Read about Harbor Research’s in-depth analysis
of the private cellular networking opportunity
New wireless cellular networks promise growth for business and disruption for the traditional carrier model
Wireless networking in industrial and mission critical domains is a large untapped growth opportunity for smart connected systems. It will enable the transition from dumb products and disparate disconnected networks to smart systems that become “portals” into a whole new world of customer value-creation. A new generation of wireless technology—Private IoT and 5G Networks—is unleashing an age of pervasive connectivity and awareness that is fostering entirely new modes of customer interaction and service delivery.
The growth of devices on networks today is chiefly occurring in two distinct ways. The first is that previously separate networks—Wi-Fi, cellular, sensor networks, etc.—are all migrating toward shared IP with many installed legacy networks being absorbed in wholesale transitions into new hybrid network management frameworks. At the same time, new classes of more intelligent devices such as powerful video, imaging and voice recognition technologies at the edge of the network are becoming enabled.
Wireless networking has been around for decades and has generally implied the notion of universal connectivity, but you wouldn’t know that in today’s industrial and mission critical domains like manufacturing, supply chain, transportation systems and energy. Instead, we see a fragmented landscape full of proprietary device networks, conservative users and buyers, and broken promises about the potential of wireless technologies.
Users and customers expect networked devices to be functional, ubiquitous, and easy-to-use. Within this construct, however, the first two expectations run counter to the third. In order to achieve all three, diverse networks must be fully integrated and that’s where the promise of wireless has yet to be fulfilled.
Private LTE and 5G cellular networks have new key features that translate into direct benefits for the digital enterprise:
- Quality of service and predictable latency, configurable in software
- Seamless mobility to support service continuity between small cells and other networks
- The ability to roam between private and public networks
- Efficient co-existence with other spectrum users such as Wi-Fi
- Higher performance in terms of capacity and throughput, yielding superior payloads than Wi-Fi
- Fewer required nodes while supporting enhanced interference management capabilities, thereby reducing costs with a greater network footprint per access point
- Low cost of deployment and integration because spectrum license and operator contracts are not required
- The simplicity of deployment, analogous to Wi-Fi, in unlicensed spectrum allows support of any device without an operator or, in some cases, without a SIM card.
Amid all this noise and clutter, a new generation of wireless communications for challenging environments has emerged. Private LTE and 5G networking technology for small cells operating in unlicensed & shared spectrum enables users and customers to integrate diverse sensors, machines, people, vehicles and more across a wide range of applications and usage scenarios. It treats user concerns—from reliability and service quality, to security and compliance—as challenges that can be addressed by a single, scalable wireless networking solution
Historical constraints, including Wi-Fi’s incurable performance and security failings, and the cost of commercial cellular service, have limited wireless networking’s reach in the market. Clever players have banded together to enable privately managed connectivity for organizations at a fraction of the cost of commercial cellular services, creating a vast new market opportunity and a new source of disruption for traditional players, particularly cellular carriers.
Realizing the potential of Private IoT and 5G networks will require the formation of new ecosystems where innovation will be driven by a collaborative community—from customers, from partners, and from their own people. To do this, they’ll need to:
Target the Highest Value Customer Applications: Utilizing higher performance and more reliable Private LTE networking technology to address diverse mission critical and industrial segments will open up many new applications where wireless use has been inhibited. Focusing on the right opportunities with the right partners will be a critical success factor.
Understand the Entire End-to-End Customer Experience: Companies often fail to develop networking solutions focused on the right capabilities and benefits because they don’t have a good understanding of what users and customers are trying to achieve and how they want to achieve it. Players can increase their chances of success by understanding the unique wireless networking requirements (i.e. performance, reliability, latency, managed services, etc.) in new applications such as safety-critical real time location systems.
Look for Non-Conflicting Business Models That Encourage Collaboration: Collaborative ecosystems are coalitions of self-motivated market participants that pursue a common goal, not mere subcontractors tied to a “command and control” scheme. Successful market development for new privately managed wireless networks will depend upon understanding and choosing new or modified business models. As control of these networks shifts to more neutral hosts, many new and novel managed services business models could and should emerge.
Build Open Collaboration / Align Partner Behaviors: Seemingly superior offerings can also fail because ecosystem partners have no incentive to participate. The customer is buying an experience with a desired result, and the ecosystem partners must work in concert to create a superior experience that provides tangible benefits to all participants. Successful ecosystems are usually composed of proactive participants, not simply a group of companies in and around a particular market space. Accordingly, a community’s design needs to allow participants to invest resources and reap rewards—indeed, to innovate openly with one another—while pursuing individual interests.
Act Early, Act Often: Assembling a collaborative ecosystem calls for a balance of timing and participants. Most collaborative opportunities will fail and re-form as learning grows. These communities do not necessarily have a finite window but they need to be initiated early and gain momentum before a competitive ecosystem emerges in its place.
The opportunity for Private IoT and 5G Networks will be significant, with an addressable market expected to exceed over 750 million device shipments by 2023. With this highly anticipated growth, industry players will move to capture and expand this value. Private IoT revenue opportunities exist across the entire technology stack, where much of the opportunity exists in industrial manufacturing, supply chain, resource segments and energy. The benefits of IP-based networking have become very clear and this, combined with innovation around Private IoT and 5G Networks, will accelerate the uptake of wireless adoption.
The current state of industrial and mission critical environments point to an inflection point in networking technology evolution. The demand to connect more devices and leverage data-driven services is transforming the way OEMs, end users and technology suppliers interact. This will continually be hindered if wireless networks continue to isolate device groups in heterogeneous industrial environments. The Private IoT model introduces a potential remedy to the current fragmentation of the industrial wireless market.
Our on-going study of high performance networking technologies is aimed directly at the innovations driving the next generation of real-time enterprise. It includes analysis of the adoption climate, technology issues, suppliers, business models, and growth opportunities arising from the convergence of networking innovations. Harbor believes society is at the cusp of a “perfect storm” of network connectivity.
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