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Publication date: 17 Jan 2024

Telco Cloud Infrastructure Software Market to Grow to $27 Billion in 2027 as Telcos' Cloud-Native Journeys Accelerate, Says IDC

NEEDHAM, Mass., January 17, 2024 – International Data Corporation (IDC) sees cloud-native deployment of telco network workloads accelerating in 2024. IDC forecasts worldwide revenue for telco cloud infrastructure software, including virtual network functions (VNFs), cloud-native network functions (CNFs), and network functions virtualization infrastructure (NFVI), across four market subsegments (core transport, mobile infrastructure, mobile backhaul, access networks and virtual CPE), will grow from $12.9 billion in 2022 to $27.3 billion in 2027. This represents a compound annual growth rate (CAGR) of 16.1% over the 2022-2027 forecast period.

Most current telco workloads continue to leverage VNFs; however, as wireless, wireline, and other service providers turn their attention to cloud-native workloads, we expect the CNF market to grow rapidly. In making this year's forecast, IDC has accounted for the recent emergence and growing initiative to deploy cloud-native, container-based telco workloads across the telco cloud. Accordingly, the forecast breaks out cloud-native network functions as a separate line item.

In addition, with the inclusion and discrete breakout of cloud-native network functions, IDC recognizes the impact on NFVI and underlying shifts toward container-as-a-service (CaaS) offerings that include container-based infrastructure management such as Kubernetes, or even hybrid deployment models in which containers are deployed on bare metal or virtual machines (VMs). In addition, in a cloud-native world, the impetus is on comms service providers to deploy network functions across edge sites while continuing to manage a mix of core and edge sites on horizontal telco cloud platforms based on a common software foundation.

"Adoption of cloud-native network functions is gaining momentum, with CNFs being deployed alongside virtual network functions across comms service providers' cloud-based digital infrastructure for service agility, lower cost of ownership, and elastic scaling of the network," said Ajeet Das, research director, Telecom Network Infrastructure at IDC. "However, these operators face a range of daunting challenges, including lack of in-house expertise in cloud-native orchestration and infrastructure, difficulty defining and implementing comprehensive security, and operational complexity of managing on-premises, cloud, and multi-cloud networks."

The IDC report, Worldwide Telco Cloud Infrastructure Software (NFVI, VNF, and CNF) Forecast, 2022-2027 (IDC #US50087723), presents the worldwide market forecast for the telco cloud infrastructure software (VNF/CNF and NFVI) for the 2022–2027 period. As part of this forecast, IDC breaks out telco cloud infrastructure software spending across core transport network (CUPS adoption in core and edge routing and BNG), mobile cloud infrastructure (e.g., virtual and cloud RAN, vEPC/5G Core, and vIMS), mobile backhaul, access network virtualization, and virtual CPE. 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 1,300 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 Follow IDC on Twitter at @IDC and LinkedIn. Subscribe to the IDC Blog for industry news and insights.