The upcoming 5G technology is hardly going to be as lucrative for the telecom vendors as it was initially believed to be. According to a report issued by Technology Business Research (TBR), it will take a few more years for telecom vendors to generate revenues from 5G.
There are many reasons for this. One prominent reason is that the business model of 5G is not clear, which is why the telcos are somewhat reluctant to go full steam ahead for 5G. Huge investments will be required for 5G and telcos across the world are experiencing drop in profits and pressure on margins.
Secondly, the telecom infrastructure market itself is experiencing a detrimental phase. The report also highlights through it’s latest telecom infrastructure services (TIS) market forecast for the years 2017-2022 that the market worldwide grew to $96.8 billion in 2017, but when we see the data year-on-year it is only a minor increase of 0.6%.
A similar report was issued by Rethink Research which reflected that the vendors aren’t ready as of now to invest their capital into 5G when they can still utilize existing 4G networks to make profits.
It is evident that companies like Nokia, who have slated operating profits of 87% for Q1 of 2018, it is going to be difficult to cope with such situations. However, CEO of Nokia, Rajeev Suri seems to be confident regarding the upcoming 5G implementations. He has been sharing that the operators in US and China are sure to bring back revenues in the industry with high-profile 5G launches to be incorporated by the end of this year.
Additionally, due to the heightened Merger and Acquisition activity in India and China’s post-peak LTE spend in the region, CAGRs in all sub-regions in APAC will also fall in the forecast period as claimed by TBR.
TBR has also explained that the volume of product-attached services will also decrease due to investments in NFV, SDN, cloud and automation. Thus, professional services will surely boom as the report states with the help of operator transformation efforts.
As quoted by TBR, “because they will be best able to withstand as well as capitalize on the opportunities that NFV, SDN and cloud provide”, the software industry will get an edge over the hardware industry.