When one hears observers speculating about 5G revenue growth, business or enterprise revenues always loom large. What is less clear is the meaning of that observation.
It might mean that new use cases develop mostly in the enterprise segment, but that total revenue remains generated by the consumer segment. It could mean the historic mix of revenues changes, and that business revenue becomes a larger percentage of total.
Globally, revenue amounts and growth are led by mobility services, and most of that is earned from consumers rather than businesses. But one constantly hears the argument that 5G is going to be different, because of the internet of things, edge computing or private networks.
Just how different is the issue.
It never is completely clear whether 5G produces, or can produce, enterprise revenues fast enough to change the historic share of revenue in fixed or mobile segments of the business.
It is easy enough to find projections of total mobile connections that suggest sensors will outnumber phone users by quite a wide margin. But connections are not directly related to revenue on a one-for-one basis, as IoT connections generate revenue an order of magnitude or sometimes two orders of magnitude less than phone accounts.
Also, many IoT connections will not directly use new wide area networks for access. Instead, local area connections of various types might actually predominate. Ericsson, for example, has estimated that about 15 percent of IoT devices will use mobile networks for connectivity.
In fact, that seems relatively unlikely, Rather, the emphasis on enterprise revenues typically refers to incremental growth. Some estimate business revenues represent only about 25 percent of total revenues. In some markets business revenue might reach close to 40 percent.
For a decade or so, service providers also have been urged to consider a range of changes in their operations, from separating retail and network functions to simplifying retail offers. Rarely is specific strategic advice given to emphasize business customer connectivity revenue over consumer revenue sources.
Service providers are, of course, encouraged to explore new roles and revenues in internet of things, private networks or edge computing, all of which might fall under the “explore market adjacencies” objective.
It seems unlikely to me that new business segment revenues are going to be substantial enough to fundamentally change revenue dynamics that have most of the total revenue being generated by consumers using phones.
No comments:
Post a Comment