Vendor Ecosystem Synergy Is Needed for Enterprise Cellular Network Infrastructure Solutions to Flourish

Market Overview

Below is a broad outlook of enterprise infrastructure trends and predictions for the future.

• It has become apparent that new greenfield infrastructure vendors (relying on Open Radio Access Network (RAN) or Open Virtual RAN (vRAN) architecture) and SIs relying on Open RAN partners are particularly successful with enterprise cellular deployments.
• By 2027, ABI Research forecasts more than 18 million small cells for the enterprise connectivity market.
• The number of Open Radio Access Network (RAN) small cell shipments in all enterprise verticals combined will grow from nearly zero deployments in 2022 to just over 8 million in 2027.
• Growing at a much slower rate, the number of small cells shipped for enterprise connectivity using traditional RAN will increase from nearly 8 million shipments in 2023 to more than 10 million in 2027.
• Traditional RANs will account for most enterprise connectivity revenue (US$5.5 billion by 2027), but Open RAN revenue growth will far outpace the former.
• Open RAN installations are expected to generate revenue of US$3.2 billion by 2027, accounting for 37% of all enterprise RAN revenue. That’s compared to no revenue as recent as 2022.
• Due to fiercer market competition—and, therefore, lower price points—Open RAN revenue will grow at a slower Compound Annual Growth Rate (CAGR) than shipments. For example, traditional RAN shipments are expected to grow by a CAGR of 12% between 2021 and 2027, while revenue is expected to grow at a CAGR of 6.8% for the same time frame.

“The success of Open RAN vendors shows once more that success in the enterprise domain requires a set of capabilities in addition to technology expertise and their technology solutions. A second set of criteria—at least as important to the implementing enterprise as technology aspects—considers the business culture of prospective connectivity providers and how well they are equipped to adjust their offering to specific enterprise requirements and pain points.” – Leo Gergs, Senior Analyst at ABI Research

Key Decision Items

CSPs Need to Partner Up

To expedite the maturity of Open RAN, Open Virtualized (vRAN), and other new network infrastructure solutions, Communication Service Providers (CSPs) should invest in Research & Development (R&D) facilities. At the same time, CSPs must continue collaborating with ecosystem partners to research, develop, and test new infrastructure technologies. As a result, this will increase vendor diversity and create more product-based competition in the market, which will ultimately lead to lower network infrastructure costs and higher infrastructure/component quality (as a result of increased product innovation).

It’s also imperative for CSPs to engage with new emerging cellular network infrastructure vendors to stimulate market traction and draw important insights from real-life deployments. Key examples of deployments include the “O-RAN Town” project in the German city of Neubrandenburg (Deutsche Telekom with equipment from vendor partners Dell, Fujitsu, Intel, Mavenir, NEC, and Supermicro) and Vodafone’s Open RAN deployments in the United Kingdom (together with infrastructure vendor Samsung).

These cellular network infrastructure trials will help emerging vendors drive critical expansion in what has historically been a very closed market. Moreover, these trials provide vendors with the knowledge needed to align their solutions more closely with market demands.

Infrastructure Vendors Must Seek RAN Equipment Interoperability

So far, one of the biggest obstructions to network operators, enterprises, and Systems Integrators (SIs) choosing an Open vRAN solution is the lack of interoperability of infrastructure. Indeed, network performance is likely to be negatively affected when different RAN vendor equipment doesn’t work smoothly with one another.

Although the standardization efforts of industry associations like the O-RAN Alliance are appreciated, they are limited because vendors often disagree in their understanding of the same specification. This necessitates tight coordination between network infrastructure vendors so that they understand each other’s equipment and interfaces. Only through collaboration can Open RAN vendors provide efficient and fluent networking solutions to enterprise customers.

Key Steps for Hyperscalers Targeting the Telco Market

As enterprises increasingly disaggregate and virtualize their cellular networks, the role of cloud hyperscaler providers (e.g., Microsoft, Google, and Amazon Web Services (AWS)) is cloud hyperscaler providers (e.g., Microsoft, Google, and Amazon Web Services (AWS)) is all the more important. If a hyperscaler wants to triumph in the enterprise cellular space, the company must study the market landscape intensely and identify unique competitive advantages over other players. 

ABI Research believes that as public, private, and hybrid cloud solutions become more integral to enterprise networks, hyperscalers should focus on offering their existing cloud infrastructure to enterprises and enterprise telco payloads. Integration and customization should be left to experts like established SIs.

When partnering with network infrastructure partners, hyperscalers should keep in mind that partners want to minimize financial risk. To solve this, hyperscalers should offer versatile Operational Expenditure (OPEX)-based pricing models that keep upfront costs down. These flexible business models will be attractive to potential channel partners, while enabling hyperscalers to remain profitable from the onset.

Systems Integrators Will Bear Greater Responsibility

SIs are expected to play a larger role in enterprises' cellular network infrastructure integration. Most implementing enterprises lack enough understanding of various infrastructure vendors and the subtleties of different available solutions to make a rational decision. This means private 5G SIs will have to step up and identify the necessary network requirements in terms of appropriate connectivity technology, deployment architecture, and which partners to engage with for individual components.

For example, SIs will have to weigh the advantages and disadvantages of an Open RAN (or Open vRAN) solution versus a traditional networking solution from a well-recognized vendor. The decision will boil down to the enterprise customer’s unique demands for performance and pricing points.

While the growing need for SIs to get more involved in cellular network infrastructure decision-making will result in an additional revenue stream for them, low prices are essential. Between enterprises being very price-sensitive and the competitive pricing of wireless connectivity alternatives like Wi-Fi, SIs must ensure markups are kept to a minimum.

Finally, SIs should focus their monetizing strategies on business outcomes, such as increasing product quality, minimizing machine downtime, or increasing the Overall Equipment Efficiency (OEE). In tandem with predictable price points, these business cases will highly resonate with potential enterprise clients.

Key Market Players to Watch

• AWS
• Deutsche Telekom
• DISH Network
• Ericsson
• Huawei
• Mavenir
• Microsoft Corporation
• Nokia
• Rakuten Mobile
• Siemens
• Telefónica
• VMware, Inc.

Dig Deeper for the Full Picture

For a more in-depth look at the current 5G RAN infrastructure market and accompanying network solutions, download ABI Research’s Infrastructure Vendor Strategies for Enterprise Cellular research report.

Not ready for the report yet? Check our 5G Private Networks in Asia-Pacific: A US$13.5 Billion Opportunity Spurred by Digitalization Research Highlight. This content is part of the company’s 5G Markets Research Service.