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5G will require a new approach on the factory floor

03 February 2020

By 2026 there will be 5.3 million 5G connections on the factory floor according to ABI Research. 

As a technology, 5G will be a good fit to provide wireless connectivity on the factory floor, as it enables, for example, establishing a huge wireless sensor network or implementing Virtual Reality (VR) and Augmented Reality (AR) applications for predictive maintenance and product monitoring. 

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

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, this will require closer collaboration between network operators, infrastructure vendors, and manufacturers.

A recent Return on Investment (ROI) study conducted by ABI Research has shown that 5G 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 in place. “It is, therefore, highly important for network operators and infrastructure vendors to develop new business strategies taking into manufacturers’ requirements,” said Leo Gergs, research analyst at ABI Research. “Centrally, this should include moving away from selling connectivity as such and develop attractive pricing models for additional network capabilities.” 

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