Aug 15, 2014
As noted recently, network hardware may be on the ropes, but while certainly battered and bruised, it still matters. In fact, more than $1 trillion will be spent on telecom and datacom equipment and software over the next 5 years, according to a new report from Infonetics Research. Last year, sales of telecom and datacom equipment and software grew 3%, to $183 billion.
“Despite the fact that enterprises and service providers are in the middle of massive network upheavals due to the evolution of software-defined networking (SDN) and network functions virtualization (NFV) technology, the telecom and datacom networking equipment and software market is on track to grow annually through 2018 with the fastest growth coming in 2015,” noted Jeff Wilson, principal analyst at Infonetics. Even though there’s tremendous uncertainty about the health of the global economy and prospects for economic growth in the short term, this segment is expected to grow annually, driven by major network transformations, he stated.
A deeper dive into the data showed that mobile service revenue remains the main telecom/datacom growth engine worldwide, led by the unabated rise of mobile broadband. However, Infonetics said SDN and NFV have the attention of nearly all service providers, who are on the long road to widespread deployments. They also are helping operators get a better handle on big data. The top four trends driving enterprise networking and communication technology spending are cloud, mobility, BYOD, and virtualization:
It’s still very early days for SDN and NFV, but even if for some unfathomable reason they don’t end up completely revolutionizing the network market, something similar will have to be invented, because networking as it currently exists is broken. SDN market projections are changing all the time, but it is expected to reach up to $3.7B by 2016, with a compound annual growth rate of 61.5% from 2012 to 2018.
The network infrastructure segment is expected to be the main beneficiary of growing investments, said report co-author Matthias Machowinski, directing analyst for enterprise networks. “The communication segment will likely have another challenging year, as companies evaluate their deployment strategy going forward.”
Gartner has predicted that IT budgets, which are expected to inch up 2.1% this year to $3.75 trillion, will turn in a much more respectable 3.7% surge next year, to $3.9 trillion.
However, the bulk of that money will be spent on telecom services, and it will barely grow, from $1.64 trillion to $1.67 trillion over the next year, while data center systems will have an even poorer showing. This year’s expected $140 billion pay out is expected to grow to $144 billion by 2015.
So what does this mean going forward, especially given all the IT demands which are rapidly outpacing budgets? IT needs to do so much more with so much less that hardware — especially proprietary hardware — will continue to face increasing pressure to justify its existence, and will increasingly, I believe, fall short.
PS: This is still primarily on the drawing boards, but MIT researchers are working on a network management system they are calling no-wait datacenters. The researchers have experimentally shown that the system can reduce network transmission queue length by over 99%.
In testing done in cooperation with Facebook at one of their data center facilities, the researchers were able to show latency reductions that effectively did away with the normal queue. Their report stated that even in times of heaviest traffic, the average latency per request dropped from 3.56 microseconds to .23 microseconds.