By adopting new business models and moving up the value chain, high-tech players can ride the growth surge of 5G. At CES 2021, 5G was one of the leading technologies discussed with several companies demonstrating that 5G is finally here and poised to bring new immersive experiences across multiple applications and industries.

Qualcomm’s SVP of Engineering Alejandro Holcman discussed a 5G mmWave remote controlled car race with the cars and smartphones a mile away from the racetrack. He cited this remote-control experience can be applied to any machine for use by doctors, in-building management and much more.  This was first demonstrated at their Snapdragon Summit a month ago as seen in this video.

Accenture’s CEO Julie Sweet talked about research we conducted that found 8 in 10 executives believe 5G will have a significant impact on their business and 57% said it will be revolutionary. As Julie stated, “organizations need to start thinking about the impact at the consumer level and across industries – how it will change the way we live and get used in applications such as surgeries, autonomous driving and many more.  Pre-COVID, we thought the business transformation would take longer, but it is happening much faster.”

Drew Blackard, vice president of product management of Samsung Electronics, discussed two types of use cases: “better on 5G” and “only on 5G”.  Cloud gaming is an example of better on 5G.  Future immersive applications are examples of only on 5G such as the work Samsung is doing with AT&T and The Dallas Cowboys They are creating an in-stadium augmented reality experience that fans will be able to access on 5G devices to overlay rich player content and statistics while inside the stadium.

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It is clear that 5G will transform our future. Offering ultrafast speeds, millisecond response times and extreme reliability, 5G promises to remake not only end-user markets, but also the supply-side ecosystem. The true impact of the new 5G network will be felt at the device-to-device level where it will enable critical new use cases such as remote ICUs, intelligent power grids and augmented reality for field technicians.  For forward-looking companies prepared to grasp the opportunity, 5G will provide a path to move up the value chain, going beyond simply manufacturing devices into innovative business models that bring new opportunities for revenue. This particularly holds true for high-tech market sectors and consumer technology. By combining these new business approaches with a robust ecosystem, organizations can better leverage the potential of 5G while also contributing to the success of the network and its many use cases.

The types of applications mentioned above are already being tested and deployed, but they only scratch the surface. Once the network is in place, it will spawn novel business models, just as the advent of the smart phone over 3G/4G led to the creation of the app economy.

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A staged rollout

We expect the 5G rollout to take place in two phases. Phase 1, currently underway, focuses on network deployment and handset sales, with revenues expected to reach $31.5 billion by 2023.  Phase 2, anchored by IoT deployment and use cases, will dwarf phase 1 numbers. According to Gartner, revenues for industrial IoT, for example, are expected to grow between 2021 and 2023 by a CAGR of 221%.  To truly take advantage of this type of growth potential, businesses need to start exploring new ways to apply their technologies and product portfolio to these use cases. They need to develop alternative ways to monetize their technology, moving beyond their traditional go-to-market strategies to reimagine their business models. Below are some examples of these new models.

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SaaS (Silicon-as-a-Service)

The Semiconductor industry is an example of the market strategy to sell chipsets rather than devices. If the Silicon-as-a-Service model is adopted, organizations can tie pricing to the data processed by the chips. Revenue then becomes continuous, freeing manufacturers from downward price pressure and long lifetimes of most ICs.

Embedded design

Instead of developing single-function devices, companies can offer differentiated designs with options intended to address specific system-level opportunities. This approach provides an opportunity for both the device supplier and their customers to differentiate themselves in the market.

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FaaS (Feature-as-a-Service)

This approach takes inspiration from server manufacturers who sell machines with a variety of features that can be activated as-needed. Before purchase or after deployment, users can activate different functions depending on their need, opening the way for a pay-as-you-go model and recurring revenue streams.

AaaS (Data analytics-as-a-Service)

For many companies, data has become nearly as valuable as the physical devices they sell. By enhancing equipment with the ability to harvest internal performance and usage data for analytics, high-tech players can now introduce a new revenue sources while bringing value to service providers and end-users.

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Paths to success

Realizing the promise of these approaches starts with understanding potential 5G use cases and the end customers for those use cases. Organizations need to analyze the intersection between their existing technology and the requirements of the new 5G world. Most of all, they need to reconsider their product portfolios, product development processes, and their organizational structure itself.

As capabilities and use cases proliferate, 5G is positioned to create an extensive and diverse customer base. As a result, even the biggest organizations will likely lack the resources to effectively address the full range of opportunities. Indeed, their very size may handicap them, compromising their ability to pivot to new business models and use cases. The answer to this problem is to develop a collaborative 5G ecosystem. By involving smaller and more nimble partners, larger organizations can respond to the needs of a broader customer base more quickly and effectively.

5G presents an opportunity for high-tech organizations to move beyond simply selling devices. By reimagining their revenue streams, they can diversify revenue and possibly increase profitability. The development of a rich and diverse ecosystem can equip them to better serve existing customers and address the needs of a wide array of new customers in emerging 5G use cases. The approach will not only equip companies to fully leverage the 5G opportunity, but also help 5G achieve its full potential. The immersive experiences enabled by 5G will be endless.


Disclaimer: This content is provided for general information purposes and is not intended to be used in place of consultation with our professional advisors. This document refers to marks owned by third parties. All such third-party marks are the property of their respective owners. Nosponsorship, endorsement or approval of this content by the owners of such marks is intended, expressed or implied.

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Syed Alam

Managing Director – Strategy & Consulting, Semiconductor, Global Lead

David Sovie

Senior Managing Director – High Tech, Global

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