Analysis of the Global Virtualized IP Testing Market

Flexibility and Cost Savings Drive Market Growth

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August 2013

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Research Team

Olga Shapiro Program Manager

Measurement & Instrumentation

Sujan Sami Industry Manager

Measurement & Instrumentation

Lead Analyst Program Manager

Corporate Communications

Jeannette Garcia Corporate Communications- North America

Measurement & Instrumentation

P: +1 210.477.8427

E: jeannette.garcia@frost.com

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Contents

Section

Executive Summary

Market Overview

Virtualized IP Testing Market

• External Challenges: Drivers and Restraints

• Forecasts and Trends

• Market Share and Competitive Analysis

The Last Word (Conclusions and Implications)

Appendix

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Executive Summary

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Executive Summary

• The virtualized IP testing market registered revenue of $4.4 million in 2012.

• The market is expected to reach $246.1 million in revenue by 2020 growing at a

compound annual growth rate (CAGR) of 65.4% from 2012 to 2020.

• The major market participants in the virtualized IP testing market include Ixia, Shenick

Network Systems, and Spirent Communications.

• The key advantages of virtualized testing products include low cost of ownership,

flexibility, and customization.

• As the virtualization trend continues to penetrate the industry, the need to test different

elements of virtualized environments is increasing as well, thus, creating opportunities

for test vendors.

• In addition, discussion with existing users of virtualized IP test solutions indicates that

this market is expected to grow exponentially. An optimal pricing model is key for scaling

the test solution successfully and gaining market share.

Source: Frost & Sullivan

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Executive Summary—Market Engineering Measurements

Market Stage

Growth

Market Revenue

$4.4 M

(2012)

Market Size for

Last Year of

Study Period

$246.1 M

(2020)

Virtualized IP Testing Market: Global, 2012

Stable Increasing Decreasing Note: All figures are rounded. The base year is 2012. Source: Frost & Sullivan

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Executive Summary—CEO’s Perspective

2 Virtualizing an infrastructure brings

tremendous cost savings to users.

3

4 It is important to identify and focus on the

growing and changing end-user requirements.

1 Virtualization is a widespread trend in the

industry.

With rapid technology growth, proprietary,

hardware-based solutions are becoming

obsolete and the need for easy and cost-

effective virtualized IP test solutions is on the

rise.

Source: Frost & Sullivan

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Market Overview

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Market Overview—Definitions

• The virtualized IP test equipment market covered in this study consists of scalable and

fully virtualized test solutions that are suitable for testing both physical devices under

test (pDUT) and virtual devices under test (vDUT).

• Such solutions must utilize industry standard servers such as Cisco UCS, Dell

PowerEdge, HP ProLiant, and/or IBM.

• These industry standard servers are x86 architecture data center server platforms

consisting of computing hardware, virtualization support, and management software.

• These solutions also support all major hypervisors such as VMware ESXi, Microsoft

Hyper-V, KVM, and Xen.

• Some of the examples of virtualized IP test solutions are Spirent TestCenter Virtual,

Spirent Avalanche Virtual, Shenick TeraVM, Ixia IxNetwork VM, and Ixia IxLoad VM.

Source: Frost & Sullivan

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Market Overview—Definitions (continued)

Source: Frost & Sullivan

This global study includes the following regions:

• North America: Canada and the United States

• Europe: Western, Central, and Eastern Europe; and Russia

• Asia-Pacific: Countries that are on the western border of the Pacific Ocean (including

those on the Indo-Chinese peninsula), the Pacific Islands, and Central Asia

• Emerging Markets: Central and South America, the Caribbean islands, the Middle

East, and Africa

The various end-user segments include:

• Service providers (SPs)

• Network equipment manufacturers (NEMs)

• Enterprises

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Market Trends

Network operators’ networks are getting crowded with various proprietary hardware

appliances. Moreover, hardware-based appliances quickly reach end of life, thus, requiring

more of the procure-design-integrate-deploy cycle to be repeated with insignificant or, often,

no revenue benefit.

With rapid technology growth, proprietary, hardware-based solutions are becoming obsolete

sooner and the need for easy and cost-effective upgrade of test products is required and is

much more feasible through a virtualized test solution.

The need for virtualized test solutions is on the rise in the R&D stage of the product life

cycle where test engineers are able to share the virtualized test beds, thereby reducing the

cost of purchasing proprietary hardware testers for each test engineer.

Research also indicates that there will be an increase in use of virtualized IP test solutions

with increases in customer knowledge as the prices of these test equipment are

comparatively lower to that of their proprietary hardware test counterparts. This significant

benefit will allow customers to invest more and not fall back.

Source: Frost & Sullivan

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Market Overview—Key Questions This Study Will Answer

Is the market growing, how long will it continue to grow, and at what rate?

What are the key growth drivers and restraints for the market?

Who are the major participants in this market and what is their market share?

Are the products offered today meeting customer needs, or is there additional development

required?

What are the major advantages of using a virtualized IP testing solution and how does it address

today’s growing concerns of end users?

Source: Frost & Sullivan

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External Challenges: Drivers and Restraints—

Virtualized IP Testing Market

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Drivers and Restraints

Virtualized IP Testing Market: Key Market Drivers and Restraints, Global, 2013–2020

Lack of customer awareness hinders market growth.

Focus on existing proprietary hardware test

solutions restrains market growth.

1–2 Years 3–4 Years 5–8 Years

Advantages of flexibility and cost savings of

virtualized environment and solutions drive the demand

for virtualized IP test solutions.

Rapid growth in virtualization and cloud

technology drives demand.

Pay-as-you-go option for testing boosts market

growth.

NFV industry consortium boosts demand.

Mark

et

Dri

vers

M

ark

et

Restr

ain

ts

Impact: High Medium Low Source: Frost & Sullivan

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Forecast Assumptions

The virtualized IP testing market is gaining importance with the industry’s shift towards virtualized

environments.

The introduction of TeraVM by Shenick revived the virtualized IP testing market and was responsible

for the rapid double-digit growth of virtualized IP test products.

Test vendors need to focus on educating customers on the benefits of virtualized IP test solutions to

increase the sales of such equipment.

Savvy IT leaders continue to invest in their virtualization solutions, looking for ways to continue to add

efficiencies, reduce costs, and improve performance.

In addition, they install virtualization platforms that pave the way for future evolution, including

providing a path to the private cloud and even public clouds.

Note: All figures are rounded. The base year is 2012. Source: Frost & Sullivan

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Appendix

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Market Engineering Methodology

One of Frost & Sullivan’s core deliverables

is its Market Engineering studies. They

are based on our proprietary Market

Engineering Methodology. This approach,

developed across the 50 years of

experience assessing global markets,

applies engineering rigor to the often

nebulous art of market forecasting and

interpretation.

A detailed description of the methodology

can be found here.

Source: Frost & Sullivan

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Partial List of Companies Interviewed

• Ixia

• Network Functions Virtualization (NFV)

• Shenick Network Systems

• Spirent Communications

Source: Frost & Sullivan

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Source: Frost & Sullivan