adopting, ACG HotSeat Video

Pratik Roychowdhury, Senior Director and Head of Product Management for Contrail at Juniper Networks, and Ray Mota, CEO, ACG Research, discuss today’s constantly evolving competitive landscape; how and why service providers must transform their business, technology and organization to meet the demands and opportunities of the new virtual and cloud world. 


For more information about ACG's video services, contact sales@acgcc.com.

Tuesday, July 5, 2016

The Business Value of Agility

Infrastucture and service agility require the right tools, and one important tool is operations support system, which allows CSPs to reduce time-to-market and lower the cost of new service creation and deployment, operating in a hybrid infrastructure (traditional and virtualized) during CSP’s business transformation. The focus on this paper is on quantifying the impact of being agile. The paper first provides the definition of agility and then quantifies the time-to-market, service creation and revenue generation advantages of being able to create new services quicker and taking them to market faster. Robert Haim of ACG has determined that there is a 77% savings in labor cost, 13% differential in revenue generation per service launched based on a faster time-to-market advantage and a 47% increase in revenue level based on increased number of services that can be launched.

Click to download Economics of Agility_ACG.

Click for more information about ACG’s business case analysis services or contact sales@acgcc.com.

 
         Robert Haim
     rhaim@acgcc.com
       www.acgcc.com

Tuesday, June 21, 2016

Are You Ready for NFV?

When it comes to network functions virtualization (NFV) and software defined networking (SDN), it is no longer a question of “if,” but rather “how” and “when.” Yet, surprisingly, much of the conversation around NFV and SDN is focused on technology, and very little is ever said about operational processes. A new white paper by Ray Mota, CEO and principal analyst at ACG Research, aims to put that right with an insightful analysis of how network operators need to prepare their operations for NFV and SDN.

Click for more information and to download the whitepaper.

For more information about ACG’s services, contact info@acgcc.com.


rmota@acgcc.com
www.acgcc.com

Tuesday, May 3, 2016

Trends and Directions in Data Center Interconnect: A Survey of Optical and Packet Mode Networking Practices

This ACG Research report investigates the trends and directions that service providers are taking in the deployment of their data centers and specifically their interconnection. It provides insight into existing data center practices as well as future practices. The survey report connected directly with service providers utilizing data center interconnect equipment or planning to deploy such equipment to interconnect their data centers in the next 12 months. Respondents included Network Service Providers, Cloud Service Providers, Internet Content Providers and Inter-eXchange Providers in the APAC, EMEA, NA and LAC regions. 

“We confirmed our previously held belief that the number of data centers will grow approximately 60% between now and 2019,” says Tim Doiron, principal analyst, Intelligent Network Services. “We determined that the types of products (SFF or multi-slot chassis) and desired product attributes differ based upon the service provider segment. Data center optical reach demonstrates a bimodal distribution with maxima below 30km and above 600km distances. Traffic drivers for DCI bandwidth also differ by service provider segment.”

Contact kgrenier@acgcc.com to purchase the report and 30 minutes of analyst time.

     Tim Doiron
     www.acgcc.com

Wednesday, April 20, 2016

It’s about APPU and QoE, not ARPU

Traditionally, average revenue per user  has been one of the key metrics used to measure service providers’ financial performance. Increased competition has been putting downward pressure on ARPU, resulting in declining earnings before interest, taxes, depreciation and amortization. In parallel, the volume of data traffic transmitted over wireless networks is increasing exponentially. Global mobile data traffic grew 74 percent in 2015, reaching 3.7 Exabytes per month at the end of 2015, up from 2.1 Exabytes per month at the end of 2014 . This is driven not only by the increase of new mobile applications, but also by the sheer number of connected devices. Smartphone subscriptions passed the billion mark in 2012; the four billion mark is expected to be reached by 2016. There will be more than 20 billion mobile-connected devices by 2020, including machine to machine modules, which will exceed the projected global population of 7.8 billion.

Current cellular networks may not have the capacity to meet this demand and the further expansion of coverage and densification will only add additional capital expense and operation expense without improving ARPU. To improve financial results, SPs must focus on the average profit per user  and look for ways to reduce operating costs while providing additional network coverage.

ACG Research conducted a business study of different technology penetrations on SPs’ networks. The scenario integrated untrusted Wi-Fi, trusted Wi-Fi, and small cell into the cellular network, which includes 2G, 3G and VoLTE voice traffic. The scenario compares different penetrations to identify the optimum plan that will optimize SPs’ APPU. The study found that this is only possible by increasing the amount of trusted Wi-Fi traffic and VoWi-Fi penetration, resulting in higher EBITDA margins and APPU, up to 9 percent, saving $3.83 billion for a 35.5 percent monthly increase of APPU over five years.

Read the entire article at RCRWireless News.

For more information about ACG’s services, contact info@acgcc.com.


rmota@acgcc.com
www.acgcc.com

Monday, April 18, 2016

PAM-4 or Coherent DWDM for DCI?


At the March 2016 OFC conference, Inphi announced its delivery of a 100G, QSFP28, PAM-4, pluggable transceiver with 80km reach. PAM technology has been utilized for 100G transmissions (Inphi is a specialist in this area) before but at much shorter distances. Pulse-amplitude modulation (PAM) is an analog transmission scheme similar to NRZ but with multi-level signaling, with PAM-4 utilizing four levels to signal one of four possible symbols (2 bits per symbol). During the announcement, Microsoft also publicly announced that it will begin sourcing the pluggable PAM-4 technology from Inphi for interconnection of its regional, metro-distributed data centers, which by definition are within 70km of each other. Coherent technology will continue to be used elsewhere. The metro-distributed data center deployment model builds and interconnects a number of smaller data centers within a metropolitan area instead of deploying a single hyperscale data center in the region. Microsoft also divulged that it was their intention to turn up all 40, 100G wavelengths at one time (4Tb/s with each carrier occupying 100GHz channel spacing) on a fiber pair, utilizing all available colors in the fixed-wavelength portfolio. 

Some at the conference reacted to the Inphi/Microsoft announcement by declaring the obsolescence of existing optical DCI/coherent DWDM solutions. Although the Inphi/Microsoft announcement is exciting news, ACG thinks the PAM-4 technology is far more complementary to existing coherent DWDM solutions than competitive for multiple reasons. 


Figure 1. Optical Reach for 100G Technologies 

Reach. The PAM-4 solution covers a portion of the optical reach needed to interconnect data centers. Below 10km, IEEE 802.3ba 100G pluggable optics are readily available with 100GBASE-LR4 supporting 10km reach in a QSFP28 package for cost-effective point-to-point connectivity. The 100GBASE-ER4 specification for 40km reach has been more challenging for optics suppliers to deliver and remains either in larger packages (example, CFP, CFP2) or in nonstandard formats, meaning non-interoperable across vendors. So where does the PAM-4 technology fit? In general, its initial fit appears to be in the <40km range as an alternative to existing, suboptimal pluggable solutions. We believe there is limited overlap with coherent DWDM solutions in this range. The solution also plays in the 40–80km range as an alternative to optical DCI/coherent DWDM solutions for some deployment scenarios. 

So, based solely upon reach, a logical question is how much of the optical DCI/coherent DWDM market is covered by 40–80km? ACG Research recently completed a worldwide survey of data center service providers, including network service providers, cloud service providers, Internet content providers and Internet eXchange providers. This research will be available in a published report later this month (April). One of the questions we asked the service providers was the proportion of optical reach needed to cover their data center interconnections today and in 2019. What we found is that service providers on average believe that 30–80km optical reach is needed for approximately 30% of their data center interconnections. The results indicate a modest increase between today and 2019. Based upon this preliminary research, we have a sense of the addressable optical DCI market for this technology. However, we also believe that service providers will consider at least three other factors in making their DCI deployment decisions.


Figure 2. Data Center Interconnect Optical Reach 

Operations. Every data center deployment is not like Microsoft’s plan for metro-distributed data centers, which is to turn up all 4Tb/s of connectivity in a point-to-point fashion on day one of data center activation. By deploying all 40 wavelengths at once, Microsoft could reduce the incremental cost per wavelength of deploying dispersion compensation on the fiber, which is required for PAM but not for coherent DWDM solutions. Dispersion compensation costs include both the capital equipment as well as the operational costs associated with installing and tuning the compensators. Microsoft also avoids the operational complexity of deploying fixed wavelength pluggable optics incrementally, where inventory and on-site resources are required every time a change or a wavelength addition is needed. 

Other service providers that have existing metro optical networks may not want to deploy in this manner. They may not want the added complexity of dealing with dispersion compensation for PAM deployments. Some may want to utilize existing metro optical infrastructure and/or deploy in a mesh architecture. Still other service providers may not have the same visibility as Microsoft with regard to their data center connectivity needs. They may need to be more agile and utilize a pay-as-you-go/pay-as-you-grow deployment model where they add interconnection capacity over time and in alignment with their data center compute/storage capacity and revenue generation. An incremental deployment model is just more operationally complex with fixed-wavelength pluggable optics. 

Fiber Scarcity. When fiber is scarce or expensive, fiber optic transmission efficiency (bits per Hz) increases in importance. The PAM-4 solution delivers an efficiency ratio of 1 with 100Gb/s transmission occupying 100GHz channel spacing. 16-QAM coherent DWDM modulation offers 200Gb/s in 50GHz channels or an efficiency ratio of 4. Recent flexible grid implementations have an even greater efficiency ratio approaching 7. If more than 4Tb/s of connectivity is needed and incremental fiber is scarce or expensive, service providers may need to utilize the more efficient coherent DWDM system to squeeze more bandwidth through their limited fiber resources.

Programmability. Fixed-wavelength pluggable optics do not advance the broader drive toward a programmable, agile, SDN enabled optical underlay. SDN and NFV are changing all aspects of the ICT industry, including optical solutions. Service providers are looking to utilize intelligence, automation and programmability to reduce operational costs and ensure that network resources adapt to changing business and networking conditions across protocol layers, including optics and IP. Many demonstrations at OFC utilized SDN control and service automation combined with a programmable optical layer to showcase network efficiency and adaptability. The ONS 2016 conference had similar demonstrations with ONOS and ODL controllers programming in near real-time optical and IP networking infrastructure. 


Figure 3. Example of a Mixed Technology DCI Deployment 

The Inphi PAM-4, QSFP28 solution is an exciting achievement and addresses a very real need in the sub-80km 100G market. We believe the solution is actually far more complementary than competitive to existing optical DCI/coherent DWDM solutions. Most service providers will utilize an all-of-the-above approach to their 100G DCI deployments just as they did before with dark fiber, IEEE pluggables and coherent DWDM options. PAM-4 meets the needs of data center operators, such as Microsoft, that intend to turn up 4Tb/s of transmission capacity in a point-to-point fashion between data centers in a ~70km metro-distributed network. However, if a provider needs longer reach or more than 4Tb/s per fiber pair or an incremental growth operational model or if a service provider is looking to advance its programmable, SDN enabled network, then a tunable, coherent DWDM solution is a better fit. PAM-4 or coherent DWDM for data center interconnections? Yes!


Click for more information about Tim Doiron and his recent articles.

     Tim Doiron
     www.acgcc.com

Friday, April 8, 2016

Infinera Delivers the Multi-Terabit Infinite Capacity Engine

Infinera revolutionized optical integration with the introduction of its industry leading 100G Photonic Integrated Circuit (PIC) in 2005.

In 2011 the company followed with the introduction of a 500G PIC and coherent digital signal processing (DSP) technology.

At the OFC Conference in March 2016, Infinera once again pushed the limits of optical integration with the debut of its multi-terabit Infinite Capacity Engine.

The Infinite Capacity Engine is a family of next-generation optical subsystems consisting of fourth-generation photonic integration with advanced coherent signal processing, software defined networking-enabled sliceable photonics architecture and Layer 1 encryption.


For more information about ACG's market impact service, contact sales@acgcc.com.

     Tim Doiron
     www.acgcc.com

Thursday, April 7, 2016

ACG HotSeat with HPE’s Nachman Shelef on Dynamic Network Transformation, Part 1 & 2

Nachman Shelef, vice president and general manager at HPE ConteXtream, Hewlett Packard Enterprise, and Ray Mota, CEO of ACG Research, discuss why customers should look to HPE as they transition their infrastructures to meet rapidly changing service demands. HPE is positioning itself as a thought leader in network evolution, not only by addressing infrastructure requirements, but also by focusing on next-generation requirements in both the wireless and fixed line space to enable service providers to deal effectively with existing and virtualized network functions. Listen to how HPE addresses service providers' infrastructure needs as they migrate their networks to enable dynamic changes in their functions, as well as about the uses cases that meet the current and future requirements. 


In Part 2 Nachman Shelef, vice president and general manager at HPE ConteXtream, Hewlett Packard Enterprise, and Ray Mota, CEO of ACG Research, continue their discussion of NFV to meet rapidly changing service demands. They focus on how HPE approach their customers, discuss how and why providers need to look beyond just the traditional function approach when transitioning their networks, and point out the differences between a fat and fit VNF. They also discuss the emerging hardware, software and ecosystems that will define and support current as well as future functions. 


Contact sales@acgcc.com for more information or to schedule your HotSeat video.

Monday, April 4, 2016

Optical Infrastructure and Optical DCI Finish Strong in 4Q-2015 and Look to Future Growth

Optical DCI contributed over $1B in 2015 with total Optical infrastructure finishing the year at $13.3 billion

ACG Research has released its 2H-2015 worldwide Optical infrastructure and worldwide Optical Data Center Interconnect (DCI) forecast. The forecast period runs through 2020.  The worldwide Optical infrastructure market is predicted to grow from $13.2 billion in 2015 to $17.8 billion by 2020. Purchases of Optical DCI equipment are expected to grow from $1.03 billion in 2015 to $4.3 billion in 2020. ACG Research predicts growth in all geographic regions including EMEA where total optical networking revenues have been flat to down over the past several years.   

Optical infrastructure demonstrated its usual seasonality throughout 2015 with Q2 and Q4 being the strongest calendar quarters.  After a down Q3, Q4-2015 saw growth in both Metro (POTS + Metro DWDM) and Long Haul optical segments at robust 17.5% and 19.5% q-q rates, respectively.  For the year, Metro optical produced 5.2% growth while Long Haul delivered 7.9% for a combined High Speed Optical (HSO) annual growth of 6.4%.  When combined with the 14.3% decline in legacy optical infrastructure spending, total optical infrastructure managed positive 1.2% growth in 2015 to finish at $13.3B.  Looking forward, ACG Research anticipates 6.6% Long Haul optical CAGR and more than 10% Metro optical CAGR over the forecast period. 


Optical DCI equipment revenue exceeded $300m for the first time in 4Q-2015 to contribute more than $1B to the Optical infrastructure market for the year with an annual growth rate in excess of 40%.  Optical DCI revenue is projected to grow at a 33.1% CAGR from 2015 to 2020. The fundamental underpinnings of DCI growth remain strong:  annual data center bandwidth growth, increasing service requirements for data center interconnectivity and increases in the total number of data centers worldwide.  Over the forecast period, ACG predicts the Metro Optical DCI growth rate will exceed Long Haul Optical DCI and SFF Optical DCI appliances will grow at a faster rate than multi-slot Optical DCI chassis-based solutions, although multi-slot chassis solutions will remain slightly dominant throughout the forecast period.  A series of publicly announced new entrants to the SFF Optical DCI appliance market including Ciena Waveserver, Fujitsu 1Fininity, Adva CloundConnect, Cisco NCS 1002, Coriant Groove G30 will join the market leading Infinera CloudXpress in 2016 and keep downward pressure on prices. 

Additional growth drivers beyond DCI for Optical infrastructure over the forecast: accelerating 100G/200G+ coherent optical upgrades, mobile front-haul, 5G mobile backhaul and bandwidth expansions, multi-layer encryption/security and transport/multi-layer SDN.  

     Tim Doiron
     www.acgcc.com

Friday, April 1, 2016

5G: The Efficient Engine to Virtual Infrastructure Optimization

Ahead of his participation at TM Forum Live!, ACG Research’s Elias Aravantinos looks at how 5G technology can be the engine to optimize the different parts of the network to enable new, faster and more profitable services.

Infrastructure optimization
In an effort to address the demand for capacity and average revenue per user (ARPU) pressures, service providers are looking at 5G technology as the engine to optimize the different parts of their networks and deliver faster, new and more profitable services. In many cases, they realize that upgrading their physical infrastructure has limitations because of costs and inefficient time to market constraints, and they are looking for solutions, specifically virtualization, that scale their networks to meet the capacity demand while simultaneously delivering business value – savings.


    

Monday, March 28, 2016

Brocade 2015 Omega Award for HotSeat Video

Brocade Communications was the ACG Research HotSeat Winner of 2015 for the video Evolution of Mobile Network Visibility. The video features a discussion about Brocade’s significant new network visibility product announcement: carrier-grade, physical and virtual network packet brokers, virtual TAPs, an SDN based session director and a single pane of glass management application. Sanjay Munshi, senior director of product management at Brocade Communications, and Michael Bushong, vice president of product management, accepted the award on behalf of the company.


Friday, March 25, 2016

ACG Omega Award for Breakthrough Innovation Product Winner Big Switch Networks


Big Switch Networks was the winner of the Breakthrough Innovation Product for its Big Cloud Fabric 3.0., which provides hyper-scale networking in public, hybrid and private clouds. BCF is unique in that it delivers on the core vision of SDN on more dimensions than any other solution currently available. Big Switch Networks is the first supplier to have achieved that goal. BCF uses open software running on low-cost, high performance merchant silicon switches from multiple white box partners. This makes the physical underlay network both efficient and programmable. 

BCF’s overlay virtual network is programmable in the same manner as the physical underlay network, supporting consistent policy deployments in a unified cloud computing fabric.BCF’s controller is also open and modular, able to integrate with cloud management systems like OpenStack and VMware, and providing visibility from the cloud management platform into the operation of its supporting network transparently. BCF’s controller is also open for extension and integration of optimization applications like Fabric Analytics to collect traffic data and use it to perform network optimizations directly. With BCF 3.0 “Big Switch Networks is achieving an important milestone in creating open, scalable, and versatile software-driven networking for the cloud. The true logic for the unified fabric’s operation is created in the BCF Controller and propagated to all participating network elements dynamically,” states Paul Parker Johnson.

Congratulations to the Big Switch team!

Roll It! ACG’s 2015 Omega Winners Are…

ACG Research is honored to announce the 2015 Omega Awards. The award recognizes excellence in message marketing for either a HotSeat, Whiteboard or Spotlight Innovation video as well as vendor operational excellence. The 2015 winners are Big Switch Networks, Brocade, Cisco, and iXia. Winners were cited and honored because “of their achievements in the areas of product innovation, message marketing or operational excellence,” said Ray Mota.

Big Switch Networks was the winner of the Breakthrough Innovation Product for its Big Cloud Fabric 3.0., which provides hyper-scale networking in public, hybrid and private clouds. BCF is unique in that it delivers on the core vision of SDN on more dimensions than any other solution currently available. Big Switch Networks is the first supplier to have achieved that goal. BCF uses open software running on low-cost, high performance merchant silicon switches from multiple white box partners. This makes the physical underlay network both efficient and programmable. BCF’s overlay virtual network is programmable in the same manner as the physical underlay network, supporting consistent policy deployments in a unified cloud computing fabric.


Left to Right Ray Mota, ACG; Douglas Murray, CEO, Kyle Forster, Founder; Shaun Page, VP of Worldwide Sales

BCF’s controller is also open and modular, able to integrate with cloud management systems like OpenStack and VMware, and providing visibility from the cloud management platform into the operation of its supporting network transparently. BCF’s controller is also open for extension and integration of optimization applications like Fabric Analytics to collect traffic data and use it to perform network optimizations directly. With BCF 3.0 “Big Switch Networks is achieving an important milestone in creating open, scalable, and versatile software-driven networking for the cloud. The true logic for the unified fabric’s operation is created in the BCF Controller and propagated to all participating network elements dynamically,” states Paul Parker Johnson.

HotSeat Winner was Brocade Communications. Sanjay Munshi, Senior Director of Product Management at Brocade Communications, and Ray Mota, CEO of ACG Research, discuss Brocade’s significant new network visibility product announcement: carrier-grade, physical and virtual network packet brokers, virtual TAPs, an SDN based session director and a single pane of glass management application. Sanjay highlights the challenges operators have in 4G/LTE visibility, how to address them in a cost effective manner and the critical need for new, next-generation network visibility architectures as mobile operators ramp up to virtual EPC and 5G with billions of M2M connections and Internet of Things in the not too distant future.


Left to Right, Sanjay Munshi, Senior Director of Product Management; Michael Bushong, Vice President of Product Management; Ray Mota, CEO 

The Trusted Vendor Award went to Cisco, which has continued to demonstrate operational excellence and sustainability as measured by ACG’s financial vendor index. Cisco has very high operating margins because of sales, solid gross margin, improved productivity and expense discipline; operating income increased 22.4% y-y. The company also has effective asset utilization, which yielded $3.52 for each fixed-asset dollar in 4Q15. Other operational factors contributing to Cisco receiving the award include efficient inventory management, one of the highest net cash ratios in the industry and a high receivables efficiency ratio.


Left to Right, Ray Mota and Sanjeev Mervana, Sr. Director, Cloud, Infrastructure, & Business Solutions for SPs

Ixia was awarded the Whiteboard winner category. In this video Dennis Cox, chief product officer of Ixia, and Ray Mota, CEO of ACG Research, discuss the need for true 100% visibility. Today, many vendors claim to provide 100% visibility, but many drop packets and create blind spots in your application performance. Understand what is needed for true visibility and providing a secure network for optimal application performance.


Left to Right, Dennis Cox, Chief Product Officer; Ray Mota


Congratulations to the 2015 Omega Award winners! 


rmota@acgcc.com
www.acgcc.com

WORLDWIDE MOBILE IP INFRASTRUCTURE WILL GROW TO $7.4 BILLION BY 2020

Mobile data, LTE upgrades, all-IP transformation and services, and network modernization are expected to positively impact demand for mobile IP infrastructure

The Worldwide Mobile IP Infrastructure market is projected to increase from $4.5 billion to $7.4 billion by 2020. ACG Research anticipates that the total Mobile IP Infrastructure market will increase 15% in 2016 as well as increase in each successive year. Mobile IP Routing Backhaul revenue will increase 7.1% and Switching Backhaul revenue will grow 1.8% during the forecast period. The Packet Core, both Mobile Packet Core and Evolved Packet Core, will surpass 15% by 2020. Although major LTE roll-outs, mainly in the macrocell layer, were completed in 2015, there is continued pressure for more mobile data capacity as mobile broadband subscribers and smart devices continue to grow. Providers want advanced services such as WiFi calling and VoLTE, fueling the demand for packet gateways, control plane functions and virtualization. LTE Carrier Aggregation, 5G and IoT capacity planning are expected to positively impact demand for mobile IP infrastructure. Vendors continue to upgrade their networks and technologies, as densification will be the key driver behind demand for data, which is expected to increase.

The projected five-year growth will be strongest in the Americas region, CAGR +11.0%, followed by the EMEA, CAGR +10.5%, and APAC, CAGR +9.0%.

“In the next five years, service providers will continue to focus on LTE but also target ultra-network transformation, looking into new architectures that will allow them to capitalize on the existing networks, identify new revenue streams, and deliver high quality of experience, service agility and innovation,” says Elias Aravantinos, mobility analyst. “Service providers are looking at vendors’ solutions that will allow them to not only manage existing networks but also let them transform to next-generation networks with simplicity, scalability and, most importantly, with low failure risk services to preserve service viability and minimize network downtime.”

TREND AND DRIVER HIGHLIGHTS

To address the demand for capacity and average revenue per user pressures, service providers are looking at 5G technology as the engine to optimize the different parts of their networks and deliver faster, new and more profitable services. 

Mobile data traffic and 4G/LTE subs are projected to increase significantly during the next six years with operators responding with faster network deployments to satisfy subscribers’ demand, which is driven by video, for more capacity. 

Data centers, flexible virtualized platforms and new software modules are now changing the traditional physical infrastructure thinking over the next 6 years that will put pressures to operators as they need to manage and maintain both virtual and legacy networks. 

How networks proliferated by SDN and NFV will look in next 3 to 5 years will impact 5G standards and subsequent deployments. New network architectures delivering service agility, such as network slicing and virtual automated platforms, could save time and generate quick revenue.

For more information about ACG's mobility services contact info@acgcc.com.

    

Global Router and Switching Market Will Grow to $14.2 B by 2020

Demand for high-speed Internet, big data solutions, SDN, and cloud computing are expected to positively impact demand for the routers and switches

The Worldwide Router and Switching market is projected to increase from $11.9 billion to $14.2 billion by 2020 according to ACG Research. ACG anticipates that the total router and switching market will increase 5% in 2016 as well as increase in each successive year. Core routing revenue will increase 3.9% and Edge routing revenue will grow 2.7% during the forecast period. Recent technological advancements such as big data solutions, software defined networking, and cloud computing are expected to positively impact demand for the router and switch market. Vendors continue to upgrade their networks and technologies, and with the shift in demand from hardware networking solutions to software-based solutions, the demand for core Ethernet devices is expected to rise. 

The projected five-year growth will be strongest in the APAC region, CAGR +4.0%, followed by the Americas, CAGR +3.7%, and EMEA, CAGR +2.8%. “There will be modest yet consistent growth projections for each router segment for 2016–2020 except for Multi-Services Edge Routing segment,” says Ray Mota, principal router and switching analyst. “Legacy technology and next-gen IP have converged into one box at tremendous cost benefits for providers and the need for these devices continues to decrease. With network performance and quality of the networks becoming a key differentiator and with an increase in the penetration of mobile devices such as smartphones and tablets, many service providers are upgrading their networks to support and monetize traffic growth. This escalation in mobile data traffic will have a positive impact on router sales.”

The global demand for data centers is also contributing to router growth. According to the Cisco® Global Cloud Index, data center traffic will grow nearly three-fold and by 2019 data center traffic will reach 104 zettabytes per year. Eighty-three percent of this data center traffic will be from the cloud and 80 percent of data center workloads will be processes in the cloud. Because of the increasing application of big data analytics and cloud-based services, the worldwide demand for data centers is expected to increase and this increase will fuel the adoption of Ethernet switches and routers.

“In the next five years service providers will continue to focus on monetizing emerging opportunities, which will require networks that enable them to accelerate service innovation, scale services, and expand the customers’ experiences within a viable economic framework,” says Ray Mota. “Service providers are looking at vendors’ solutions that provide a single operating system, operational simplicity and a platform with the highest possible scale across bandwidth, subscribers and services.”

TREND AND DRIVER HIGHLIGHTS

Growing operational needs of businesses and the advent of IoT will spur the increase in the global Ethernet switch and router market during the forecast period. The ability of Ethernet switches and routers to aid consumers and businesses in accessing advanced technologies is estimated to result in modest growth.

Mobile data traffic is projected to explode over the next six years as operators deploy faster networks and consumers add more devices to the mobile networks. This surge in demand is due to increase in smartphone usage, rise in wireless devices in networks combined with deployment of faster networks such as 3G/4G/5G and LTE. 

Wireless vendors are already drawing up architectures and scoping out the requirements of next generation wireless platforms; the monetization of current investments amid rapidly changing consumer buying behaviors is a priority of carriers. Major transitions and disruptions from SDN/NFV are also playing out before 5G standards can be decided. How networks proliferated by SDN and NFV will look in next 3 to 5 years is going to impact 5G standards and subsequent deployments.

For more information about ACG's router and switching services contact info@acgcc.com.


rmota@acgcc.com
www.acgcc.com

Another Positive Quarter for the Global Router & Switching Market

Demand for data center interconnect products is driving growth in the routing and switching market

The 4Q15 total Worldwide Carrier Routing and Switching market increased 6.9% percent quarter over quarter and 3.9% year over year. The core routing segment posted revenue of $605.7 million, increasing 3.1% q-q and 7.5% y-y. The edge/switching segment posted revenue of $2.5 billion, increasing 7.9% q-q and 3.1% y-y.

In 2015 we saw
  • Significant increase in deployments of 100 GE ports, driven by the growth in IP traffic as well as the availability of higher capacity line cards.
  • Core router upgrades and replacements prompted by the move to 100GE helped the market to grow in 4Q15. The core router space saw diversification and expansion from traditional IP/MPLS and Internet peering to metro and DCI. Some vendors, specifically Juniper and ALU/Nokia, experienced growth in most regions because of this diversification.
  • The increase in demand for high-speed Internet, expansion of cloud networking combined with adoption of virtualized technology has companies thinking of upgrading their technology.
  • And with the shift in demand from hardware networking solutions to software-based solutions, the demand for core Ethernet devices increased.

In rank order, Cisco Systems, Alcatel-Lucent, Juniper Networks, and Huawei Technologies were the market share leaders in the Service Provider Router & Carrier Ethernet Switch markets, accounting for almost 90 percent of revenue in 2015.

The Worldwide Carrier Routing and Switch market has been affected by increases in fixed broadband traffic and mobile broadband traffic on 3G and LTE networks, which are driving infrastructure growth. Next-generation devices as well as pressure on service providers to provide content-rich applications is nudging many service providers to upgrade their access, aggregation, core networks, and mobile backhaul. In 2016, we expect the developments in technologies such as DOCSIS3.1, LTE, 5G and G.fast, which in turn will drive IP traffic growth and prompt service providers to invest more in routers to keep their competitive advantage.



TREND HIGHLIGHTS

Equipment vendors saw double- and in some cases triple-digit growth in 100G ports. In 2015 we saw a significant increase in adoption of 100 Gigabit Ethernet (100GbE), which was driven by the continuous increase in IP traffic as well as the availability of higher capacity line cards. We expect this momentum to continue into 2016 as newer core router platforms go from test to deployment stages, and next generation 100 Gbps Ethernet optical interfaces become available.

In 2015, NFV saw traction with proof of concepts becoming deployments. Increasingly, operators are turning to NFV as an enabler of new services, short service innovation cycles, and as a means to drastically reduce the operational cost of new and existing services. AT&T has targeted virtualizing 75 percent of its business by 2021. Virtual CPEs, software-defined data centers, and VPN platforms are strong candidates for SDN/NFV transition. AT&T has identified wireless packet core as its first major function to virtualize. Dell Inc., which purchased EMC for a $67 billion, has entered the virtualization market to offer public/private software-defined datac enter cloud. Additionally, carriers realize cost savings as they do not have to buy, in some cases, additional hardware or vendor-specific hardware.

Data center interconnect has become a vital part of the service provider edge; currently, ACG sees six to eight percent of edge routers being dedicated to DCI. Traditionally, the router was used at the gateway function in the data center, but a large number are now for the data center for connectivity. The global demand for data centers has increased and data center equipment is seeing double-digit growth every quarter. Global data center traffic is expected to grow nearly three-fold, and by 2019 data center traffic will reach 104 zettabytes per year.

For more information about ACG’s router and switching services contact info@acgcc.com.


Meghna Zutshi
mzutshi@acgcc.com
www.acgcc.com

Thursday, March 10, 2016

ACG HotSeat with Kelly Ahuja, Cisco, on CloudScale Networking

Kelly Ahuja, SVP, Service Provider Business, Products, and Solutions, Cisco, and Ray Mota, CEO of ACG Research, discuss Cisco’s recent announcement of software solutions for CloudScale networking. Cisco worked with web-scale and service providers to identify their network priorities; across the board, these providers want deployment capabilities that can scale rapidly, are easy to execute,and automated and optimize the network so that they can deliver services on demand. Listen as to how Cisco with its software-centric approach and leading-edge network platforms meets SPs current and future requirements to address not only cloud-scale networking but deliver exceptional operational efficiency. 


Contact sales@acgcc.com for more information about ACG's video services.


rmota@acgcc.com
www.acgcc.com

Friday, March 4, 2016

Ray Mota Talks NFV with Affirmed Networks & RCR Wireless

This CEO panel, filmed during Mobile World Congress 2016, brings together Hassan Ahmed, Affirmed Networks CEO, ACG Research CEO Ray Mota and Jeff Mucci, CEO of RCR Wireless News. The group discusses the use cases driving carrier NFV adoption and how the NFV landscape has changed in the past year.


Contact info@acgcc.com for more information about ACG's video services

rmota@acgcc.com
www.acgcc.com