Virtual network functions (VNFs) represent a growing revenue opportunity for telecom and network operators.
VNFs provide virtualized versions of different common network capabilities, including WAN optimization, WLAN controllers, routing and firewall capabilities. VNFs are different than software-defined networking (SDN) constructs that aim to virtualize the network itself. In contrast, VNFs deal with services.
In a report titled, "Worldwide Telecom Virtual Network Functions Forecast, 2018-2022," IDC provides its forecast for the growing VNF market. IDC notes that VNF in 2018 is a relatively small business. For 2017, IDC tracked $2.5 billion in revenue for VNFs and stated that 2018 revenue should double, thanks to 5G deployment needs.
Looking forward, IDC has forecast a compound annual growth rate (CAGR) for VNF revenue of 45.4 percent over a five-year period, with 2022 revenues for VNF coming in at $16.4 billion.
"Communications service providers globally recognize the need to digitally transform their network infrastructure and build more customer-centric business models," Rajesh Ghai, research director, Carrier Network Infrastructure research at IDC, wrote in a statement. "Embracing software-defined networking principles and deploying network functions in virtualized form factors are a strategic necessity, not only for carriers as they invest in their future, but also for vendors supplying those solutions to the market."
Sean Michael Kerner is a senior editor at EnterpriseNetworkingPlanet and InternetNews.com. Follow him on Twitter @TechJournalist.