What Awaits the Telco Ecosystem as it Targets Manufacturing?

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1Q 2019 | IN-5374

Nokia, one of the big three telecom equipment vendors, has created a private LTE network with China Unicom for a BMW Brilliance Automotive Ltd. plant (BMW Group JV) in China. The plant will feature connected video surveillance equipment, asset tracking, connected tools, connected PLCs, connected AGVs, and various other equipment with Multi-access Edge computing (MEC) over the private LTE network.

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Nokia Deploys Private LTE for BMW and Partners with Bosch Rexroth

NEWS


Nokia, one of the big three telecom equipment vendors, has created a private LTE network with China Unicom for a BMW Brilliance Automotive Ltd. plant (BMW Group JV) in China. The plant will feature connected video surveillance equipment, asset tracking, connected tools, connected PLCs, connected AGVs, and various other equipment with Multi-access Edge computing (MEC) over the private LTE network.

Additionally, Nokia has partnered with Bosch Rexroth as Bosch attempts to build cellular connectivity into several pieces of its industrial equipment such as PLCs, drives, or even tools such as screwdrivers to sync wirelessly with MES systems and ensure that each screw gets the right amount of torque at the right angle.

Over the past two years, network vendors have touted private LTE as a stepping stone to 5G in the manufacturing sector but have not seen the demand or adoption they initially expected. Announcements such as these provide an opportunity for Nokia to demonstrate the business benefits of its technology in the sector.

Faster Configurations and Reconfigurations

IMPACT


Nokia and other network vendors have targeted the manufacturing sector because it offers an enormous opportunity. The connection revenues and network services revenues for cellular connected devices in the manufacturing sector alone will grow significantly to generate over US$1.1 billion by the end of 2023 and over US$23.8 billion by 2030, according to the latest iteration of ABI Research’s Digital Factory market data. Those numbers do not include device and app platform revenues, data analytic services revenues, professional services revenues, security services revenues, hardware revenues, or anything non-cellular based.

Right now, no one has even started to capture this revenue because of the many challenges vendors face in connecting and networking assets on the factory floor. On the average factory floor, a manufacturing firm has many types of equipment and oftentimes robotics from many different OEMs. All this operational technology, or OT, communicates with Fieldbus, ModBus, and various proprietary protocols. This means the equipment and assets cannot easily exchange data with each other, let alone an IT system.

To make things more complicated for the telcos, the manufacturing sector has a natural distrust of any IT that takes operational data off-premises due to security and privacy concerns.

Nokia’s plans with BMW try to solve all these problems. With MEC on a CSP private LTE network, and collaboration between Nokia and manufacturer equipment vendors like Bosch Rexroth, the manufacturing equipment will eventually be able to communicate via cellular while still giving the car manufacturer total control over its own data and what stays at the edge vs. publishing to an off-premises database or cloud. This will empower BMW to process streams of data at the edge while maintaining the ability to batch results to the cloud as desired.

One of the reasons BMW chose to implement private LTE in its new plant was the ability to re-configure production lines compared to using wiring, cabling and Ethernet systems. It hopes that standardizing on private LTE will cut down on that time significantly while guaranteeing the necessary reliability, bandwidth, and low latency. Getting a couple months ahead of schedule for new production lines or the ability to re-shuffle lines can easily result in tens of millions of US$ in ROI for an auto maker. This does not even include the bottom line impact of increased productivity due to easy real-time data exchange on the plant floor, predictive maintenance, and quality control.

Will This Strategy Scale?

RECOMMENDATIONS


Nokia and other network vendors could easily replicate this strategy with other manufacturing customers opening new factories if they get total buy-in from their clients and influence cooperation and LTE take up from industrial suppliers. In fact, if everything works as hoped with BMW, the market could move in that direction quickly. BMW’s competition will want the same advantages when opening new auto plants, and the car manufacturers’ suppliers, such as Bosch Rexroth, will want to sell their cellular connected equipment to their other clients.

Unfortunately, this only applies to new plants. Telcos will not find it so easy to retrofit existing factories with private LTE networks and connected equipment. As a result, they will likely find a bigger opportunity in supply chain asset tracking for the foreseeable future. Outside of asset tracking, cellular will only make up 23% of connections in manufacturing by 2023 but could reach 42% by 2030 if 5G takes off as hoped.

In the meantime, private LTE deployments such as Nokia’s with BMW serve as trust building exercises. If Nokia can get permission to share some of the results, impact, and value of the private LTE network, it could open new opportunities to develop relationships with other manufacturers. First, it needs to ensure that BMW’s deployment lives up to its promise.

For more insights and perspectives on manufacturing and the Industrial Internet, please check out ABI Research’s Industrial Solution.

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