SourceFor years, internet service providers (ISPs) have been purveyors of bit pipes and little else. Plenty have been able to charge a buck or three a month for services like extra security, hosting or storage, but over-the-top services have nearly always won the day, as shown by the fact that Dropbox rules and ISPs like Australia's iiNet have exited the cloud storage and security business.
CPEs that can run virtual machines give the carrier a platform to push services onto the kit, if they can't be run in the cloud. Lightweight hypervisors aren't hard to find and won't strain a multi-core Atom box unduly.
Consider WAN optimisation, for example. Purveyors of that technology nearly always need to deploy software on-premises and in the data centre. Getting your average family or small business to install an app on every device to make that happen is asking for trouble.
Running it in an on-premises virtual machine spawned into the CPE with the only customer intervention being to click a box saying “Do you want faster downloads for $1/month?” is a lot more likely to have a happy ending.
So...VMs on routers eh? Heh...