In the early days of a disruptive market trend, it’s difficult to wrap your arms around the technology choices. Everyone is speaking a different language, with words that have no meaning to a wide audience. It’s like the Tower of Babel: people get excited about their ability to create something, and delusions of grandeur… but later find out that they didn’t understand each other.
When the business model is vague, it’s easy to imagine some wild scenarios for the new technology. I guess that’s why so many people get caught up in the “hype cycle,” with unrealistic expectations for short-term growth. Later, when the business model becomes clear, the technology and its limitations snap into focus and real deployment can start.
Edge computing is in the early phase of the hype cycle now. Multiple business models and technologies are up for grabs… so thousands of possible applications seem feasible. There are multiple unanswered questions right now, across at least four dimensions:
- Private cloud, operator cloud, or public cloud?
- Wired or wireless?
- Public network or private network?
- Media streaming apps/CDNs, or low latency apps with local compute?
Mobile Experts is launching a research service to address these four dimensions and determine the size and shape of the edge cloud market.
We don’t have all of the answers yet, but we have made some early conclusions. Here’s one: Big companies will use edge computing differently than small companies. A huge manufacturing company like Volkswagen can commit early to 5G connectivity and MEC-based manufacturing controls in 122 factories, because they have a big IT staff that’s committed to a private 5G network and on-premises customization. But, a mom-and-pop manufacturing business won’t invest in automation until a combination of easy connectivity and real-time computing has been tailored to their narrow business niche. The larger market for light industry will have to wait for the edge to be structured like the cloud is today, with “apps” that can be plugged in for various purposes.
Here’s another conclusion:
5G URLLC has huge potential, but it’s clear that the connectivity is only one small part of this story. The value chain will include connectivity, MEC software and hardware platforms, and a series of software elements that will work like an “app” does on the cloud today. The difference from the cloud is that each “app” will include development of software for ease of use and an intuitive user interface, along with some hardware to carry out the automation in the real world.
This process will not happen quickly. Nobody should expect that 5G connectivity by itself will instantly lead to industrial automation. In fact, we expect the connectivity to represent less than 30% of the value in the overall business model, because the “app” (including software and hardware) will be the primary vehicle for adding value in a local enterprise. The mobile operators are unlikely to be in the driver’s seat here.
Stay tuned, as over the next year we will be uncovering the business model one piece at a time, and forecasting the future of Industrial IoT.
Joe Madden is principal analyst at Mobile Experts, a network of market and technology experts that analyze wireless markets. The team provides detailed research on small cell, base station, carrier Wi-Fi, and IoT markets. Madden currently focuses on trends in 5G, IoT, and enterprise markets for wireless infrastructure. Over 26 years in mobile communications, he accurately predicted the rise of digital predistortion, remote radio heads, small cells, and a mobile IT market. He validates his ideas with mobile and cable operators, as well as semiconductor suppliers, to find the match between business models and technology. Madden holds a physics degree from UCLA. Despite learning about economics at Stanford, he still obeys the laws of physics.
“Industry Voices” are opinion columns written by outside contributors—often industry experts or analysts—who are invited to the conversation by FierceWireless staff. They do not represent the opinions of FierceWireless.