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Which industry verticals will adopt small cells first?

Pie ChartWhile it’s easy to split the small cell market into indoor and outdoor, there are many different industry market sectors each with their own specific requirements and timescales. Which ones would benefit most from improved wireless communications as part of their digitization transformation and which are most likely to be demanding more from their wireless communications?

I've often been told that different sectors will adopt wireless communications (and so implicitly small cells) at different rates, depending on the needs and evolution of their individual market sector. One way to evaluate that is to look at the wider progress of digitization across each of these different industry verticals.

The wider scope of industry digitization

This McKinsey report looks at the state of Digital America in 2015, telling a tale of haves and have-nots. It argues that those companies adopting digitization are winning greater market share and profit; workers with sophisticated digital skills are commanding higher than average wages. It’s created a gap between different sectors of the economy, estimating a 4.1x rate of growth in digitization in leading sectors compared with lagging ones.

Digitisation isn’t simply about buying IT equipment and systems. Nor is it only about wireless connectivity, whether Wi-Fi or cellular. It involves changing the way industries work, automating processes, capturing and analysing much more data, creating many new products and services we hadn’t considered before. It encompasses the Internet of Things, Big Data, Artificial Intelligence, Cloud Services and Wireless Communications. It will impact many aspects of our society including how we live and work.

Ubiquitous wireless access will continue to grow in importance and must enable secure, efficient and resilient connectivity throughout.

Which sectors are furthest advanced

McKinsey combined 27 indicators and came up with the following ranking:

Industry Digitization Index

Perhaps it’s no surprise that the ICT, Media and Finance sectors lead the way. They are also benefitting from the greatest productivity growth.

In the middle we can see service sectors with plenty of opportunity to digitise customer transactions. While wireless services may have less impact on B2B (Business to Business), there’s clearly plenty of opportunity for streamlining customer transactions in the entertainment and recreation industry. I can think of many instances where cash transactions or queuing at a service desk are still common. The retail industry is undergoing turmoil as we switch to buying more goods and services online, directly delivered to home.

What was of greatest surprise to me were the sectors at the bottom of the chart, which show greatest potential for economic gain. Health care, hospitality and construction stand out with both relatively high employment share (13%, 8% and 5% respectively) but negative growth (-0.1%, -0.9% and -1.4%).

One example in healthcare is the growing use of remote patient monitoring, where this study showed a 50% reduction in readmission rates, potentially reducing the need for and cost of long term acute care facilities.

The hospitality industry has already undergone much change in how we book hotel rooms or order food in a restaurant. Perhaps the printed menu card will soon become a thing of the past, replaced by online ordering from a tablet. MacDonalds plan to rollout self-service kiosks throughout all of its 14,000 US stores. Domino’s Pizzas have gone one step further than Amazon’s One-Click ordering, introducing “zero-click” which expedites your favourite choice if you don’t do anything within 10 seconds after opening their App. Ordoo even allow you to order your latte while on your way to the coffee shop.

An example of automation in the construction industry is this automated bricklayer. It doesn’t replace the manual bricklayer completely, but considerably speeds up progress and reduces the heavy-lifting manual labour. A wireless connection allows it to download blueprints, report progress and order more supplies.

What these examples have in common in a need for ubiquitous wireless connectivity. There will also be plenty of opportunity for new IoT devices and solutions to expand the scope of services available.

Perhaps consumers are the biggest winning sector so far

Our smartphones and associated Apps provide vast knowledge and computing power in our pockets. We can access pricing data, book hotel rooms and read reviews online almost anywhere. This has created intense price competition and siphoned a lot of value out of traditional businesses who once charged high fees.

This has changed our society in many ways – and not always for the better – but provided a platform to increase efficiency and effectiveness of society as a whole.

Picking the winners

When assessing which sectors have the greatest potential, there is a tradeoff between those who are more likely to make the investment and adopt new technology versus those with most to gain.

While those at the top of the list may be the easies to sell into, there will also be much more competition.

Arguably those nearer the bottom of the list could be more profitable, but take more time and persistence to bring to fruition.

Further reading

Read McKinsey's report (no registration required) Executive Summary (654kBytes/24 pages) or Full Report (3Mbyte/120 pages)

 

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