Appledore Research sees private 5G pulling $232 billion in annual enterprise spend by 2027
There was maybe always a disconnect between what the telecoms set wanted out of private 5G (and how quickly they wanted it) versus what the industrial sectors meant to spend big on cellular-enabled digital transformation were ever prepared to actually do. Appledore Research Principal Analyst Shanthi Ravindran explained that, “It is a very specialized market. The refresh of these [industrial] systems are not happening as per the 5G refresh cycle.”
So while there is a misalignment between when operators wanted to see a material revenue lift from private 5G for industries and when the checks actually started to be put in the post, the money is starting to flow. Appledore reckons enterprises will spend $232 billion on private cellular networks by 2027; further, the firm forecasts traditional communications service providers (CSPs) will win $101.8 billion with the remaining $130.9 billion flowing to other types of service providers.
Breaking up the market, Ravindran highlighted four segments—industrial automation, automated security, broadband communications and edge services—and four broad categories of enterprises along with their priority use cases:
- Industrial mission critical operations—video/image processing and remote operations
- Transportation and logistics—remote operations
- Commercial businesses—connected devices/security/video
- Public safety and smart cities—all of the above
So what is driving this investment? “First of all we see that the industry really needs the capabilities of 5G in terms of latency, in terms of their own distribution across many locations, precise manufacturing requirements, and a host of requirements that are pushing the industry in this direction,” Ravindran said. But, she continued, we also have to think if 5G is the best solution.
This tees up the technology considerations that would result in a go/no go decision from a particular enterprise considering private 5G. How do I get the spectrum; do my use cases require 5G-enabled capabilities; what role will edge processing play in my technology strategy; what are my security requirements; and are there devices that meet my needs?
Those technology considerations should serve as a good reminder that this is a specialized market. And the degree of specialization is further reiterated when keeping in mind the range of solution providers (large NEPs and private network specialists, platform providers, cloud/edge firms, embedded device producers, domain-specific application players, and infrastructure companies) and service providers (CSPs, neutral hosts, public cloud companies, the enterprises themselves, and system integrators or managed service firms with domain expertise). Again, specialized market.
The logical extension here is that given the breadth and variation within the target market of all global industries, and given the complexity of the serving that market from the vendor side, an ecosystem-led approach is the only viable option. In fact, Ravindran said, “The key requirement for this industry to proceed at the pace that it needs to now becomes survival of the ecosystem.”
For more on this topic, take a look at the Industrial 5G Forum, available on demand.
