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$15B market for "live" SDN by 2018

$30B total potential market for service provider deployments, says ACG

Sales of software-defined networking products for live service provider deployments will reach $15.6 billion by 2018, while those that have live deployment potential will reach $29.5 billion, according to ACG Research. The firm studied SDN deployments in cloud and application data centers, advanced IP services and multilayer transport across four domains: data center, IP edge, metro and core.

ACG's live deployment figures are on a similar trajectory as IDC's estimates for both enterprise and service provider deployments, which are growing at a 117% CAGR, but far below those of Infonetics Research which chart enterprise and data center. And ACG's market potential figure is also in line with another previous forecast.

The market for SDN-enabled hardware in live deployments across all four domains is projected to top $707 million in 2014 and to reach $13.3 billion in 2018, according to ACG. Software will reach $2.3 billion in live service provider SDN deployments by 2018.

Software sales will be split evenly among SDN controllers and applications early on. But by 2018, the split will be 60% applications to 40% controllers across all domains, ACG predicts.

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Cloud and application data centers will be the busiest of the four domains until 2016, representing over 50% of SDN sales into live deployments, ACG said. By the end of the forecast period, edge and metro areas will each become larger than the data center domain, with the uptake of SDN in advanced transport and IP services ramping along with deployments in the cloud.

Driving all of this will be virtualization and consumer appetite for media and entertainment, social networking, Internet of Things, and cloud IT/application hosting. Indeed, the top revenue generating services motivating service providers to embrace SDN are cloud-based IT and applications, content and entertainment delivery, machine-to-machine applications, and managed services for business and individual users.

Service provider networks will have to harness SDN to improve the agility and capacity of their service networks to address these demands, ACG says. They'll use SDN for automated service provisioning, traffic steering, custom applications/services, application-driven service chains, transport path optimization, SLA monitoring and enforcement, operations simplification and a reduction in capital costs, ACG says.

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