Healthy growth forecast for RAN market – Dell’Oro

Analyst firm Dell’Oro reckons the renewed growth being experienced by the global radio access network market has a few years left in it yet.

The company has just published its latest RAN market five year forecast and is saying total revenues will be $200 billion over that period. However most of the growth will be in the next year or two, with things slowing after that once everyone has got 5G out of their system. The market is expected to grow by 4% this year, but more like 2% CAGR over the full period.

“Following three consecutive years of declining worldwide RAN revenues between 2015 and 2017, the global upswing that began in the second half of 2018 has become deeper and stronger, reflecting a shift from 4G to 5G that is accelerating at a torrid pace, much faster than anyone expected,” said Stefan Pongratz, Analyst with the Dell’Oro Group.

“We expect these trends to propel the overall RAN market to advance at a healthy pace over the near-term accommodating an intense 5G capex envelop before growth tapers off in the outer part of the forecast period resulting in a flat CAGR between 2019 and 2024.”

As is standard practice with Analyst press releases, most of the juicy, granular data is kept secret in the hope that people will pay for the full report. They did offer the following extra morsels, however: 5G NR RAN investments to surpass $100 Billion, 5G NR small cell market to approach 10 percent to 20 percent of overall 5G NR market. Global macro and small cell transceiver shipments to approach 0.7 Billion. Millimeter Wave 5G NR to account for one sixth of overall small cell investments.

IOT spending to top $1.1 trillion in 2023 – IDC

IDC has released its Worldwide Semi-annual Internet of Things Spending Guide, which suggests global IOT spend could reach $1.1 trillion in 2023.

The three segments likely to be the biggest contributors to growth are discrete manufacturing, process manufacturing, and transportation, collectively accounting for a third of the total spend worldwide. Operational efficiency seems to be the focus of the manufacturing segments, while freight monitoring is the key for transportation.

“Spending on IoT deployments continues with good momentum and is expected to be $726 billion worldwide this year,” said Carrie MacGillivray of IDC. “While organizations are investing in hardware, software, and services to support their IoT initiatives, their next challenge is finding solutions that help them to manage, process, and analyse the data being generated from all these connected things.”

Of course, while manufacturing and transportation might not be the sexiest part of the IOT world, the consumer segments will see healthy growth also. The smart home and connected vehicle use cases will drive revenues here, with the consumer market expected to become the largest segment post-2023.

For the telcos, an interesting trend to keep an eye on is the increasing spend on IOT services. So far, hardware has dominated the budgets of enterprise customers, which was to be expected, though as the foundations are laid and the business cases are proved, vertical industry IoT platforms and cloud deployments for IoT software are expected to make headway.

“The new Deployment Type segmentation in the IoT Spending Guide draws sharp lines that identify opportunities for software growth via public cloud services,” said Marcus Torchia of IDC. “Segmented at the deepest level, clients can now prioritize strategy planning at the region/country, industry, and use case levels.”

RAN and AR app revenues forecast to increase rapidly

In its preview of MWC 2019, analyst firm Ovum has forecast that revenues for both radio kit and augmented reality mobile apps will increase significantly in the next few years.

Ovum anticipated what it thinks will be the major themes of this year’s show and, unsurprisingly, 5G dominates. Monetization, device hype, mobile video and enterprise are all aspects of 5G that Ovum reckons will be extensively debated at the Barcelona telecoms fest. While there are still plenty of unanswered questions at this early stage on 5G, Ovum seems quite bullish about its commercial prospects.

While the RAN kit market is forecast to slightly decline this year, it’s expected to bounce back and start growing rapidly by 2021.

Ovum RAN forecast

On the back of all this lovely extra bandwidth augmented reality apps are also forecast to become a lot more popular. While revenues from that segment fell in 2017, they’re expected to increase by around $2 billion per year for the next few.

Ovum AR app forecast

Other major themes anticipated in the report include: consumer AI, data privacy, IoT and RCS.

Operator confidence raises 5G connections forecast to 340 million in 2021

CCS Insight has suggested 5G connections will reach 340 million in 2021, before surpassing one billion in the first half of 2023.

The confidence in raising its forecasts come after more bullish behaviour from the operator segments in the industry, with more telcos declaring their 5G ambitions before expected. Telia in Finland was one which suggested it will hit the on-switch in 2019, while EE is another to confirm the 5G bonanza next year.

“The intentions of major US carriers to launch 5G in late 2018 have been clear for a while. But recently we’ve seen greater urgency to deploy networks from providers in Europe, the Middle East and China,” said Kester Mann of CCS Insight. “While Europe may still be around a year adrift of the leading markets in 5G, some regional operators are clearly determined to launch commercial services as soon as next year.”

Aside from EE and Telia, Telecom Italia, Swisscom and Telenor has also suggested they might reach the finish line sooner than expected. Finnish operator Elisa has even gone one step further by saying it has a 5G network now, though this seems questionable. Of course, the sluggish stereotype of European operators is there for a reason with the likes of Vodafone, Orange, Deutsche Telekom and Telefonica taking a much more cautious approach.

Of course, it is certainly encouraging to see progress in Europe, but let’s not forget the leaders are miles ahead. Many commentators have pointed to China as leading the 5G race, though with all the US telcos targeting the end of 2018, it puts the European progress into context. CCS expects China to overtake the US to become the biggest 5G market in 2020, with 40 million connections. By 2025, connections in China will surpass 1 billion, accounting for nearly four connections in every ten worldwide.

It’s nice to see there is some confidence in the European markets, but it still a notable distance behind the market leaders.

Breakthrough for wearables predicted, yet again

Wearables have been a promise for the technology industry ever since science fiction movies showcased wonderful uses for the gear, but time and time again, we’ve been disappointed. That said, CCS Insight think it’s about to kick off.

The research from CCS forecasts 71 million smartwatches will be sold in 2018, then doubling to 140 million in 2022. The wearables space on the whole is expected to grow 20% year-on-year through to 2022, becoming a $29 billion market with 243 million unit sales. Predicting the wearables boom has been a perilous game in recent years, but the general public is becoming more in-tune with future tech, just look at the growth of smart speakers, maybe this is the time for wearables, with smart watches leading the charge.

“Apple has become the market leader for smartwatches. Sales volumes have exceeded expectations and the introduction of a cellular-enabled model has pushed up the value of its sales, which we estimate at $5 billion in 2017,” said George Jijiashvili of CCS Insight.

“It’s not surprising that traditional watchmakers are looking over their shoulders nervously at Apple given the significant slice of the market it has secured in just three years. Our projections show that in 2018 Apple will come close to matching worldwide sales of Swiss-made watches, which sold 24 million units in 2017.”

The problem with smart watches to date is that they are a solution without a problem. Until recently the devices were tethered to a smartphone, but even with standalone connectivity few are likely to ditch their smartphones for the devices. The more expensive models are not going to replace traditional watches as fashion icons (not yet anyway) and the cheaper devices from manufacturers such as Fitbit are perfectly suitable for fitness fanatics. That said, the market for fitness trackers, which has largely driven wearables to date, is predicted to have weakened; new areas will be needed.

One area which could be of interest to the manufacturers is children’s watches. These could act as safety/tracking devices, while also a stepping stone for youngsters towards smartphones. A basic communications tool which prevents a child from venturing into the unholy areas of the internet could appeal to some parents. CCS estimates that 25 million of these watches were sold in China over 2017.

“The success of kids’ watches in China is impressive. There’s strong support from Chinese mobile network operators and we’re expecting further growth in 2018 as 4G networks improve to support even more advanced features,” said Jijiashvili. “Although we recorded sales of about 1 million units in the US in 2017, we don’t expect the kind of volumes we’ve seen in China. And in Europe, privacy concerns and regulatory issues have cut the market to just a few thousand units.”

Elsewhere in the wearables world, hearable devices, which are defined as smart wireless headphones, earphones or earbuds that connect to smartphones and other compatible devices, could be on the increase. We’re not 100% convinced wearables are ever going to be more than a footnote to the technology world, though AR could make a bit of difference when that technology becomes more mainstream.

Ericsson reckons 5G subs will top 1 billion in 2023

The latest Ericsson Mobility Report has run the numbers and come to the conclusion that a fifth of the world will be on 5G within six years.

Anyone can extrapolate a graph, of course, but since Ericsson has special insight into the nature of the network itself, thanks to being one of the biggest mobile networking kit vendors, there’s a chance it’s number crunching may be relatively accurate. On the flip side there are zero 5G subscriptions today, so Ericsson isn’t so much extrapolating as having a really good guess.

But it does have precedent to draw upon. If you take a look at the chart below you can see that 4G took a few years to start ramping, but once it did it exploded. You can also see that total global mobile subscriptions have increased in a very predictable straight line. Therefore the main piece of judgment Ericsson had to make is picking the time 5G will hit that growth inflection point, which it seems to think will be in 2022.

EMR global 5G

That is a bit contentious. The assumption seems to be that 5G uptake will be much more rapid for 5G than for previous generations. While the past trend may well have been for new generations to be adopted more quickly than previous ones, that doesn’t mean it will repeat itself. The case for consumers is likely to be especially weak for 5G, with most of the applications it enables, at least initially, being industrial ones.

The anticipated regional split has North East Asia (Korea, Japan, China) and North America leading the way, with Western Europe a distant third. There is a fair bit of hand-wringing about Europe being left behind on 5G but, given that the immediate benefits of it are still being debated, it remains to be seen if that’s such a bad thing. Ericsson, presumably, would like Europe to accelerate its 5G investments.

EMR regional 5G

China predicted to account for half of 5G subscribers

Analyst house CCS Insight has been running the numbers on predicted 5G adoption and come to the conclusion that China will be all over it.

They reckon 5G will take off faster than any of the previous generations, which is no great reach since that’s usually the case with the next ‘G’. With things only set to kick off in 2020, CCS forecasts we’ll hit the 1 billion mark by 2023, with more than half of that accounted for by China alone.

China has shown a remarkable ability to ramp very quickly. For years growth in the smartphone industry was driven by around a billion Chinese consumers upgrading from feature phones to smartphones and they clearly love a mobile phone. Furthermore vendors like Huawei and ZTE, alongside mega-operators like China Mobile have been throwing cash at 5G for a while. By contrast CCS reckons Europe will trail the Far East and the US by at least a year.

“We see China playing a far more influential role in 5G than it did in 4G,” said Marina Koytcheva, VP of Forecasting at CCS. “Size, scale and economic growth give China an obvious head start, but we expect network deployments to be much faster than in the early days of 4G. China will dominate 5G thanks to its political ambition to lead technology development, the inexorable rise of local manufacturer Huawei and the breakneck speed at which consumers have upgraded to 4G connections in the recent past.”

The firm has clearly been receiving many of the press releases we have around 5G and warns that many of the utopian use-cases put forward are going to be a long time coming.

“The unrelenting hype that has surrounded 5G for several years has seen a diverse range of applications put forward as the main drivers of adoption,” Kester Mann, Principal Analyst, Operators at CCS. “Some of them will be relevant at different times of the technology’s development, but the never-ending need for speed and people’s apparently limitless demand for video consumption will dominate 5G networks.”

“5G is about creating a network that can scale up and adapt to radically new applications,” said Geoff Blaber, VP Research, Americas at CCS. “For operators, network capacity is the near-term justification; IoT and mission-critical services may not see exponential growth in the next few years but they remain a central part of the vision for 5G. Operators will have to carefully balance the period between investment and generating revenue from new services.”

Here’s the CCS Insights global 5G connections forecast.

CCS Insights 5G forecast