Leo Gergs, analyst with ABI Research said that the private 5G market is moving away from an exploratory phase
The global private cellular market is expected to reach $100 billion by 2030, with a growing participation of services and applications, according to Leo Gergs, senior research analyst at ABI Research.
“It’s important to mention here that this does not only comprise the connectivity infrastructure, but also professional services and applications. And in fact, we see almost a 50/50 split here, which really highlights that applications and services are becoming more important in that domain,” the analyst said during a presentation at RCR Wireless News’ Private Networks Global Forum 2023.
Commenting on the current state of the private cellular networks market, Gergs said that the market is moving away from an exploratory phase, which focused on trials and proof of concepts towards real commercial deployments. “This leads to a more realistic picture from different angles. The market is maturing in different different aspects, leading to different implications ranging from more technology focused implications to more business cases and market structure implications,” he said.
“From a technology point of view, the industry has realized that enterprises will not rip out their existing connectivity infrastructure and only deploy private cellular connectivity. Wi-Fi and private cellular specifically 5G will continue to coexist and converge for enterprises different use cases,” the analyst added.
According to Gergs, some life critical use cases can use private cellular, while other IT-driven use cases, for example, could use Wi-Fi. “And vendors are already reacting to that trend looking at more converged solutions. So I think the convergence of Wi-Fi and 5G will be the name of the game really.”
“The second aspect that we’re seeing is that the private cellular value proposition is slowly emerging. I think by now that the telco industry has realized that Release 16-capable devices and chipsets are not emerging, what’s developing is a more realistic value proposition at the moment of looking at what operators can provide with the enhanced mobile broadband capabilities or inherent cellular connectivity features that 5G will bring to enterprises today,” he said.
The analyst went on to say that this value proposition around private cellular “centers mainly around providing connectivity to large coverage areas, adding that it is mainly a TCO driven discussion. “Another aspect is looking at application and services. I think the telco industry is realizing that connectivity is only a piece of the enterprise digitization puzzle, while a much larger aspect will be applications and services.”
“And it will depend on strong ties to either developer communities within traditional hyperscalers or industrial automation vendors, who have a huge expertise on developing industrial grade applications or vertical specific applications to bring this private cellular successfully to the market,” he said.
Gergs also highlighted that the key drivers for a growing adoption of private cellular networks are the harsh macroeconomic conditions accelerating enterprise digitization processes; the growing costs of energy and production driving the need for automation and efficiency improvements and the macroeconomic conditions leading to a drastically shorter ROI tolerance by enterprises.
