It likely will come as no surprise to most of you that small businesses expect to rely on service providers for their 5G strategies, while many professionals at enterprises say they plan to rely on hyperscale cloud service providers, do it themselves or use system integrators.
That pattern--enterprises can create their own infrastructure--has been in place as long as any of us can remember. Small businesses--essentially in the same position as consumers--cannot generally affordably create their own services.
At the same time, mobile service provider executives tend to believe enterprise customers will generate twice as much 5G revenue as do consumer services.
That is almost certainly a contextual answer. Given the certain displacement of existing 4G revenues by 5G replacements, and given that consumers generate perhaps 70 percent of 4G revenue, the belief that enterprises will generate twice as much revenue as consumers cannot apply to phone services.
Consumer revenues in Europe, for example, are stable at about 68 percent of total revenue (mobile and fixed). In some markets, business revenues could range from 30 percent to 40 percent of total. Smaller providers might generate only about 15 percent of total revenue from business segments.
The sense that enterprises will drive “new use cases” is what survey respondents likely have in mind. The obvious example is that most revenue-generating new use cases based on 5G, or edge computing or IoT using 5G, will happen in the business user segment of the business.
Most consumer IoT applications will rely on existing connections--most often the home broadband connection. Eventually, artificial intelligence or virtual reality apps could rely primarily on the 5G connection.
The European Telecom Network Operators association (ETNO) expects connectivity provider IoT revenues to represent about 2.7 percent of total revenue by about 2027, for example.
Connectivity alone generally represents less than 10 percent of total revenue from an IoT application, ETNO notes. In 2019, total IoT connectivity revenue in the ETNO countries reached EUR1.1 billion, about 0.4 percent of total telco revenues in the region and 1.2 percent of business segment connectivity revenues.
Revenues might grow steadily to reach EUR2.9 billion by 2027. In 2019, IoT accounted for 0.9 percent of mobile service revenue in Europe, and by 2027 this is forecast to have risen to just 2.6 percent.
Vehicle communications will likely provide the single biggest industry vertical revenue, ETNO says.
Still, the belief that new 5G use cases will be created in the business-to-business space are logical. Most of the big new use cases will happen in the enterprise segments of the 5G market, though incremental connectivity revenue might not be as significant as some hope.
Significantly, compared to all prior mobile generations, 5G is designed around connecting sensors and servers, not people using phones. So there is reason for hope about incremental new use cases and revenue.
No comments:
Post a Comment