Large enterprises will drive the market for private cellular until 2030, but the mid-tier sector will be important for long-term success
The immense appetite for private networks in the enterprise domain keeps rising and rising. According to a new forecast by global tech advisory firm ABI Research, private cellular network deployments within the enterprise domain will generate equipment revenues of more than US$64 billion by 2030. While large enterprises (with annual revenues of more than US$1 billion) will drive the market for the next 10 years (accounting for 50% of private networks by 2030), enterprises with annual revenues between US$250 million and US$1 billion will account for 40% of private networks by 2030, with their proportion expected to rise further beyond the forecasting period.
“These numbers underline the huge momentum that we see for private cellular networks as a key enabler for enterprise digitization,” says Leo Gergs, Research Analyst for 5G Markets at ABI Research. “As enterprises require highly customized deployment solutions, including deterministic & time-sensitive networking and are governed by strict regulations regarding data protection and network integrity, the deployment of a private cellular network will be their first choice.”
While large manufacturers like Bosch, Mercedes, or Siemens certainly have the financial resources and the necessary manpower to manage and operate a cellular network on their own, enterprises with annual revenues below US$1 billion do not have the resources nor capabilities to do so. Following a recent ABI Research survey among industrial manufacturers across key markets in Europe, North America, and the Asia-Pacific region, 3 out of 5 manufacturers would prefer their private network to be managed & operated by a third party.
To address this revenue opportunity within mid-tier enterprises, the telco industry needs to develop appealing offerings that take into account the business realities of these enterprises. Since enterprises with revenues of up to US$1 billion face tight budgetary constraints, large upfront investments into network deployment would serve as a true barrier to entry. “To lower this barrier and promote enterprise cellular network deployments, the telco industry needs to bid farewell to CAPEX intensive business models and develop OPEX-based offerings instead. Any such offering should adopt a service-based approach to give enterprise the reassurance of paying only for services they truly need. As a result, the telco industry should be prepared to sacrifice short-term gains for the tremendous opportunity that private cellular in the enterprise verticals domain will unlock in the long-term,” Gergs advises.
The need for the telco industry to adapt is underlined by a drastic change in the shape of the competitive landscape that we are witnessing. “The traditional network operators are under attack. On the one hand, we see webscalers like Amazon Webservices (AWS) and Microsoft Azure developing End-to-End solutions for enterprise connectivity. On the other hand, we see more and more specialized network operators like Ambra, Citymesh, and Edzcom, which reserve spectrum assets to provide private cellular for enterprises as a service-based offering. Considering this, network operators need to evolve their business models fast, to protect their slice of the cake from being eaten by anyone else,” concludes Gergs.
These findings are from ABI Research’s Private Cellular Network Forecasts market data report.
