Private LTE and 5G networks are becoming a fast lane to over $5 bn of global enterprise expenditure on services and solutions, according to Omdia’s latest Private LTE and 5G Networks Market Forecast 2020–25
The truth about private LTE and 5G networks, however, is that they are not important for the network itself but rather for what it enables. While the private networks market – consisting of RAN, core networking equipment, and professional and managed services – will be worth $5 billion by 2025, it triggers associated expenditure in services such as security, integration and IoT applications.
99% of enterprises buying into private networks plan to buy additional services, according to recent Omdia intelligence gathered across 7 countries and 6 industries. Collectively, this means private LTE and 5G networks should be used to tap into an estimated $2 tn beneficial ecosystem of additional enterprise services in areas such as cloud and applications.
With Industrial verticals leading, SPs may end up lagging
Manufacturing ($1.3 billion) alongside energy and utilities ($1.2 billion), and transportation and logistics ($698 million) will generate more than 60% of the total market. Competition will heat up quickly in industrial verticals forcing competitors without specific skills and budgets out of the race.
The relevance of industrial vendors complicates the opportunity for service providers which have traditionally being weak in those markets. Service providers need to accelerate and gain capabilities and skills such as industrial expertise and know-how and consulting and integration, while building and specialising their workforce, if they want to be part of this market.
Private networks will remain a fragmented vertical opportunity, where there will be a steady growth rather than a marked acceleration of individual markets. Significantly, in many industries such as energy and utilities and manufacturing the long cycles for any technology from theoretical opportunity into reality means that 5G will grow but not disrupt the market in the forecast period.
Start now, be patient, and look beyond the network
There is no quick and easy win in what is set to be an extremely competitive market, however there are key reccomendations to onboard in your strategies.
– Enter now or be left out: The limited private networks infrastructure opportunity matched with the interest from companies from all sides of the ecosystem will result in mounting competition. As a consequence, the time to enter this market, identify target segments, and specialise your business structure will run out quickly.
– Think of a marathon: The market will continue to grow over time and so will the opportunity to provide additional services as the provider nurtures the relationship with the enterprise. Howeevr, it will take time and many industries will grow relatively slow making essential for any provider to have the right expectations and be prepared for a long journey.
– Build private networks looking at the whole enterprise: While the market starts with connectivity, providers should look at those skills, expertise, and additional revenue opportunities needed to complement their portfolio. This should be obtained by finding partners offering complementary services as well as via in-house investment and possibly M&A activity.
Pablo Tomasi Principal Analyst Private Networks at Omdia, commented: “Despite the hype and market noise generated by everything that is 5G-related, private LTE and 5G networks represent a complementary opportunity to the core business of providers and vendors. While there is a growing interest and increasing network rollouts, this is a long game market. Market players should realise that private LTE and 5G will be an incremental opportunity in a set of fragmented industries”.
“The real value of private LTE and 5G networks resides in the fact that they are a means to support wider digitization or industry 4.0 goals and initiatives. Private networks should be considered as a pillar for the provision of additional services and solutions such as security, integration, or IoT applications.”
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