26 May 2021

IDC Forecasts Carrier VNF/CNF and NFVI Markets to Grow from $7.5 Billion in 2020 to More Than $29 Billion in 2025 as Telco Cloud Rollouts Rapidly Increase

NEEDHAM, Mass., May 26, 2021 – International Data Corporation (IDC) forecasts worldwide revenue for telecommunications network functions virtualization (NFV) software, including virtual network functions (VNFs), network functions virtualization infrastructure (NFVI), and cloud-native network functions (CNFs), will grow from a combined $7.5 billion in 2020 to just over $29 billion in 2025. This represents a compound annual growth rate (CAGR) of 30.9% over the 2020-2025 forecast period.

Despite the sustained headwinds from COVID-19 in 2020, communications service providers (SPs) continued to deploy VNFs as an adjunct to legacy physical network functions. Additionally, the broader industry witnessed early instances of CNFs deployed in containers, primarily tied to the standalone 5G core as part of mobile network upgrades, giving rise to telco cloud infrastructure. However, IDC does not expect material uptake for CNFs across comms SPs (wireless and wireline) until the latter part of the forecast.

While the VNF/CNF and NFVI markets have generally underperformed against expectations thus far, we expect 5G network rollouts to positively impact uptake, particularly across the latter portion of the forecast. Additionally, virtualization is incrementally seeing uptake across the core transport network, mobile backhaul, access network (cable and PON) and virtual CPE markets, particularly as multi-access edge computing (MEC) initiatives take hold.

"Communications SPs globally continue to gradually embrace network virtualization technologies driven by the lower cost of ownership and elastic scaling of the network," said Ajeet Das, research director, Carrier Network Infrastructure research at IDC. "Cloud-native network functions are now slowly being deployed alongside virtual network functions across cloud-based digital infrastructure so that the customer-centric services can be scaled, updated, and orchestrated easily, not only at the core but also at the edge of the network."

The IDC report, Worldwide Telecom Network Functions Virtualization Software (VNF and NFVI) Forecast, 2021–2025 (IDC # US47662821), presents the worldwide market forecast for telecom network functions virtualization software (VNF and NFVI) for the 2021–2025 period. As part of the forecast, IDC breaks out VNF/CNF spending across the core transport, mobile, mobile backhaul, access, and CPE domains, with further breakouts in each segment. (e.g. vRAN). For NFVI, IDC breaks out spending across key segments such as the faster-growing virtual infrastructure management (VIM) and orchestration domains, as well as traditional infrastructure segments (e.g., software-defined infrastructure). 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, IT benchmarking and sourcing, 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 tech media, data, and marketing services company. To learn more about IDC, please visit www.idc.com. Follow IDC on Twitter at @IDC and LinkedIn. Subscribe to the IDC Blog for industry news and insights.


Regions Covered


Topics Covered

Networking virtualization

For more information, contact:

Michael Shirer

Rohit Mehra

Patrick Filkins

Ajeet Das