Research company Dell’Oro Group offered a more bearish outlook for telecom server market revenue than it did in 2022, though remained confident increased adoption of network function virtualisation (NFV) and edge use cases would keep growth in the double-figures over the next five years.

The research outfit noted the transition of telecom appliances to server-based architectures is still in its early stages, but sufficient to drive a 19 per cent CAGR in revenue, which it expects to hit $12.5 billion in 2027.

Analyst Baron Fung told Mobile World Live the company previously forecast a CAGR of 20 per cent between 2022 and 2026, with revenue tipped to reach $14 billion.

Dell’Oro Group stated it lowered its forecast due to economic headwinds impacting network spend, challenges around adoption of open RAN and multi-access edge computing (MEC) and an overly-optimistic outlook for OSS and BSS servers.

It predicted data centre server revenue will hit $265 billion in 2027, with other equipment taking the total to $500 billion that year.

The company noted a convergence of data centre IT and telecom infrastructure continued, with operators favouring commercial off-the-shelf servers for NFV to reduce costs and replace legacy hardware.

It predicted edge use cases will account for 45 per cent of telecom server revenue in 2027.