Ericsson promises enormous rewards for the right enterprise investments

With consumer revenues in the mobile world flat-lining, many telcos are exploring the world of enterprise services to recoup 5G investments, and Ericsson thinks it’s a pretty large pot of gold.

Jamie Davies

October 15, 2019

3 Min Read
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With consumer revenues in the mobile world flat-lining, many telcos are exploring the world of enterprise services to recoup 5G investments, and Ericsson thinks it’s a pretty large pot of gold.

According to Ericsson’s ‘5G for business: a 2030 market compass’ report the question isn’t whether or not telcos are exploring how to work with enterprise customers in new and interesting ways, but more which are the ones to prioritise.

“The combination of 5G and digitalization creates new opportunities for service providers to build and extend their businesses beyond connectivity and presents a way to break the trend of a stagnant market,” Jan Karlsson, Head of Business Area Digital Services at Ericsson, said in the report.

“However, even if the rapidly changing 5G-IoT landscape offers enormous potential, it is complex and not without its challenges. Deciding on the best way forward requires a comprehensive understanding of issues surrounding the addressable markets, the driving forces and barriers for different industries to adopt 5G-enabled use cases.”

This is the challenge which many telcos will face. Enterprise services are not simply about bundling together several buzzwords, each vertical demands its own niche solution. For example, the fast-growing gaming industry is demanding low-latency driven services, while smart manufacturing depends on reliability and resilience and broadcasters are searching for the high-speeds and coverage.

With limited resources available in-house, some telcos might have to elect which niche to target. This creates the potential for a very interesting industry moving forward. Perhaps the telcos will compete for post-paid contracts in the consumer world, but the creation of niche solutions for enterprise services might force telcos down more specialist routes.

But each of the verticals are not created equal, and the nuance in opportunity in the short- to mid-term is worth bearing in mind.

According to Ericsson, while healthcare might have notable challenges, there are also some significant rewards. mHealth, eHealth and hospitals are all areas where connectivity can offer benefits and profits. In Industry 4.0, a favourite segment for 5G justification, the team suggests smart factories might gain traction sooner rather than later, though mining and utilities usecases are not gaining as much traction.

The automotive arena is an interesting area, with opportunities obvious in both the connected/autonomous vehicles segment as well as for in-car entertainment. Unfortunately for the telcos this is an area where other challengers are trying to own the ecosystem. If the telco industry is not careful, it might be relegated to nothing more than a commoditised connectivity partner.

Interestingly enough, in the retail segment, Ericsson is downplaying the opportunity for 5G in the physical stores though eCommerce certainly presents greater prospects. There could be profits for those who create the solutions and own the space, though as there are a limited number of larger retailers who would have the CAPEX to invest in such propositions as in-store mixed-reality experiences or drone delivery, it might be a tricky segment to justify.

Perhaps the most interesting takeaway from this report is the opportunity for diversification and specialisation in the enterprise services market. Some telcos might opt to chase after the same pot of gold, but strategic investments could see the right telco enter a niche will little or no competition.

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