Network functions at the enterprise edge, such as routing, security, and WAN optimization, have historically been delivered via dedicated purpose-built physical network appliances deployed on the enterprise network edge.

Under the new paradigm of virtual CPE (vCPE), these network functions are delivered on virtual multitenant commodity infrastructure, now widely referred to in the industry as uCPE. Instead of several physical appliances at the network edge, virtual CPE aims to leverage several virtual network functions on a single (or multiple) hardware device.

A new forecast from International Data Corporation (IDC) estimates that the worldwide virtual CPE infrastructure market – hardware and software – will exceed $3 billion by 2021. IDC ( forecasts the virtual CPE software market to grow from $145.7 million in 2016 to $2 billion in 2021 at a compound annual growth rate (CAGR) of 68.3%. The virtual CPE hardware market is expected to grow from a base of $67.8 million in 2016 to $1.16 billion in 2021 at a CAGR of 76.4%.

The research group says the most significant driver of NFV at the network edge – virtual CPE – over the next five years will be digital transformation (DX) in which enterprises deploy third platform technologies — including cloud, big data and analytics, mobility, and social business — to unlock new sources of innovation and creativity that enhance customer experiences and improve financial performance. SD-WAN is the WAN’s response to the migration of apps to the cloud in the enterprise’s pursuit of DX goals. SD-WAN, is also the precursor of a broader virtual network functions (VNF) deployment at the network edge under the virtual CPE paradigm.

Finally, IDC believes there is a broader acceptance, and adoption, of software-defined networking (SDN) throughout the enterprise. As virtualization, cloud management, and SDN continue to gain traction throughout enterprise networks, virtual CPE will benefit from this paradigm shift and receive increasing consideration. It also helps that virtual CPE also promises enterprises a strong return on investment.

The abstraction of networking function into software away from the underlying hardware makes it much simpler to operate the infrastructure and enables significantly higher flexibility of operation, according to IDC. The operational simplicity and flexibility make for significant reduction in operating expenditure (Opex).

Opex can be further reduced over time as the software-based function enables greater automation and elimination of routine tasks. Most importantly, it enables the enterprise to add or remove new functions on the fly, allowing the enterprise to respond more dynamically to both opportunities and threats in the environment, adds IDC.