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How Industry 4.0 Will Fuel 5G Global Revenue Growth

New research has focused on the economic value of fifth-generation (5G) wireless communication technology, the Internet of Things (IoT), and how they enable the development of new vertical industry applications.

5G will dramatically gain importance in providing wireless connectivity to industrial environments, especially in the context of Industry 4.0 and the automation of production processes and monitoring of machine conditions.

5G Infrastructure Market Development

According to the latest worldwide market study by ABI Research, by 2026 there will be 5.3 million 5G connections on the factory floor which will generate revenue of more than $184 million -- that's a CAGR of 623 percent between 2021 and 2026.

"As a technology, 5G will be a perfect fit to provide wireless connectivity on the factory floor, since it enables, for example, establishing a massive wireless sensor network or implementing Virtual Reality (VR) and Augmented Reality (AR) applications for predictive maintenance and product monitoring," said Leo Gergs, research analyst at ABI Research.

5G offers immense operational benefits and productivity enhancements to the implementing manufacturer. Furthermore, the technology opens up new production opportunities by enabling artificial intelligence (AI) applications to be integrated into manufacturing processes.

Early 5G trial deployment projects at companies such as Schneider Electric in France and Germany’s Osram, and Mercedes hint that bringing 5G connectivity to the factory floor will decrease maintenance costs by 30 percent and increase overall equipment efficiency by 7 percent.

While there are many use cases and areas of application for 5G in industrial manufacturing, targeting the enterprise vertical will fundamentally change the value chain associated with 5G.

However, a much closer collaboration between network operators, infrastructure vendors, and manufacturers will be required.

According to the ABI assessment, targeting enterprise verticals is vitally important for telecom service providers and the successful deployment of 5G infrastructure and associated product offerings.

A recent Return on Investment (ROI) study has shown that 5G infrastructure will take approximately 14 to 15 years to break even if it remains solely in the consumer market, versus 10 years if enterprise business models were developed with effective target marketing.

Outlook for 5G Innovation and Revenue Growth

"It is, therefore, highly important for network operators and infrastructure vendors to develop new business strategies taking into manufacturers’ requirements. Centrally, this should include moving away from selling connectivity as such and develop attractive pricing models for additional network capabilities," concludes Gergs.

Industry 4.0 is a subset of the fourth industrial revolution (4IR). Did you know that 1TB of production data is created daily by the average factory, but less than 1 percent is analyzed?

Industry 4.0 innovations make use of that raw data to uncover insights, predict failures, prescribe fixes and optimize assets -- significantly reducing costs and improving factory productivity.

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