In most tech markets, we naturally converge on one or two platforms for software. That’s the easiest way for developers to hit their stride, with blocks of code and tools that are tailored for a known platform. We saw tremendous benefits from this kind of convergence in the PC market, in smartphones and in cloud computing.
As we start a new market for RAN software in the open RAN era, of course we are starting out with a fragmented mess. All of the top network vendors will have their own RAN Intelligent Controller (RIC) platforms, and they will try to use this to maintain their differentiation based on algorithms that they’ve developed over the past 30 years. In addition, we have several new companies that will offer a RIC, from NEC and Mavenir to Juniper and VMware. So far, we are counting at least 12 options on the market. This is a barrier that will prevent a RAN developer community from coming together.
As with previous markets, we can expect some of the fragmentation to resolve itself naturally. It won’t take long for some of the new entrants in the RAN market to fold their cards and change directions. In fact, this will be accelerated when Rakuten Symphony officially announces the worst-kept secret in the industry: Rakuten will offer the RIC for free.
A free RIC makes sense to me. Just like iOS or Android software on a phone, the value is in the applications and not in the platform. The smart play is to give away the RIC in order to offer your applications in the best possible way.
But here’s the problem: The entrenched network vendors are not a fluid market like PCs, phones or cloud computing. The customers are locked in. After all, that is the point of the open RAN initiative: The vendors have more muscle than their customers when it comes to technology choices. More than 90% of the market still uses single-vendor equipment, and as this dominant segment moves to virtualization, the customers will continue to be locked in with their vendor’s version of RAN software.
The operators will insist on compliance with open RAN standards, but clearly, the standardization will not be perfect. Porting an application from one RIC to eight other RICs will be a challenge. So, we will have Ericsson apps on Ericsson’s RIC, Samsung’s apps on the Samsung RIC, and so on.
How will the fragmented RIC situation ever be resolved? I have a working theory that I will be holding loosely for the next 3 years, and we will see if it plays out. In short, the private 5G market will create new solutions that will disrupt the telco market.
Hint: The enterprise market is a fluid market with a lot of customers, which means that fragmentation issues can be solved. The telco market is a rigid market with fewer customers, so lock-in tends to last forever.
The private 5G market will grow roughly tenfold in the next five years. Today, private networks are dominated by the major vendors, with big telco networks that are “slimmed down” for enterprise customers. But this is only suitable for a small number of big customers.
For millions of small businesses, the private 5G network needs to be a simpler, more flexible, scalable platform. Virtualized open RAN is a great way to do this, and we will see disruptors come into the private 5G market with simple networks. They’ll use a RIC and a few xApps and rApps to build in the features they need instead of wading through hundreds of features.
By 2027, the industrial private 5G market will drive RAN equipment revenue north of $2 billion. That’s only 5% of the telco RAN market. But what happens when the private 5G market reaches $5B? $10B? At some point, the tail will start wagging the dog here. The telco customers will notice the vibrant market for xApps and the best-in-class RIC used in the enterprise market, and they’ll insist that their network vendors adopt the same RIC so that they too can participate in the enterprise market.
I believe that the virtualized open RAN will be spectacularly successful in small enterprise networks… and whoever dominates that niche will become the king of the RAN someday.
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