In 1Q18, the Evolved Packet Core (EPC) market grew 15% compared to 1Q17 to reach $578 million. We expect that the market will continue to improve throughout 2018 as data usage prompts capacity increases and operators are increasingly comfortable in using cloud-based infrastructure for their smartphone traffic.

Like many market segments within service provider core networks, the EPC market is still in the early stages of transitioning to virtual and cloud-based systems and away from purpose-built router and appliance platforms. During the quarter, approximately 10% of the revenue for the quarter was based on virtual or cloud network functions with the remainder being composed of physical or purpose-built network elements. With the 5G core network architecture due to be approved in June 2018, it is expected that this will help prompt more operators to more actively plan to transition their primary packet core network to a cloud-based architecture that supports both 4G and 5G subscriptions.

During the quarter, the market leaders were: Huawei, Ericsson, Cisco, and Nokia.