How Do Researchers Try and Quantify 5G Private Network Markets?

When attempting to quantify the size and possible growth of a new industry, any market researcher has essentially a few choices, but almost all approaches include looking at similar existing markets and assume some percentage cannibalization. In other words, estimates of electric vehicle sales would include some estimate of conventional car sales in a market and an expected rate of substitution. 

So any estimates of possible 5G private network activity and spending would include some estimate of what enterprises currently spend for private networks dominated by wifi and Ethernet. 

According to Markets and Markets, enterprise Wi-Fi spending will reach about $26 billion by 2026. 

Region	Spend (USD billion)
North America	9.6
Europe	6.6
Asia Pacific	4.7
Rest of the World	5.6

Some estimate that enterprises spent $64 billion or so in network gear in 2022, for example, including spending for Ethernet, W-iFi and all other private networks. Add to that the sums spent for system integration and consulting. 

Global enterprise information technology spending is estimated at $4.6 trillion in 2023, an increase of 5.1 percent from 2022, according to the latest forecast by Gartner, including spending on software, hardware, and services.

Of this, $2.5 trillion is expected to be spent on software, $1.6 trillion on hardware, and $460 billion on services. Most would likely consider the bulk of any substitution effect to come in the hardware and services categories. But most also would consider that data insufficiently granular to guide assumptions about product substitution. 

Perhaps the other common approach is to look at industry verticals, estimate their annual spending for networking-related information technology, and then make assumptions about a shift of spending in support of new categories.

Global enterprise spending on factory automation is expected to reach $320 billion in 2023, according to MarketsandMarkets, growing at a compound annual growth rate of 8.2 percent from 2023 to 2028.

But only about five percent of that spending is for networking devices. So perhaps $16 billion in annual networking could be shifted to other technologies such as 5G, in the manufacturing industries, which seems to be everybody’s bet for the leading use case for private 5G networks. 

Category	Market Size (USD Billion)
Networking devices	115
Control systems	45
Robotics	35
Sensors	25
Others	15

The point is that new enterprise IT markets often develop as spending is shifted from one existing area to the new areas. Since most enterprise budgets only change in single digits from year to year, it is reasonable enough to expect that category shifts are the primary source of funds for any new innovation’s deployment. 

So many of us would expect 5G private networking investments to pull from other areas such as spending on Wi-Fi or Ethernet networks.