IDC report: VNF revenues to hit $16.4B by 2022

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A new report by IDC says that VNF revenue will double from last year to this year. (Pixabay)

After a somewhat rocky start, virtual network functions are poised to grow to $16.4 billion in revenues by 2022, according to an IDC report.

Worldwide revenue for the VNF market in 2017 checked in at $2.5 billion across emerging segments such as network slicing for 5G and virtual customer premises equipment (vCPE) for business services. Driven by early 5G deployments, vCPE, CORD (Central Office Re-architected as a Datacenter) and HERD (Head End Re-architected as a Data Center), IDC expects VNF revenues will double this year.

IDC's report says wireless infrastructure is the largest contributor to the current VNF forecasts, and it's expected to continue to be the largest contributor in 2022 followed by routing. With meaningful rollouts starting next year, 5G will continue to be a big driver of wireless infrastructure VNF growth, while the move to virtual routing in edge and access use cases will drive routing VNF growth more than overall VNF market growth rates.

"Communications service providers globally recognize the need to digitally transform their network infrastructure and build more customer-centric business models," said IDC's Rajesh Ghai, research director for Carrier Network Infrastructure, in a prepared 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." 

RELATED: AT&T adds more VNFs for businesses with Cisco's ENCS

Network functions virtualization (NFV) is a key element for the evolution of service providers' network architectures. With NFV, service providers are designing services by chaining various VNFs, such as virtual firewalls or virtual routers, together that can then run across x86 servers or virtual routers. One of the problems that has hampered the deployment of VNFs has been that service providers have had to configure and onboard each vendor's VNF to use them in their software-defined networks.

Chris Rice, senior vice president of AT&T Labs, Domain 2.0 Architecture and Design, has spent the past few years evangelizing that VNFs needed to be more like Lego building blocks and less like unique snowflakes so that service providers can configure and deploy them quickly.

"They've [VNFs] gotten better," said Ensemble CTO Prayson Pate in an interview earlier this month with FierceTelecom. "So first of all, we're not providing the VNFs. VNFs are coming from the third-party suppliers. What we've seen over time is that they've gotten more consistent. Now we're seeing a lot more of them are supporting constructs like Cloud-Init and Config-Drive, which are much more standard and make onboarding go a lot faster. So it has gotten a lot better since the early days."

In response to service providers' VNF concerns, the Open Networking Automation Platform (ONAP) and the European Telecommunications Standards Group are both working on improving the use and deployments of VNFs.

Last month, F5 Networks announced a way to simplify NFV for mobile operators and service providers with its new VNF Manager and preconfigured VNFs, but for now that platform only works with F5's VNFs.

Service providers are looking at using containers for quicker onboarding, provisioning and maintenance of VNFs. In a previous interview, Anil Simlot, CenturyLink's vice president of virtual services, development and support, said his company was a big believer in using containers and containerizing its VNFs, but so far he hasn't seen the vendor community come up with a VNF that CenturyLink can use in a container for its cloud environments.