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But the service provider SDN/NFV universe is much larger than the enterprise. In sizing the market, ACG found that cloud and application data centers will be the busiest of four service provider domains -- data center, IP edge, metro and core -- until 2016, representing over 50% of SDN sales into live deployments. 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.
Similarly, Infonetics last found that the top five network domains targeted by operators for SDN and NFV are: within data
centers; between data centers; operations and management; CDNs; and cloud services. Eighty-six percent of surveyed operators
also plan to deploy SDN and NFV technology in their optical transport networks as well, once standards are finalized, according
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 and NFV to improve the agility and capacity of their service networks to address these demands, ACG says. They'll use SDN/NFV 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.
“Many operators are operating at pretty high scale,” says ACG analyst Paul Parker-Johnson. “One of the things NFV platforms allow them to do is deploy a solution quickly into a tenant context. They can deploy functionality just as another module, just as another resource in the cloud.”
Early use cases of data center SDN were in cloud service providers with enterprise data centers still in the lab trial phase, Grossner notes. They have the scale to benefit from the optimizations promised by SDN.
And cloud service providers are under pressure to reduce costs to make a profit from offering cloud services like IaaS, PaaS and NaaS to enterprises.
“The urgency was there because of the requirement to be less expensive overall, and the scale where the potential cost savings was large enough to justify the investment” in SDN and NFV, Grossner says.
Infonetics found that 80% of the service providers responding to a 2012 survey are including the OpenFlow SDN protocol and API in their purchasing considerations. OpenFlow manipulates the forwarding of switches downstream from a centralized SDN controller.
Google is using OpenFlow to interconnect 12 worldwide data centers over 10G links. And Verizon sees OpenFlow as a standard way to implement SDNs across multivendor equipment to centralize network intelligence from a high number of remote locations to its more accessible data centers.