ABI: 5G Not Enough To Enter Smart Manufacturing

For over a decade telcos have been actively branching outside their traditional boundaries in search of new opportunities. Today telcos are involved in government-led projects like smart cities. They are partnering with financial institutions to offer payment-type solutions or support financial inclusion initiatives.

One industry vertical for which telcos continue to struggle is manufacturing. According to ABI Research, mobile service providers (MSPs) have largely remained as secondary players in this market – despite efforts to position themselves as active participants in the coming smart manufacturing sector.

“The manufacturing market has grown without MSPs so far, and if they don’t play their cards right, it will continue to do so,” said Pablo Tomasi senior analyst at ABI Research.

Consequently, their short-term opportunity in manufacturing is forecast to be only $2.6 billion by 2022, according to ABI Research’s UnTelco in Manufacturing: Telco Opportunities and Market Activities report.

Tomasi noted that MSPs have an opportunity to enter the smart manufacturing market building from the ground up, gaining trust as partners, and proving that the value of their offering is beyond what is currently delivered in the market.

“5G is a promise, but alone is not enough and with doubts on what business model will support it, 5G’s ability to integrate with legacy technologies, and the actual results delivered in harsh factory environments, there is much uncertainty about whether 5G will be a game-changer for MSPs in manufacturing,” cautioned Tomasi.

MSPs must understand their competitive position in the market, be patient, prepare for a long journey, and align their ambitions with what the sector wants. Partnering with market leaders will be essential – the recently announced partnership between Orange and Siemens is an example of what should be a growing trend.

5G will not be in the factory for few years, and to be successful,  a wider alignment between industrial vendors and MSPs is essential. Even the private LTE solutions currently available are only at a very early stage in manufacturing and still the lack the success stories needed to prove their value in the market.

“The manufacturing market looks for enhancements, not disruption, and for solutions, not technologies. MSPs should tailor their offerings, including 5G, to these enhancements and solutions,” Tomasi concluded. – Telecom Asia