The Covid-19 pandemic has catalyzed the shift to advanced wireless, and enterprises are rapidly adopting Wi-Fi 6 and 5G in parallel.
Accelerated digital transformation, network traffic shifts, and economic disruption in the wake of the Covid-19 pandemic have combined to alter the landscape of the enterprise networking industry.
Each year, enterprise organizations – both large and small, including government – spend more than USD 50 billion on network and network security hardware and software. The largest segment of network spend is Ethernet switching at over USD 20 billion, followed by network security at more than USD 14 billion, Wi-Fi at over USD 5 billion, and routing and software-defined WAN (SD-WAN) at USD 5 billion. Cisco is by far the largest provider of network equipment in this sector – especially outside of China – followed by HPE/Aruba, Extreme Networks, Juniper Networks, and Arista Networks, among others.
Communications service providers (CSPs), such as telcos, cable, and satellite annually spend over USD 80 billion on networking hardware and software, including 4G/5G wireless for both edge and core, optical, routing, switching, and network security. Ciena, Cisco, Ericsson, Huawei, Juniper, Samsung, Nokia, and ZTE are the largest suppliers.
The pandemic has likely permanently altered the corporate network environment as companies shift to remote connectivity and migrate more of their applications to the cloud. Overall enterprise network spending will change as a result. Campus network spending is poised to drop significantly while companies invest in technologies designed to make home networks safe and reliable.
The digital transformation trajectory that began as a pandemic response is here to stay for the next few years. Enterprises will increasingly build new technologies and software, rather than buy and implement them, leading to overall slower spending levels in 2022 compared to 2021.
India has experienced one of the fastest recoveries despite being one of the worst-hit regions in the second wave of the pandemic in early 2021. In 2022, CIOs in India will build on renewed interest in technology from the business to gain funding for new IT projects. Indian CIOs are likely to increase their spending toward projects that drive innovation and modernizing legacy systems.
In 2022, all segments of IT spending in India are expected to grow, with software emerging as the highest-growing segment. Spending on software is forecast to total USD 10.5 billion in 2022, up 14.4 percent from 2021. While experiencing a slower growth rate than 2021, spending on software in 2022 is forecast to be nearly double of what it was pre-pandemic.
With a weak base, caused due to Covid-19 in 2020 and the country witnessing significant economic activity after the second wave of the pandemic, the Indian enterprise networking market, which includes Ethernet Switch, Routers, and WLAN segments saw a revival in Q3 2021. However, the vendor ecosystem faced challenges in terms of the semiconductor shortage, thereby exponentially increasing the shipping lead times. The prices for most network infrastructure components increased due to this shortage, coupled with increasing logistics costs. However, this also acted as an indirect catalyst in some cases where enterprises planned for their future needs in advance and placed orders to avoid unplanned delays. The overall market encompassing all elements of networking bounced back strongly to pre-pandemic levels for the first time in six quarters, anticipating 2022 to be a year of growth.
Within the enterprise segment, Wi-Fi 6 is becoming the de facto technology faster than expected due to the semiconductor shortage, thereby substantially delaying the shipments of previous generations of Wi-Fi access points. In addition, cloud-managed wireless is also gaining traction in the Indian market owing to easier deployment and management. Increased adoption of emerging technologies, such as cloud, Internet of Things (IoT), mobility, etc., would drive incremental revenues.
Worldwide IT spending is projected to total USD 4.5 trillion in 2022, an increase of 5.5 percent from 2021, according to the latest forecast by Gartner, Inc.
IT services are becoming one of the most critical assets a company needs to spend money on in order to keep business afloat. Gartner pegs the IT services spending to reach USD 1.294 trillion in 2022, from USD 1.191 billion in 2021, representing an increase of 8.6 percent year-over-year (YoY).
Global spending growth on devices reached a peak in 2021 (15.1%) as remote work, telehealth, and remote learning took hold, but Gartner expects 2022 will still show an uptick in enterprises that upgrade devices and/or invest in multiple devices to thrive in a hybrid work setting.
Enterprise software is expected to have the highest growth rate in 2022 at 11.5 percent YoY, driven by infrastructure-software spending continuing to outpace application-software spending. Gartner predicts spending to reach USD 670 billion in 2022, from USD 601 billion in 2021, a whopping 11.5 percent greater than this year.
The worldwide enterprise network equipment growth rates remained strong too. The Ethernet switch market’s 7.5 percent annualized growth in Q3 2021 builds on growth in the first half of the year, according to IDC. Year-to-date through the first three quarters of 2021, the market is up 8.6 percent compared to the first three quarters of 2020.
On a sequential basis, the Q3 2021 Ethernet switch market revenues were up 9.3 percent from the previous quarter. And compared to the third quarter of 2019, which was before the Covid-19 pandemic, revenues increased 9.6 percent, indicating strong organic growth in the market.
The enterprise and service provider router market increased 4.7 percent YoY in Q3 2021 with the major service provider segment, which accounts for 76.4 percent of revenues, increasing 3.6 percent and the enterprise segment increasing 8.3 percent.
Enterprise WLAN is a dynamic market that continued to grow through the first three quarters of the year. A key driver for the enterprise WLAN sales is Wi-Fi 6, which once again fueled uptake in the market. Wi-Fi 6 access points (APs) made up 62.2 percent of the revenues in the Dependent AP segment and accounted for 50.7 percent of unit shipments within the segment in Q3 2021. Wi-Fi 5 products, the 802.11ac, made up the vast balance of the remaining Dependent AP sales.
Meanwhile, the consumer-class WLAN market declined 7.3 percent year over year in 3Q21. During the Covid-19 pandemic in 2020, the segment had robust growth due to consumers upgrading their wireless connectivity.
Compared to the second quarter of 2019 (before the pandemic), the market grew 6.2 percent, indicating that fundamentals of the market remain strong. Wi-Fi 6 products continued to grow in the consumer market, rising to make up 27.9 percent of the consumer segment’s total revenue, up from 24.5 percent in Q2 2021. Wi-Fi 5 APs still account for the majority of revenues (61.4%) and unit shipments (63.6%).
Wi-Fi today supports increased device density, more bandwidth-hungry applications, and surges in uplink-data demand in residential and enterprise environments. Wi-Fi networks are supporting more upstream activity, with users frequently uploading work documents and videos to social media sites, and the trend toward greater uplink data consumption will further increase as more IoT devices send data via Wi-Fi to the cloud. Uplink multi-user MIMO improves network performance and reduces latency while video conferencing, uploading documents, and any other mission-critical applications that require greater uplink capacity.
Wi-Fi 6 adoption has outpaced previous Wi-Fi generations, driven by demand for better Wi-Fi connectivity in phones, tablets, PCs, and access points to support high-performance, low-latency uses in both residential and enterprise environments.
With adoption of Wi-Fi Certified 6 growing steadily, Wi-Fi Alliance is evolving Wi-Fi 6 certification to meet increasing demands from today’s Wi-Fi use-cases. Wi-Fi Certified 6 Release 2 is now available, bringing new features that support increasing device and traffic density to deliver greater performance and power management with Wi-Fi devices and applications. Wi-Fi Certified 6 Release 2 adds support for uplink multi-user multiple input, multiple output (multi-user MIMO) to deliver smoother streaming services and video conferencing, faster uploads, and more reliable gaming. Additionally, three power-management features improve Wi-Fi Certified 6 power efficiency, benefitting enterprise, industrial, and IoT applications. New features apply across all bands supported by Wi-Fi 6 – 2.4 GHz, 5 GHz and 6 GHz – bringing capacity, efficiency, coverage, and performance benefits to residential, enterprise, and large public networks. Wi-Fi Certified 6 delivers the best experience with advanced applications, while providing strong WPA3 security and promoting interoperability between Wi-Fi Certified devices.
Wi-Fi Certified 6 has been a game changer for IoT applications and the reduction in chipset costs and advancements in Wi-Fi 6 power management will also help shift the IoT space to more broadly adopt Wi-Fi 6 in the coming years.
Wi-Fi 6 will make huge inroads into the enterprise – estimated to be more than 30 percent faster than Wi-Fi 5, Wi-Fi 6 can make a huge difference with huge improvements in speed and reduced latency in environments (stadiums, airports, etc.) that have a higher density of devices.
2.5 billion Wi-Fi 6 devices, 338 million Wi-Fi 6E devices, and 10 million or more Wi-Fi 6E APs (access points), are expected to enter the worldwide market in 2022. The year will see the ascendance of hyper-aware Wi-Fi access points as hubs for an array of sensors and radios supporting the IoT and operational technology (OT), accessing powerful analytics engines, both locally and in the cloud, that fuse device data and context to create value and solve real problems for businesses and their customers. In addition to popular devices like smartphones, tablets, and PCs, Wi-Fi 6 will be embedded in others, including wireless cameras, smart home devices, game consoles, wearables and AR/VR headsets.
Eighty-three percent of service providers and equipment manufacturers and enterprises worldwide will have deployed Wi-Fi 6/6E or plan to do so before the end of 2022. Also known as Extremely High Throughput (EHT), Wi-Fi 7 is projected to support up to 30Gbps throughput, about three times faster than Wi-Fi 6, and will provide improved video streaming, better range, and improvements to congestion. Wi-Fi 7 devices are expected to make their market debut in 2025.
As helpful as Bluetooth beacons have been as an effective, albeit costly and labor-intensive stopgap method to enable indoor location applications, FTM (fine time measurement), built into the Wi-Fi infrastructure, will emerge in 2022 as a highly scalable alternative, quickly becoming the dominant basis for accurate and ubiquitous indoor location.
Overlay deployments of arduously surveyed beacons, whether physical or virtual, will die out, saving network administrator’s time, money, and headaches, and every Wi-Fi network will deliver accurate location information as easily as it has delivered access to data.
Wi-Fi 6 and 5G strike a complementary balance, and should by no means be seen as competitors. Rather, the technologies complement each other by offering different strengths.
For example, Wi-Fi 6 does particularly well in internal environments, such as schools and medical facilities, where a lot of devices are competing for bandwidth. On the other hand, the differing variants of 5G (ultra-wideband, millimeter wave) tend to do best outdoors – and struggle with walls. Both technologies enable higher speeds, lower latency, and increased device density and network capacity.
Unlike past generations of wireless, Wi-Fi 6 and 5G are designed to work together smoothly, and the wireless industry appears headed toward a future in which devices can roam securely and seamlessly between all types of wireless networks. Industry associations and standards bodies are co-developing future network standards that will enable convergence of cellular and non-cellular technologies, permitting integration of Wi-Fi 6 into core 5G networks.
The expected benefits of an integrated architecture include improved traffic control on factory floors, and the ability to provide uninterrupted service for smart city and edge applications, according to Deloitte. These buildouts will not be merely tactical solutions.
Wi-Fi 6 pilots and deployments are outpacing 5G in several countries. Ease of deployment is one reason Wi-Fi 6 has taken the lead. Wi-Fi networks are already widely established, along with a large base of Wi-Fi devices. As enterprises upgrade to Wi-Fi 6 networks, they can take advantage of backward compatibility, avoiding the need to replace older Wi-Fi devices all at once. Another reason is cost, since Wi-Fi 6 devices are more affordable and more widely available than 5G devices, according to Deloitte. The firm predicts that more Wi-Fi 6 devices will ship in 2022 than 5G devices – at least 2.5 billion Wi-Fi 6 devices versus roughly 1.5 billion 5G devices. The firm said there is good reason for this – Wi-Fi 6 has just as significant a role to play in the future of wireless connectivity as 5G – not just for consumers, but also for the enterprise.
Additionally, many IT departments already have expertise in deploying and operating Wi-Fi networks, the firm said. By contrast, setting up a 5G network, either alone or with a network operator, generally means learning something new and potentially more complex, adjusting to a standard that is still rolling out, and perhaps working with a partner that is also just getting up to speed on 5G.
Having said that, 2022 will be the year when 5G slips out of the hands of mobile network operators and becomes a viable technology for private enterprise networks. In countries throughout the world, spectrum is being allocated specifically for private enterprise use. Private 5G will be deployed in conjunction with Wi-Fi to support use-cases that require dedicated, clean spectrum, or continuous, wide-area outdoor coverage. No longer will enterprises have to wait for mobile network operators to deliver long-promised private 5G services.
Some other networking technology trends that will gain momentum include:
5G IoT. 5G may become a technology that will enable rapidly growing concepts, such as the IoT to become an integral part of our daily lives. Thanks to 5G, more devices can be controlled remotely, especially in applications where real-time network performance is a must. The 5G IoT market was valued at USD 1.5 billion last year. By 2026, it is expected to reach USD 40 billion. As IoT connectivity needs faster and faster networks with higher capacity, it is obvious that 5G will be essential. The only thing to remember is security – it is the primary concern regarding 5G IoT. Users face the threat of data leakage, breaches, threats of hacks, etc. To ensure 5G IoT continues to revolutionize the networking technology world, extra steps toward security must be taken.
Microservices, containerization, cloud-native applications. While discussing networking technology trends for 2022, it is impossible not to mention microservices, containerization, and cloud-native applications. Microservices architecture is now the dominant paradigm for application building. It will both affect the increasing number of cloud-native apps and be associated with the increasing use of dedicated solutions for communication between microservices, such as various types of service-mesh implementation. It is estimated that, by 2021, 80 percent of application development will take place on cloud platforms using microservices and cloud functions. The year 2022 will probably see a growth in the containerization approach, thus the importance of platforms like Kubernetes, designed to manage and automatically deploy containerized applications, will grow.
Finally, the cloud-native approach is going to impact the way teams develop apps in the future. Platforms for deploying apps in cloud environments will be more and more significant. In some deployment scenarios, advanced network mechanisms applicable to Kubernetes, such as advanced CNI (container network interface) plugins or NSM (network service mesh) will be used much more often.
Network automation. It seems that network automation is now a key need and that will not change anytime soon.
Network automation (and related concepts like NetOps) can be a central touchpoint to manage traditional and cloud-native apps. It is the way to eliminate manual work and handle significantly more service without increasing the time needed. Network automation helps NetOps teams deliver apps more quickly and smoothly compared to manual operation. The global network automation market is expected to grow to USD 16.89 billion by 2022 (compared to USD 2.32 billion in 2017).
Network-as-a-service (NaaS), ordering network infrastructure components from a menu of options, have them designed to fit their business needs, and have the whole thing delivered and running in perhaps hours will invariably change how many companies acquire, deliver, and manage their networking capabilities.
Any virtualized network construct that is abstracted from underlying network infrastructure and provided by one entity to another, even within a single company, could be considered NaaS. Still in its early stages, it could provide agility when it comes to acquiring network equipment.
It is clear that enterprise customers’ move to cloud services is the primary driver for NaaS. And while the networking industry is only now sorting out how the cloud world will be effectively networked, NaaS could play a big role in the future.
Having been around in a number of different forms for a few years in the service-provider arena, the licensing and software-management components increasingly being offered via a subscription, is driving it in the enterprise networking-infrastructure industry.
Artificial Intelligence. Technology organizations are increasing investments in AI as they recognize its potential to not only assess critical data and improve business efficiency, but also to create new products and services, expand their customer base and generate new revenue. These are serious investments that will help to dispel AI hype.
Compared with other emerging technology areas, such as cloud and IoT, AI technologies had the second-highest reported mean-funding allocation. One-third of technology and service provider organizations with AI technology plan to invest USD 1 million or more into these technologies in the next two years, says a Gartner survey.
Technology immaturity is cited as a top reason among AI-investing organizations leading to failure when integrating an emerging technology. Furthermore, product leaders investing in AI, whose implementations are progressing slower than expected, reported product complexity and a lack of skills as the main hindrances to their progress.
IT leaders struggle to integrate AI within applications, wasting time and money on AI projects that are never put in production, or struggling to retain value from AI solutions once released. AI engineering is an integrated approach for operationalizing AI models. “For fusion teams working on AI, the real differentiator for their organizations will lie in their ability to continually enhance value through rapid AI change,” says David Groombridge, research vice president, Gartner. “By 2025, the 10 percent of enterprises that establish AI engineering best practices will generate at least three times more value from their AI efforts than the 90 percent of enterprises that do not.”
The conversation about Big Tech and its role in society will continue in 2022. Policymakers must realize that Big
Tech is adapting faster than the efforts to regulate it. If anything, the regulations adopted to date like the General Data Protection Regulation (GDPR) have made Big Tech even stronger. Today these companies’ revenue, market share, and earnings have increased compared to the time before regulation. And government has made it harder for small- and medium-sized companies to compete. The bottom line is that efforts to regulate Big Tech have failed. Just when it seems Big Tech could be pinned down, Big Tech adapts to the new reality – with a new name, a new practice, or a new public-private partnership.
Unified Communications has evolved to become an increasingly flexible, ever-transforming concept, capable of adapting to suit the needs of the user. For virtually every company, UC is no longer a nice-to-have concept, but a mandatory part of running a successful business. This is particularly true in the post-pandemic age, where companies need to find new ways of enabling and aligning in-office and remote employees.
Right now, it is difficult to predict exactly what the future of work might hold. Hybrid and remote work concepts are still in their infancy. I think we have an exciting road ahead, but in many ways, we are still in a pretty unpredictable place.
While phone calls might still have a place in the UC environment, it is fair to say that video and messaging are rapidly taking over as the preferred forms of communication. The video became a must-have investment in the pandemic era, with 90 percent of people saying they find it easier to get a message across on video, and 76 percent using video for remote work.
The landscape for unified communications is stronger than ever now. Increasingly, we are beginning to see vendors distributing truly connected environments, intended to maintain and enhance the productivity of people wherever they are.
Companies will need to focus more heavily on optimizing the employee experience, by investing in quality video-enhanced platforms, accessories, and room kits. These tools need to be inclusive, safe, and flexible, with plenty of insights and analytics to help teams and users be more productive.
At the same time, security and compliance will need to remain a priority, underpinning global collaboration and communication deployments. Platform reliability and vendor credibility should not be taken for granted. We are seeing more and more major changes among vendors, which means companies are looking more seriously at smaller, but more secure platforms.
Heading in 2022, as the chip shortage and broader supply-chain issues continue to plague the tech industry, IT must be prepared to make compromises and prioritize needs in order to complete essential network projects.
2022 will be the year when the industry will move away from navigating extreme unpredictability to building new opportunities-based compelling technologies, be it Wi-Fi 6E, private 5G, or some other. Focus will be on extracting more value from the wireless investments by taking advantage of the new location and contextual awareness of respective networks – a future toward entirely new services and emerging business objectives.