5G and the Factory Floor

5G has finally made its mark on a wide range of applications and services, most notably in the consumer market. However, larger revenue opportunities will arise from targeting enterprise verticals. ABI Research forecasts that by 2028, manufacturing will account for nearly a quarter of total generated revenue in the 5G Ultra Low Latency Use Cases (URLLC) market. The capacity to establish a massive wireless sensor network or implement AR/VR applications for predictive monitoring makes 5G's wireless connectivity capabilities a perfect technological fit for growth in manufacturing. Therefore, it is critical for all parties involved to understand how to optimize 5G for their business strategies. 

Mobile Network Operators

To lower entry barriers for 5G deployment and attract potential implementers, network operators need to move away from business models purely relying on selling connectivity. To give manufacturers a flavor of 5G on the factory floor, they should develop more creative business and spectrum licensing models and use these as a foundation to start developing attractive pricing models for additional network capabilities (such as network slicing, a particularly high bandwidth or particularly low latency). Mobile operators should acknowledge that a sustainable business may be several years away in the industrial manufacturing segment.

To successfully target manufacturers, operators need to focus their efforts on targeting large Tier One manufacturers as a first step, as they are more prepared to invest into new technology than Small and Medium-Sized Enterprises (SMEs). In doing so, they need to understand, however, that targeting large manufacturers as keen early implementers can only be the first step, while most manufacturing companies are SMEs. That is why network operators will need to address the larger medium-sized companies like Beckhoff Automation, Balluff, Heidelberger Druckmaschinen, or Ingersoll-Rand or Rockwell Automation. While they have enough resources to invest in new technology from early on, they will be unlikely to deploy their own private network (in contrast to Mercedes-Benz or Bosch).

MNOs need to understand that listening to the requirements of manufacturers looking to implement 5G is much more important than trying to educate them on why they need 5G. To do this, they should actively engage in discussions within industry-specific associations like the 5G Alliance for Connected Industries and Automation (5G-ACIA) and should listen carefully to discussions in other user-centric groups (e.g., Germany’s VDMA 5G User Group) and present their offerings on industry-specific fairs (e.g., the annual Hannover industry fair).

Network Infrastructure Vendors

Much like MNOs, infrastructure vendors need to adjust their pricing models to remove entry barriers for potential implementers and aid 5G deployment on the factory floor. To be able to afford this, vendors need to cooperate with operators to agree on revenue sharing models.

Infrastructure vendors need to offer packaged solutions to manufacturers to simplify decision processes. Even though the nature of packaging requires some standardization of the solution, there should customizable options (such as different package sizes).

Infrastructure vendors have to hide technology and implementation complexity, especially when considering private networks using shared spectrum. These barriers are the most challenging for industrial manufacturers and are a threat to the adoption of cellular networks in enterprise verticals. Infrastructure vendors must make manufacturing priorities their own and must create an ecosystem to address all implementer requirements, from devices to support services.


Before deploying 5G on the factory floor, manufacturers need to have a solid automation strategy, as well as clearly conceivable and realistic use cases.

Manufacturers should currently consider private cellular 4G as a best-of-breed connectivity technology and 5G as a foundation to create more advanced use cases on-premises.

Manufacturers need to have a solid understanding of their preferred deployment option, as well as the implications. At the heart of this should be considerations on whether they require their data to stay on the implementer’s premises at all times (requiring a completely isolated no-public network, which is more expensive to operate) or whether there is some flexibility, allowing for the deployment of public network with a dedicated network slice.

No Clear Path to Success

Despite the higher potential for revenue for enterprise 5G connectivity than in the consumer market, manufacturers, network operators and vendors are mindful of how to target these opportunities. The manufacturing vertical is more fragmented than the consumer market, which will force operators and vendors toward more customizable 5G solutions, rather than a one-size-fits-all model. Furthermore, addressing enterprise verticals will fundamentally change the shape of the 5G value chain, requiring a change in behavior from all relevant actors. Making 5G work in industrial manufacturing, therefore, needs significant effort from Mobile Network Operators (MNOs), infrastructure vendors, and potential implementers from the manufacturing domain. Tighter collaboration between all parties will be necessary to address industrial manufacturing connectivity needs.

These findings are from ABI Research’s 5G For Industrial Applications application analysis report. This report is part of the company’s 5G Markets research service, which includes research, data, and ABI Insights.