Market Overview

IDC Forecasts Network Functions Virtualization Infrastructure (NFVI) Revenues to Reach $5.6 Billion in 2022

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Communications service providers (CSPs) are being challenged to
transform their carrier network infrastructure (CNI) to create new
business network services, generate new revenue streams, and improve
their operational efficiency. Against this backdrop, CSPs are embracing
software-defined networking (SDN) and deploying network functions in
virtualized (NFV) form factors. Today, CNI includes both physical and
virtual network infrastructure, leveraging NFV and SDN. A new report
from International Data Corporation (IDC)
introduces a new CNI category – network functions virtualization
infrastructure (NFVI) – and provides the first NFVI revenue forecast.

Because this is a nascent market, IDC estimates that worldwide NVFI
revenues were just $564 million in 2017. But as CSPs ramp up their
network transformation, revenues are expected to achieve a compound
annual growth rate of 58.1% over the 2017-2022 forecast period, reaching
$5.6 billion in 2022.

In defining NFVI, IDC aligns with the European Telecommunications
Standards Institute (ETSI) proposed architecture identifying five
segments in this CNI domain: software-defined compute, networking,
storage, management, and orchestration. IDC expects the orchestration
segment will be the fastest growing, driven by the need to orchestrate
network services dynamically across an increasingly complex smorgasbord
of network functions – both physical and virtual – potentially across
several vertical domains. Software-defined networking is also likely to
grow significantly, driven by the growing need to programmatically
manage network flows in response to a dynamic market and an
application/use case environment – both within the telco cloud
datacenter and across telco cloud deployments to manage services flows.
The compute and management segments will grow at a comparatively slower
pace than the other segments.

From a domain perspective, wireless infrastructure is the largest
contributor to the NFVI forecast today and will continue to be the
largest contributor throughout the forecast, followed by the routing. 5G
will be a big driver of wireless infrastructure NFVI growth, while the
move to virtual routing in edge and access use cases will enable routing
NFVI growth to outperform the overall market.

"Communications service providers globally recognize the need to
digitally transform their network infrastructure and build more
customer-centric business models. 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,"
said Rajesh
Ghai
, research director, Carrier
Network Infrastructure
research at IDC. "NFVI is the foundation on
which this vision rests and this forecast is IDC's first effort to size
this strategically important segment of carrier network infrastructure."

The report, Worldwide
Telecom Network Functions Virtualization Infrastructure Forecast,
2018-2022
(IDC #US44212617), presents IDC's inaugural forecast
for the NFVI market. Revenue is presented for the overall market and
each of the five market segments (compute, networking, storage,
management, and orchestration) as well as by domain (routing, wireless
infrastructure, access, and optical transport). The report also provides
a market overview, including drivers and challenges for communications
service providers and advice for technology suppliers.

About IDC
International Data Corporation (IDC) is the
premier global provider of market intelligence, advisory services, and
events for the information technology, telecommunications, and consumer
technology markets. With more than 1,100 analysts worldwide, IDC offers
global, regional, and local expertise on technology and industry
opportunities and trends in over 110 countries. IDC's analysis and
insight helps IT professionals, business executives, and the investment
community to make fact-based technology decisions and to achieve their
key business objectives. Founded in 1964, IDC is a wholly-owned
subsidiary of International Data Group (IDG),
the world's leading media, data and marketing services company that
activates and engages the most influential technology buyers. To learn
more about IDC, please visit www.idc.com.
Follow IDC on Twitter at @IDC
and LinkedIn.

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