As 5G creeps closer to reality, end-to-end network slicing will play a large role in the network transformation. ABI Research predicts that network slicing will create $66 billion in value for enterprise verticals by 2026. The main verticals that the technology will impact are manufacturing, logistics, and transportation.
Network slicing is a technology that will enable mobile operators to provide portions of their networks for specific use cases —including IoT, smart factories, and more. It is part of the 5G network architecture and will allow operators to create multiple virtual networks using a shared physical infrastructure.
The ABI Research Network Slicing and Industry Verticals report estimates that $32 billion, at a compound annual growth rate (CAGR) of 96 percent through 2026, in value would be created in just the manufacturing vertical. This sector stands to benefit from 5G network slicing as it enables the high-performance connectivity that industrial systems and machinery require. According to ABI analyst Don Alusha, these systems rely on dynamic, secure, and reliable interconnection to operate.
The second biggest revenue opportunity lies in the logistics sector. ABI projected that this market will increase from $65 million in 2019 to $20 billion in 2026 at CAGR of 127 percent.
Mobile operators stand to benefit the most from network slicing, as they provide the networks with the slicing infrastructure. However, ABI found that while the technology is projected to grow immensely, the $66 billion by 2026 will only account for 6 percent of provider’s revenues in that year. Alusha said that Telefónica, BT, and Deutsche Telekom were the operators likely to see some benefits of network slicing.
What this means is that there is a much larger market opportunity for mobile service providers than they are exploring. The ABI report said that in order to grow past these projections and fully embrace the technology, operators will need to improve their messaging, invest in proof of concepts in new areas, engage in new partnerships, and invest in customized enterprise vertical solutions. Alusha said that he expects operators to start targeting enterprise verticals and exploring the slicing technology in the coming years.
In the larger 5G industry, vendors and operators have acknowledged the promise of network slicing. At the 2018 Mobile World Congress Intel, T-Mobile, and Oracle all touted the technology. Ericsson and Swiss operator Swisscom have done some work on a 4G and 5G network slicing project. And Telstra conducted trials on how to manage multiple slices and monetize the technology last December.