With enterprise 5G maturing, the importance of private networks for the enterprise domain will continue to grow.
ABI Research says the demand for private network deployments will be driven primarily by heavy industry verticals. Industrial manufacturing, energy production (including mining, oil and gas, and logistics) alone will generate private network revenues of US$32.38 billion by 2030, representing half of the US$64 Billion overall private network revenues.
“These findings show the importance of private networks, particularly for automating mission- or even life-critical use cases, that require the highest possible network reliability and availability and are characterized by a high degree of network integrity to prevent data from leaving the enterprise premises,” said Leo Gergs, research analyst for 5G Markets at ABI Research.
Demand drivers
He predicted that enterprises that require network slicing capabilities to separate mission-critical from non-mission-critical use cases within the same physical network will turn to private networks.
Two main factors are causing the surge in private network demand.
Gergs explained: “First, there is a huge rise in demand for automation and enterprise digitization. What has started with Industry 4.0 is now exacerbated by the aftermath of the global COVID-19 outbreak.
“Enterprises in industrial manufacturing, logistics, and oil and gas are now accelerating their digitization plans to reduce their dependency on manual labour availability and increase the resilience of their business operations against sudden disruptions to supply chains,” he added.
The second is the addition to the demand-side effect.
Gergs continued: “The market for private network deployments will also benefit from a supply-side effect. The freeze of Release 16 gives enterprises the much-needed reassurance of 5G capabilities for enterprise-grade connectivity, which allows chipset and module manufacturers to grow the device ecosystem for compatible hardware. The maturing device ecosystem, in turn, drives down prices per module and therefore makes the deployment of private 5G network more cost-efficient, which will spur additional interest from enterprises.”
Competitive landscape
There is a growing number of private network offerings emerging on the market to address this rising opportunity.
While private network operators like Ambra, Citymesh or Edzcom are threatening traditional CSPs’ market share by monetizing managed services other than connectivity, hyperscalers like AWS, IBM, and Google are launching their private network offerings in co-creation efforts with telco players.
In addition, software companies like Athonet or Quortus benefit from trends toward network virtualization, which allows them to offer a virtualized core network either through System Integrators or to enterprises directly.
“These developments show the amazing pace at which this market is evolving. Against this backdrop, it is important that all players in the enterprise connectivity domain develop a durable business strategy to profit from this rising market,” concluded Gergs.
