The boring truth about private networks is this: most private networks are local area networks, and enterprises desperately need someone else to manage them.
This fact comes as a total surprise to many evaluating private networks as a shiny new growth opportunity. Surely, they say, private networks are hot stuff, while managed LANs are not sexy at all.
But the boring truth can make you rich. Nine out of 10 enterprises want someone to manage their sprawling and increasingly wireless LAN estates, according to new Omdia primary research with enterprises in North America and Europe. This represents $18.5 billion in annuity revenues in 2020, with more growth to come.
Many traditional LANs are cabled or a mongrel of wired and wireless vendor equipment that no one has ever kept tabs on. They’re a miserable tangle that someone needs to sort out.
The timing to address this challenge is excellent: various managed public, private, and virtual private options now exist using Wi-Fi 6, LTE, 5G, and other combinations with the growing democratization of spectrum. It’s now possible to deliver stunning productivity benefits by replacing legacy to empower enterprises’ 21st century workforces of humans and things. Not forgetting that automation, AI, software-defined, and cloud-based management tools are also transforming operational economics.
Not least, enterprises are now looking for much more from service providers: Their number one desire is unified management of LAN and WAN (see Figure 1) with end-to-end accountability for network security and application performance, preferably via a network-as-a-service contract.
Figure 1: Enterprises’ top 5 LAN problems
Source: Omdia 2020 Managed LAN Survey
Importantly, the cluster of LAN-WAN services in question adds up to a “borderless” networking opportunity conservatively worth more than $50 billion per annum. Whoever is prepared to manage the LAN is also in line to win incremental managed security, WAN revenues, and much more besides.
But will communication service providers answer this call? Historically, many managed LAN services have been mess-for-less deals of dubious profitability. No wonder many CSPs have opted for a narrower range of industrial private network activity.
Certainly, exciting potential exists in industrial and critical mobile private networks, many of which are also attractive greenfield projects. CSPs, vendors and systems integrators are sparring and partnering variously for these opportunities, according to Omdia’s Enterprise 5G Innovation Tracker.
But beyond the perimeter of factories, mines, ports, warehouses, and stadiums exist many more addressable contexts and other potential “private network” providers. Here are just a few:
Konica Minolta: Becoming a global managed IT services provider to more than 2 million existing small business and healthcare customers, Konica Minolta offers a workspace hub providing imaging, sensing, productivity apps, security, and edge services – and achieving eight times the revenue per customer of its legacy managed print business by improving strategic data flows across business LANs.
Glide Group: A specialist technology service provider for the highly competitive purpose-built student accommodation market in Europe, Glide helps landlords differentiate by supporting digital lifestyle, virtual learning and environmental management services across 850 LAN sites housing 350,000 Generation Z students.
Mitie: This 50,000-employee facilities management firm has a connected workspace mission to deliver real-time, automated and predictive property management insights to clients via LANs using the 2.5 million assets and 100,000 sensors under its control.
Given the potential of a multi-billion-dollar payday to those with a broader perspective, the truth is that LANs aren’t so boring after all.
Straight Talk is a weekly briefing from the desk of the Chief Research Officer. To receive this newsletter by email, please contact us.