Everyone is talking about the massive implications for 5G on various industries and how the technology is poised to disrupt the way we do many things. Many of these innovations and fundamental changes to cellular networks and device connectivity come from the new 5G NR (New Radio) specification. This new specification utilizes a new type of radio and air interface to maximize the utilization of wireless spectrum to do network slicing and enable new types of services. However, there are massive changes that need to occur in the core network and data center including the cloud that will be necessary to deliver on the promise that 5G NR technologies offer. Moor Insights & Strategy believes these changes will drive massive IT hardware spending to the tune of $326 billion by 2025. This includes 5G data processing, storage and networking needs in the datacenter and edge compute, carrier network transformation projects, and 5G modems and IP.These new 5G NR networks that are fully compliant with the capabilities of 5G NR will require faster and more flexible infrastructure that can adapt to the needs of faster connectivity. These new requirements also mean investing in new edge computing hardware that can help reduce latency and minimize the amount of 5G data flowing in and out of the network core and data center. The topography and overall makeup of cellular networks will have to change as well as an increase in responsiveness, flexibility, and overall performance. Many 4G LTE networks that exist today aren’t up to the task and will have to be upgraded even to be able to run 5G NR devices in any meaningful manner. The changes necessary to deliver the true 5G NR experience outlined by the 3GPP are going to have to happen in both the devices and in the network. Currently, the 5G NR non-standalone specification allows for older core networks to operate 5G NR temporarily to encourage faster adoption of the technology. However, as more networks transition to deploying fully-fledged standalone 5G NR networks beginning in the 2020/2021 timeframe, we will start to see the full impact of 5G on IT hardware spending which we believe will be $326 billion by 2025. This investment splits between different segments including the data center at 56% (including public cloud), network transformation at 22%, edge computing at 3% and modems and IP at 19%. These numbers do not include smartphones or the edge devices, just the infrastructure to process, store and move all this new data. All this vast spending on the necessary and new infrastructure for 5G shows that growth in spending is not just isolated to smartphones and new mobile devices. Note that while edge compute and network transformation have the highest growth rates, but datacenter spending is at a much higher base.
- datacenter and edge compute OEMs like Cisco Systems, Dell EMC, Hewlett Packard Enterprise, Huawei Technologies, IBM, Lenovo, Pure Storage
- datacenter and edge compute component suppliers like Advanced Micro Devices, Broadcom, Intel, NVIDIA, Samsung Electronics, Qualcomm, Xilinx
- network transformation providers like Ericsson, Huawei Technologies, Intel, National Instruments, Nokia, Samsung Electronics, ZTE
- modem and IP suppliers like Ericsson, Huawei, Intel, Nokia, Qualcomm, Samsung Electronics
- pure-play silicon foundries like Globalfoundries