Global telco cloud revenue will grow to US$29.3 billion by 2025, up from US$8.7 billion in 2020, at a 5-year Compound Annual Growth Rate (CAGR) of 27%.
The telco cloud growth will be driven primarily by cloud infrastructure-related investments, such as Virtual Network Functions (VNFs), Management and Network Orchestration (MANO), and Cloud Native Functions (CNFs).
ABI Research forecasts telco cloud market to be worth US$10 billion in North America, US$9 billion in Asia-Pacific (APAC), and US$8.2 billion in Europe by 2025.
The introduction of cloudified environments in the telco business landscape also presents some shifts in the value chain. For example, telcos are now being presented a second option of telco cloud deployment—the multi-vendor approach, in which different network equipment vendors are responsible for different components of the telco.
“While this approach seems to provide some benefits, such as avoiding single-vendor lock in, it also requires substantial coordination of effort, not only through robust MANO, but also between stakeholders during certain key phases of the telco cloud deployment, such as the design and planning phase,” explains Kangrui Ling, 5G Core and Edge Networks Research Analyst at ABI Research.
Another 5G Core and Edge Networks trend highlighted in the whitepaper: 5G network slicing stands to create approximately US$8.9 billion by 2026 at a CAGR of 76%.
Don Alusha, senior analyst at ABI Research points out that the figure is a drop in the bucket for Communication Service Provider (CSP) service revenue. CSPs continue to possess strong network assets, namely low-latency, last-mile access and core network capabilities.
But for the broader industry, capturing significant new growth opportunity will vary in line with their corresponding digitization initiatives and readiness to adopt new technologies like 5G core networks and cloud-native principles.
Conversely, hyperscalers like Microsoft and Amazon are cognizant of these dynamics and are positioning themselves accordingly with telco-specific solutions like Amazon Web Services (AWS) Wavelength and Microsoft Azure Edge Zones, particularly on edge computing deployments.
“Though moderate in the next 5 years, new value creation abounds, but the jury is still out who captures what parts of the bigger emerging 5G edge and network slicing ecosystem,” Alusha concluded.
