Enterprise

Sizing the potential for Small Cells as a Service

Estimate market sizeAnalyst iGR published a sponsored survey report last year assessing the potential US market size of Small Cells as a Service for the Enterprise sector. While you may not agree with all of its conclusions, there were some results you might find surprising and several nuggets of interest.  We’ve summarised and commented with our view and the implications.

 

 

First of all, let’s caveat this was a sponsored piece of research by Spidercloud, Intel and Cisco, so although we won’t question the integrity of iGR or these sponsors, you may not be surprised to find it supports their goals.

Enterprises are switching to Cloud services rapidly

Many Enterprises already use managed services as part of their business operations. This might range from backoffice functions such as payroll to front-of-house websites and operational support. Amazon Web Services dominate the cloud infrastructure market with revenue for 2015 of $7.7 Billion, but don’t overlook that this grew 70% year-on-year. While the figure is dwarfed by global cellular revenues exceeding $1 trillion, it signifies a major shift from in-house to managed Enterprise infrastructure.

But that segment is itself dwarfed by applications and managed services that run on top of such infrastructure. Salesforce.com is just one good example, reporting annual revenues of $6.6 Billion and forecasting growth of 24% to exceed $8 Billion next year. It’s one of many popular managed services in strong demand today. So the concept of outsourcing IT services and platforms isn’t unusual.

This was validated by the survey which found that 55% of companies already use Software as a Service (SaaS) such as Salesforce.com, with a smaller 38% who use Infrastructure as a Service (IaaS) such as renting space or servers in the Cloud.

Smaller companies cited the benefit of flexibility and scalability, while larger companies were more driven by cost saving.

Enterprise IT managers know about Small Cells

The survey found that more than half of IT managers were well aware of Small Cell technology, with a further 15 to 30% only “somewhat aware”, and a segment of 20-25% “less aware”. Around half of respondents were “most interested” in Enterprise Small Cells, with the greatest interest from larger companies of over 5000 staff.

A smaller proportion were “mostly interested” in a managed services solution, between 30 to 40%, with a further 30-40% neutral on the topic. Perhaps they either need to understand what’s on offer better or are awaiting further commercial and technical developments. iGR suggest it may because some IT managers don’t want to lose direct control of their small cell environment.

iGR highlight four critical success factors for a managed small cell offering:

  • Security and compliance with regulation and legislation
  • Easy deployment model, simple cabling and equipment placement
  • Operating expense model with minimal initial capital spend
  • Neutral host compatible with multiple mobile network operators

Those already with large scale Wi-Fi deployed are the most interested.

But not necessarily about value added services on top

Just as SaaS enables huge range of Cloud services, small cells also enable a range of value added goodies.

I’d group these into three primary categories

  • Call handling including unified communications, mobile/PBX integration
  • Data traffic management, including web filtering, firewall, policy services
  • Context aware/location services

Interest levels in most types of services seemed to be around the 20% level, with greater demand for smaller companies (500 to 1000 employees).

The value of Context/Location Services seems to be less well understood. It seems that more education is required to explain the possibilities, ranging from enhanced emergency location finding (e911) to aggregate footfall tracking.

Total addressable market

iGR document their calculations and data sizing sources so you can see how their forecasts are derived. The top level figure is 15% CAGR from $6.8 billion at end 2016 to $12 billion by 2019. This is purely for the US market and ignores other countries.

This is thought to be more significant for larger companies, who can justify the larger investments for any customised integration into their own systems/networks. However I’ve found that many Cloud based Apps and solutions come pre-integrated with their most popular counterparts. Smaller companies may find these services quite accessible if they are prepared to work within the standard range of functions and features available.

Summary

The purpose of the survey report was to establish potential market size for both small cell infrastructure as a managed service, and for some of the value added services that it enables.

We can look to wider trends in the Enterprise server infrastructure and Cloud services to see that this model of operation is gaining market share. It’s no longer thought business critical to own or operate infrastructure in-house, and this extends to in-building wireless services too.

The report is still available for free download (registration required) from iGR. ThinkSmallCell wasn’t involved in the research or publication, and views expressed above are our own.

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