Global 5G Market Poised for Significant Growth

Oct. 25, 2016

October 25, 2016 -- The global 5G equipment market is expected grow at a CAGR of more than 32% during the period 2016-2020, according to Technavio's latest report.

'Proliferation of smartphones and tablets is fueling the growth opportunities of this market. In addition, telecom operators globally have observed rising demand for enhancing their network management capabilities to provide strong and stable connectivity solutions for smart applications,' says Abhishek Sharma, a lead M2M and connected devices research expert at Technavio.

The company's ICT research analysts segment the global 5G equipment market into the following regions:

Americas
EMEA
APAC

In 2015, with a market share of 43%, Americas dominated the global 5G equipment market, followed by EMEA with 36% and APAC with 21%. In 2013, approximately 35 million IoT connections were recorded only in the US region. Smart solutions are widely used in different sectors, including energy and utilities, automotive, and logistics. International expansion by US-based operators to provide IoT solutions will contribute to the market growth.

Nearly 80% of enterprises in the US have been using IoT products and services, with the support of cloud platforms and data analytics to improve their business efficiency. With the penetration of Internet of Everything, all industries are highly in need of efficient and reliable communication networks to process business operations. This trend is expected to continue during the forecast period. The US is expected to witness approximately 30,000 small cell nodes to handle LTE-A and mobile 5G applications.

The demand for high speed broadband access network has been increasing rapidly. In addition, advent of several online applications and social media has put pressure on telecom operators to provide high quality services. This has led telecom operators to expand wireless networks to meet the rising customer demand and implement power-efficient solutions to reduce power usage. For instance, Verizon is looking to expand its power efficiency program to help deploy more small cell nodes for LTE networks and reduce operational expenses (OPEX) on energy by half of its current OPEX by 2020. Similarly, Sprint has decided to replace almost one-third of its cell sites with high-efficiency nodes.

In the EMEA market, telecom vendors such as BT, Vodafone, and Deutsche Telekom are competing to release their smart technology products and corresponding package services, which act as a key enabler to the growth of this market. Increased adoption of sensors in the automotive and healthcare sectors and growing number of connected devices drive the adoption of 5G technology in this region. Nordic regions like Sweden, Norway, Denmark, and Finland have an objective to develop smart cities and hence, huge investments have been allocated for the development of 5G technology.

In some African countries like South Africa, Kenya, and Nigeria, smart mobility technology is widely used in applications such as fleet management, asset tracking, POS, and pay-as-you-go insurance. The rapid adoption of mobile media by enterprises for promoting products and services and the increasing adoption of location-enabled searches by individual users are among the factors that will increase market growth.

Service providers are seeking to improve the performance of network connectivity to enhance user experience with the roll-out of LTE networks across the region. In addition, some of the African governments have established regulations to enforce smart monitoring of electricity and water meters, driving the use of 5G communications in the energy and utility sectors. Saudi Araba is also set to invest USD 70 billion in various smart city projects and is planning to invest heavily in IoT technologies.

In the Asia-Pacific region, the increasing rate of urbanization in the world's most populated countries such as India and China is creating a demand for economic and environmental development. Government investments in the development of cities are rising and numerous central government programs (designed to promote urban developments) have been proposed.

Japan is the major contributing country in this region. Due to the early deployment of 4G LTE networks, Japan is a potential market for 5G technology. As service providers have already been offering effective 3G and 4G solutions, the demand for low latency wireless mobile technology is expected to grow during the forecast period. Other potential countries in the region are South Korea and Singapore. 'As APAC has the largest penetration of mobile internet, it is expected to accelerate the demand for 5G services among individual consumers,' says Abhishek.

A few Asian countries including Indonesia, Malaysia, and Thailand are investing in ICT technologies to help develop efficient and enhanced public services in the interest of sustainable city management. These countries are investing in intelligent transportation systems, smart grid technologies, smart buildings, and smart water management systems. In addition, Australia and China are investing in IT infrastructure to support smart city projects designed to promote quality cities and accelerate economic growth.

The top vendors in the global 5G equipment market highlighted in the report are Ericsson, Huawei Technologies, Nokia, Qualcomm, Samsung, and ZTE.