Evolution and disruptive innovation of the 5G private network market: Q1 2022

Participants take partnerships and strategy more seriously

The pace of market development is stabilizing. We tracked 95 announcements this quarter, down 1% year-over-year but up 20% from the previous quarter. However, private networks (a market that is now completely in the hype phase) are growing in complexity.

While all vendors have adopted a similar market strategy of working with multiple partners, Nokia is putting pressure on CSPs. In the first quarter of 2022, the vendor added Atos and Kyndryl as partners, showing CSPs that many players can provide services in the private network market.

On the other hand, CSP strategies are maturing, and some CSPs are beginning to create unique strategies. Telefonica Tech has made multiple acquisitions and other investments; some of which are for private networks (Monogoto) and others for IT and services (Incremental). Vodafone has expanded its private networks to all business markets, such as its recent expansion into Spain and India. Verizon has further entered the private network market and signed a cooperation agreement with Celona, ​​a disruptor. This quarter, Middle Eastern CSPs such as Etisalat and Du also took related actions.

Some CSPs are also creating dedicated private network units, including Telenor Denmark and BT’s Division X. Building more agile, solution-driven business units makes sense, but the challenge, as always, is execution.

Trials, marketing messages and industry interest: the market is evolving

Many companies are talking about soft launches and testing, with AT&T's recent collaboration with Microsoft and AWS's launch of Private 5G solutions being representative examples. Private networks are not a "home run" market that can easily reap high returns in the short term, and participants need to learn from experience and lessons and address challenges. This also means that although many participants are involved in this market, the private network market is not suitable for everyone. Omdia predicts that some providers and manufacturers may begin to be forgotten by the market as early as next year.

Wi-Fi is another important emerging theme. Cisco and HP want to change the discussion about private cellular and Wi-Fi. The two technologies can enhance each other rather than being presented in a competitive way. This is an evolutionary (not disruptive) marketing message that is easier to sell to enterprises. Other players need to consider their strategies based on the success of this emerging marketing message.

As of Q1 2022, many deployments are still defined as proof of concepts (POC) or pilot projects. According to our database, 33% of activities are pilot projects. A recent example is NTT and Schneider working together on a POC deployment, which shows that industrial manufacturers are interested in using and commercializing 5G private network solutions. This example also shows that it will take several years for industrial players to go from considering 5G private networks to accepting 5G private networks.

Next development

Success in this market is not easy. Market participants are currently experiencing orderly chaos and excitement in the market, but the real market is fragmented and more difficult. There are many ways to participate in the private network market, which obviously creates opportunities for cooperation and innovation, but also brings new competitive threats. Market participants need to pay attention to new developments in channel migration (such as combining Wi-Fi with private networks) and incorporate them into their own strategies.

Players still have time to adjust their private network strategies; many products are still in the testing phase. This is a slowly evolving market, and CSPs still have the opportunity to partner with different types of players and participate in the private network market. Not all market strategies will be successful, but as CSPs continue to refine their strategies and make them more specific, they have the opportunity to gain a foothold in this market. Some CSPs will continue to play the role of major players in the private network market.

Source: Omdia