Private Cellular Networks: Growth Drivers, Challenges and Opportunities Expected Through 2028


 

What Verticals Will Lead in Private Cellular Networks Adoption Through 2028?

Despite persistent ecosystem maturity challenges, the private cellular networks (PCN) market is growing as leading enterprises advance their Industry 4.0 strategies and governments aim to capitalize on defense and public safety use cases. TBR research indicates that the private 5G network market will see strong growth through this decade as a wide range of industries and governments adopt the technology, but a confluence of factors is slowing the pace of market development relative to the industry’s original expectations.

 

Join Senior Analyst Michael Soper Thursday, Dec. 19, 2024, at 1 p.m. EST/10 a.m. PST for an in-depth look at TBR’s private cellular networks research. Each year TBR publishes a vendor benchmark, market forecast and market landscape on PCN, each covering a different aspect of the market. TBR’s private cellular networks analysis includes rankings of key PCN vendors by various revenue splits, the ecosystem for private LTE and private 5G networks, spend on private LTE- and 5G related infrastructure, and more.

In This FREE Webinar on Private Cellular Networks You’ll Learn:

  • Key growth drivers and detractors expected in the PCN market through 2028
  • Which verticals are leading and lagging in PCN adoption
  • Which ecosystem players are positioned to capitalize on trends in the PCN market

 

TBR Insights Live sessions are held typically on Thursdays at 1 p.m. ET and include a 15-minute Q&A session following the main presentation. Previous sessions can be viewed anytime on TBR’s Webinar Portal.

Meet MAMAA: The Top 5 Hyperscalers Shaping the Future of Digital Ecosystems

What Are the Top 5 Hyperscalers?

Alphabet, Amazon, Apple, Meta Platforms and Microsoft are the five largest, most comprehensive hyperscalers in the world by a wide margin. This group of Tier 1 hyperscalers are collectively referred to as MAMAA.

 

TBR research shows only the Tier 1 hyperscalers can transcend most, if not all, of the major lifestyle categories to provide a seamless end-to-end ecosystem experience, touching all aspects of people’s lives, primarily due to their scale and access to resources.
 

An In-depth Discussion on How GenAI Will Impact the Telecom Industry — Watch Now!

The World’s Largest Hyperscalers Are Positioned to Win an Outsized Share of the New Opportunities Created in the Digital Era

Tier 1 hyperscalers have momentum as they pursue their end-to-end digital ecosystem goals. Key reasons why hyperscalers will succeed in their digital ecosystem endeavors include:

  • Scale
  • Network effect
  • Proficiency at building and scaling platforms
  • Adept at translating data into outcomes
  • Near limitless financial resources
  • Access to the best talent
  • Have the best legal teams
  • Control essential intellectual property and patents (e.g., devices, chipsets, AI/machine learning algorithms, Lidar)
  • Tax advantaged — pay relatively little in taxes

Tier 1 Hyperscalers Intend to Own and Control Critical Aspects of the Value Chain in the Digital Era

The End Goal: Full-scope Digital Ecosystems

TBR believes the top 5 hyperscalers will own and control foundational and critical aspects of the digital economy and capture an outsized portion of the value created during the digital era.

  • Societies will become dependent on their clouds.
  • The majority of internet traffic will run over their networks.
  • Transportation will be directed by their self-driving technologies.
  • A significant portion of financial transactions will be processed via their payment platforms.
  • And much, much more

 

If current trends play out, and assuming interference from regulators remains manageable, TBR believes MAMAA will ultimately become fully integrated, end-to-end digital ecosystem owners, providing essential solutions for businesses and consumers worldwide.

 

At a high level, hyperscalers are all pursuing the same strategy, which is to maximize the value of data. All of the Tier 1 hyperscalers are entering similar markets, introducing similar products and services, investing in similar technology areas, and pursuing similar business models. The underlying goal is to provide an immersive, seamless, end-to-end digital experience to end users (consumers and businesses), which will maximize hyperscalers’ value capture in the digital era. Value in its most basic form resides in the data that hyperscalers have access to, but leveraging that data to produce outcomes is how the hyperscalers make their money.

As Hyperscalers Redefine Digital Ecosystems, Industry Consolidation and Adaptation Become Essential for Long-Term Relevancy

As hyperscalers build out their ecosystems, some incumbent entities will become marginalized and fail, and the remaining incumbent players across industries will have to consolidate, adapt and/or partner with hyperscalers in some way or risk fading from relevancy. The markets for IT, advertising, retail, media, entertainment, financial services and other industries are already facing this disruption. TBR believes transportation, healthcare, education, telecom and other industries will also experience hyperscaler disruption during this decade.

 

The lifeblood of the digital era is data, and the heart is the systems, platforms, marketplaces and other digital infrastructure that make use of that data. Hyperscalers have thus far created the most compelling digital infrastructure that is capable of amassing, synthesizing, automating and utilizing vast amounts of data, which is the key underlying reason why they have been so successful in creating economic value over the past two decades.

Growing Infrastructure as a Service Commitments and Competitive Dynamics

Hyperscalers Forge Larger, Longer-term Deals Amid Intensifying Competition

Customers Are Engaging in Long-term Contracts

Market leaders Amazon Web Services (AWS) and Microsoft have highlighted that customers are signing larger cloud contracts with longer terms. At least in the case of AWS, customers are increasingly applying their cloud credits toward one- or three-year subscription offerings like Savings Plans and Reserved Instances.

 

Microsoft offers similar plans, and in FY3Q24 reported an 80% year-to-year increase in the company’s number of $100-plus million Azure deals. We expect this trend to persist and potentially bring a greater degree of stability to hyperscalers’ top lines.

Google Cloud Should Keep an Eye on OCI’s Expansions

Oracle Cloud Infrastructure (OCI) is growing noticeably faster than competing services as Oracle rapidly fills data center capacity. Oracle has an unofficial goal of closing the revenue gap with Google Cloud Platform (GCP). Though this is a lofty goal, Oracle’s $60-plus billion backlog balance and strategic use of third-party colocation providers, alongside a series of cloud regions that interconnect with Azure, should be noted.

 

Google Cloud has opted to build and operate its own data centers, and while the company is expanding its footprint, competitors are doing so at a rapid pace, leading Google Cloud to enter markets where AWS, Microsoft and, in many cases, Oracle already have an established footprint.

Oracle Remains a Rising Force in IaaS, Growing Noticeably Faster Than Peers

Demand for OCI exceeds supply, but Oracle is quickly building new data centers, specifically smaller facilities that deliver high uptime and reliability, and is also leveraging third-party colocation providers. As Oracle fills capacity within its OCI data centers, Infrastructure as a Service (IaaS) revenue will continue to grow, and executives appear confident Oracle can maintain a 50%-plus growth rate on cloud infrastructure revenue for the near future.
 
Infrastructure as a Service Revenue Growth for 4Q24

Cloud Infrastructure Vendor Spotlights

Amazon Web Services

Essentially the first company to bring GPUs to the cloud, AWS has an established relationship with NVIDIA that AWS will hone to make sure customers continue to build applications on AWS infrastructure. For instance, AWS is supporting NVIDIA’s latest GB200 chips, allowing customers to scale up to thousands of GPUs in a single cluster, and is exploring the codevelopment of industry-specific solutions. Despite this alliance, AWS continues to invest in its own custom AI chips.

Microsoft

IaaS revenue growth is reaccelerating, coming off a challenging 2023, but Microsoft is also reporting a revenue uplift for AI services. In 4Q23 Microsoft reported that AI services contributed 6 points of growth in the Azure and other Cloud Services business. Serious about leading the AI market, Microsoft made the long-anticipated move to release its own custom line of chips, dubbed Maia, to better support AI workloads, including Copilot, and keep pace with peers, which have long invested in custom silicon.

Alibaba Cloud

Alibaba Cloud’s IaaS revenue growth continues to struggle due to ongoing economic headwinds in the China market, resulting in another quarter of negative growth in 4Q23. To hedge against this trend, Alibaba Cloud announced it will cut prices on more than 100 of its core products by up to 55%. The organization hopes to attract more enterprises and developers involved with AI development projects to promote overall AI adoption.

Leidos Sees Strong Bookings and Sustained Growth Across National Security, Health and International Sectors

Leidos’ Domestic DOD, Intel and National Security Operations Are Seeing Modest to Moderate Growth

Leidos’ reorganization is delivering positive results, particularly down the company’s income statement, where profitability reached record levels in 1H24. Midsingle-digit top-line growth is being buoyed by strong bookings activity with the Department of Defense (DOD) and civilian agencies.

 

Leidos’ top-line expansion is also being driven by the continued surge in program volumes in Leidos Health, which itself is sustaining year-to-year sales growth and operating margins near 20%. Outside of federal IT, Leidos’ Australia subsidiary is parlaying the company’s innovations in military-grade cybersecurity and software into new growth avenues in the fast-expanding Australian defense sector.
 

Explore the Ramifications of the Waning Bull Market on Federal IT Services Contractors in the Below TBR Insights Live On-demand Replay — Watch Now!

3Q24 Vertical Analysis

National Security & Digital (NSD)

NSD is booking new work with the DOD to modernize existing software platforms and implement new software that will accommodate future advanced weapons systems and digital technologies like AI-enhanced battlespace solutions. Leidos’ DevSecOps capabilities heavily underpin NSD’s efforts to enable the DOD to achieve its “Army of 2030” concept. NSD is also actively touting the potential benefits of GenAI for national security and DOD missions by addressing the upfront ethical and security risks of GenAI for defense and national security agencies.

Defense Systems (DS)

Sequential margin improvement for DS owes to efforts to optimize contract delivery. DS houses Dynetics, where activity is accelerating to develop satellite, force protection and hypersonics solutions for the DOD. Margins in DS will improve further in 2H24 as programs in these three areas transition from the R&D phases to production and delivery to clients.

Health & Civil (H&C)

Underpinning H&C’s robust performance of five straight quarters of double-digit growth as of 3Q24 are higher program volumes in H&C’s managed health services (medical examinations, diagnostic tests and automated reporting – delivered principally through Leidos’ QTC Health Services subsidiary) and disability exam programs with the VBA (Veterans Benefits Administration).

 

H&C was also awarded a five-year $326 million contract in 3Q24 with the National Institutes of Health (NIH) for Agile software development to modernize NIH’s grant management system, further extending H&C’s relationship with the NIH. (H&C provides scientific and operational support to the NIH’s 27 institutes and centers.)

Commercial & International (C&I)

Top-line growth for C&I, which includes Leidos’ commercial energy, international and Security Enterprise Solutions (SES) operations, is holding at low-single-digit rates. Segment expansion owes to higher program volumes in Australia, accelerating activity in Leidos’ energy unit and the continued rebound of Leidos’ now-restructured SES group.

 

For more data and analysis on Leidos’ 3Q24 performance, as well as TBR’s entire federal IT research stream, start your TBR Insight Center™ free trial today.

 

Dell Grows Its AI Factory Portfolio with the Integration of New NVIDIA AI Solutions

Much like its OEM peers, Dell Technologies (Dell) has increasingly made partnering a cornerstone of its strategy, particularly as it relates to the company’s AI business. Dell leverages its AI partner ecosystem to drive the codevelopment of AI solutions like those included in the company’s Dell AI Factory with NVIDIA portfolio.

 

Dell also integrates critical AI infrastructure and PC components, like data center GPUs and AI PC silicon, from a variety of vendors, including NVIDIA, and leverages platform and cloud service providers to increase the reach of its AI solutions. These are just two of the many ways Dell drives AI go-to-market synergies between itself and its partners.

 

Looking ahead, Dell will continue to invest in the development of unstructured data storage offerings to take advantage of the ongoing proliferation of AI workloads. The company will also continue to work with NVIDIA to have certain storage solutions certified and grow its storage footprint around AI servers and systems.

The Latest Dell and NVIDIA AI Solutions

Dell shipped $3.1 billion worth of AI servers in 2Q24, representing an 82.4% sequential increase, while AI server backlog remained healthy at $3.8 billion. Additionally, it is worth noting that while AI server backlog remained flat sequentially, Dell says its five-quarter AI server pipeline has grown to several multiples of its backlog, foreshadowing strong demand through 2025 as systems based on NVIDIA Blackwell begin shipping in volume to customers.

 

After unveiling Dell AI Factory with NVIDIA at Dell Technologies World in May, Dell announced in August the availability of NVIDIA NIM Agent Blueprints on Dell AI Factory with NVIDIA. NVIDIA NIM Agent Blueprints represent the company’s latest addition to its NVIDIA AI Enterprise platform, with the pretrained reference AI workflows being designed to help customers build and employ custom, use-case-specific generative AI (GenAI) applications.

 

In July Dell released its Dell Validated Design for GenAI Digital Assistants. The new solution was codeveloped by Dell and NVIDIA and allows for faster deployment of digital assistants, reducing customers’ development time and speeding up their time to value.

 

In July Dell announced it had begun shipping PowerEdge XE9680 servers based on AMD Instinct MI300X GPUs. Originally, the PowerEdge XE9680 supported only NVIDIA GPUs, but in December Dell announced it would integrate AMD Instinct accelerators into the company’s flagship AI rack server offering.

 

Stay up to date with analysis of Dell and NVIDIA’s partnership with a subscription to TBR Insight Center™. Start your free trial today!

Hyperscalers Continue to Discreetly Build Out Their Global Networks


 

What Will Hyperscaler-owned and -operated Networks Mean for the Telecom Industry?

Though AI dominates hyperscalers’ mindshare and investments currently, network connectivity remains a critical need and investment area for hyperscalers’ longer-term growth ambitions, and they continue to discreetly build out their global networks. These hyperscaler-owned networks portend significant disruption for the telecom industry.

 

Join Principal Analyst Chris Antlitz Thursday, Dec. 12, 2024, at 1 p.m. EST/10 a.m. PST for an exclusive review of TBR’s Hyperscaler Digital Ecosystem Market Landscape, which tracks how and why the world’s largest hyperscalers are disrupting industries to unlock economic value in the digital era, with specific focus on the disruption of the telecom industry. The report focuses on Alphabet (Google), Amazon, Apple, Meta Platforms (Facebook), and Microsoft.

In This FREE Webinar on Hyperscalers’ Activities You’ll Learn:

  • How hyperscalers are building out their own networks
  • Why hyperscalers are building out their own networks
  • What hyperscaler-owned and -operated networks could mean for the telecom industry

 

TBR Insights Live sessions are held typically on Thursdays at 1 p.m. ET and include a 15-minute Q&A session following the main presentation. Previous sessions can be viewed anytime on TBR’s Webinar Portal.

Hybrid AI: Lenovo Builds a Portfolio Ready to Address the Confluence of Personal, Enterprise and Public Data

Lenovo Outlines Its Vision for Hybrid AI

Lenovo CEO Yuanqing Yang, better known as YY, opened up the company’s 2024 Tech World event by discussing Lenovo’s stance on what it calls “hybrid AI,” a vision not dissimilar to hybrid cloud.

 

Hybrid AI is the ability to leverage both private (personal or enterprise) and public foundational models together to drive action. YY sees hybrid AI as the path forward for both consumer and enterprise users, with AI agents serving as the vector for combining these multiple data sources and connecting knowledge with specific tasks. AI agents will know their users by integrating disparate data into unified frameworks, will understand their users by creating models of a person or enterprise, and will work for their users by putting this knowledge into action.

 

The incoming era of agentic AI will require multiple agents work together to make critical connections across public and private data sets. During the Tech World keynote, Lenovo executives demonstrated a handful of capabilities of personal AI agents, from helping students study more effectively for exams to understanding the context of a consumer’s morning routine and ordering their favorite coffee from their usual coffee shop. These types of tasks require the ingestion, understanding and integration of user data across multiple applications.

 

While the discussion around consumer AI was focused on devices, Lenovo’s Enterprise AI showcase largely highlighted its IT infrastructure and services businesses. Core to the hybrid AI theme was the announcement of Hybrid AI Advantage with NVIDIA. Enabled by Lenovo’s full-stack portfolio and new Lenovo AI Library, the joint solution framework highlights how Lenovo believes its Lenovo Hybrid AI Advantage will accelerate enterprises’ AI adoption. This announcement formalizes Lenovo in competition with similar NVIDIA-based joint solution portfolios from Dell Technologies and Hewlett Packard Enterprise (HPE).

 

In contrast to these large-scale high-performance computing (HPC) systems, Lenovo arguably will have equal or greater success through its AI-centric edge business, where Lenovo has a track record of deploying retail, manufacturing and smart city use cases. Multiple server vendors’ AI stories center on their massive 8-GPU AI systems, but Lenovo points out that for many companies, AI will be executed on far smaller and more affordable systems, some with no GPU at all. This strategy plays directly into Lenovo’s “AI for all” mantra.

 

Underneath the enthusiasm for hybrid AI, Lenovo’s mission remains unchanged: It is driving transformation to become a technology leader in global devices, infrastructure solutions and services worldwide. Lenovo positions itself as having an end-to-end technology portfolio, a user-centered approach and an immense emphasis on open innovation. The company offers its customers choices thanks to its partnerships across semiconductor, AI platforms and ISVs; and it leverages its Solutions and Services Group (SSG) to accelerate solution development between its own portfolio and partner ecosystem.

Lenovo Develops Proprietary AI Features to Differentiate Its IDG Portfolio

Overall PC demand decreased over the past several quarters due to lengthening PC life cycles and the lingering effects of post-pandemic market saturation. However, during the pandemic the total addressable market for PCs increased robustly as the number of PCs per household jumped, driven by both work- and learn-from-home initiatives around the world.

 

As such, with these pandemic-bought machines aging, the next major PC refresh cycle is on the horizon and is expected to drive a material rebound in the market, supported by the upcoming end of Windows 10 support and mounting interest around AI PCs.

 

However, the lack of killer applications leveraging the neural processing unit (NPU) has throttled AI PC adoption thus far. At GIAC Lenovo emphasized that it expects new AI PC killer use cases and applications will come in 2025 and 2026, noting that there are already over 100 independent software vendors developing applications leveraging the NPU.

 

Lenovo had also recently announced AI PC Fast Start, an AI-centered advisory and deployment service that helps organizations transition to AI-ready devices and quickly unlock the potential of AI PCs.

Lenovo Announces Aura Edition AI PCs Ahead of the Next Major PC Refresh Cycle

To prepare for this refresh and capitalize on the market’s interest in AI and generative AI (GenAI), Lenovo unveiled a series of new AI PCs, including the company’s Aura Edition AI PCs, which the company developed in deep collaboration with Intel and includes three levels of “Smart” features to enhance the user experience.

 

The Smart Modes feature allows Aura Edition PCs to intelligently adapt to users’ workloads and environments through five submodes, including Shield Mode and Collaboration Mode, which enhance user privacy and optimize video from integrated PC cameras, respectively. The Smart Care feature integrates natural language processing capabilities to drive an enhanced user support experience, and the Smart Share feature allows for cross-device image sharing, supporting smartphones on both Android and iOS platforms.

Lenovo Plans to Leverage Its AI Now Agent to Drive Differentiation in the Market

Over the last decade the Windows PC market has become increasingly commoditized as all OEMs across the industry built machines based on the same PC silicon and operating system, resulting in a lack of material differentiation. However, the rise of AI PCs presents a new opportunity, and Lenovo is working to set itself apart from its peers by working with Meta to develop and integrate an on-device AI agent, dubbed AI Now, through a deepening of their partner engagement.

 

While Microsoft Copilot+ offers a series of GenAI features and experiences for Windows 11 machines leveraging several of Microsoft’s small language models, at GIAC Lenovo Executive Vice President and President of IDG Luca Rossi noted that not all Copilot+ functions are run natively on the device, with certain queries going to the cloud. In contrast, Lenovo AI Now leverages a local large language model to drive new capabilities that complement Copilot+’s feature set.

 

With significant support from Meta, Lenovo’s research team worked extensively to fine-tune the local large language model behind AI Now using Meta’s Llama 3. Through AI Now users can interact in real time with their device’s personal knowledge base, all without relying on cloud computing, providing enhanced data privacy and enabling GenAI features without internet connectivity.

 

AI Now’s capabilities include document management, meeting summarization, device control and content generation, with the AI assistant supporting natural language interaction. Additionally, it is worth reiterating that Lenovo sees AI Now complementing Copilot+ rather than replacing it, as the company does not want its AI PC agent to compete with other cloud-based or cloud-leveraging alternatives.

Lenovo Bets Big on MBG and moto ai

IDG is comprised of two business units: PCs and Smart Devices (PCSD) and Mobile Business Group (MBG). While the majority of IDG’s investment is focused on PCSD, the larger of the two business units, Lenovo remains committed to expanding its MBG business, which includes Motorola Mobility, to grow its global market share and increase the premium mix of its overall mobile portfolio.

 

Similar to its strategy in the AI PC space, Lenovo MBG continues to invest in the development and integration of AI features within its smartphone lineup through moto ai. While many of the company’s moto ai features showcased at Tech World are in proof of concept or beta stages, Lenovo made clear its plans to bring customized user experiences to market in the near term. New moto ai features include prompts and commands like “Catch me up,” which summarizes personal communications, and “Remember this,” which, when initiated, captures live moments and on-screen information while also providing AI-generated insights.

 

Additionally, Lenovo demonstrated the capabilities of its large action model, which allows Motorola devices to learn from users’ behaviors to offer increasingly personalized responses and translate natural language prompts into actions that can be executed automatically on behalf of the user.

 

Further, Lenovo provided an update on how the company plans to bolster the capabilities of its Smart Connect software solution, launched in February, to enable multidevice experiences across Lenovo’s portfolio of PCs, tablets and smartphones. The integration of new AI features with Smart Connect will enable users to not only transfer personal data across their connected devices but also benefit from cross-device searches and smart actions, allowing them to activate moto ai features directly from their PC using moto ai prompts and commands.
 
Perhaps most noteworthy, Smart Connect supports Lenovo’s hybrid AI strategy by fully integrating device ecosystems, allowing users to instruct their Motorola devices to carry out a complex AI task that cannot be performed locally on the device. Instead, Smart Connect uses a connected AI-enabled device, such as a Lenovo AI PC, to execute the task and return the results to the users’ smartphone.

Lenovo Uses One Lenovo Strategy to Bring Enterprise AI to Fruition

Enterprise AI Solutions Highlight ISG and SSG Integration

While Lenovo operates three distinct groups for devices, infrastructure and services, its enterprise AI solutions pull from expertise across the three businesses. This is particularly evident in the ISG and SSG space with the launch of Lenovo AI Fast Start services and Lenovo Hybrid AI Advantage with NVIDIA.

 

Lenovo’s AI Fast Start professional services help customers identify AI use cases and begin generating value within 90 days. While this may seem like a lofty goal, particularly as the enterprise market struggles to identify and best deploy AI, Lenovo highlighted two examples of this service in action. SAP used AI Fast Start to build an interactive AI avatar for one of its newest experience centers. Formula One also used the service to deploy an AI-based solution that provides a more immersive viewer experience by pulling video from numerous video feeds, enhancing the content and delivering it to the user faster than through manual video management method.

 

While these use cases are examples of tangible needs that can be met using AI, other use cases are not as evident in the enterprise market. Lenovo has also built an AI advisory practice that identifies ways AI can create value for a business and develop an adoption road map leveraging Lenovo’s AI library of use cases. By using the term “library” to describe its collection of AI use cases, Lenovo is intentionally conveying the impression that it offers specific use cases for everyone.

 

In TBR’s view, this provides some subtle differences from the one-size-fits-most messaging around AI use cases coming from most of Lenovo’s peers and ecosystem players. In addition, TBR notes that Lenovo intends to fully root its AI advisory capability into its technology, rather than taking a McKinsey-like approach to business consulting, playing to Lenovo’s services strengths.

Lenovo Deepens Its Relationship with NVIDIA to Drive Enterprise AI Adoption

Lenovo Hybrid AI Advantage with NVIDIA is first and foremost a collaboration that marries  Lenovo’s infrastructure and services portfolios with the NVIDIA AI Enterprise software platform, NVIDIA accelerators and NVIDIA networking solutions. While other companies have collaborated with NVIDIA in the enterprise market, including Dell Technologies with its Dell AI Factory with NVIDIA and HPE with its NVIDIA AI Computing by HPE, Lenovo intends to differentiate itself through its library of horizontal and vertical-specific accelerators, which will help customers build solutions more quickly.

 

Lenovo Hybrid AI Advantage with NVIDIA can be paired with Lenovo AI Advisory and Lenovo AI Fast Start services, Lenovo TruScale GPUaaS, or ISV offerings from Lenovo’s AI Innovators Program.

 

Lenovo is also using its 70,000-employee base as the test bed for AI use cases being brought to market. Ken Wong, executive vice president and president, SSG, notes that SSG’s biggest customer is Lenovo itself. For example, the company has built generative AI-based solutions to generate marketing content and to create customer service agents for its customer support centers.

Lenovo Highlights Engineering Distinctions in Its Wide-ranging AI Server Lineup

Sustainability is a difficult topic to broach when it comes to large-scale AI systems, which consume increasing amounts of electricity and generate more heat with each new generation of AI accelerators. Lenovo provides a compelling approach with its sixth generation of Neptune liquid cooling, which is integrated into its ThinkSystem SC750 and SC777 servers.

 

Unlike other water cooled systems, Lenovo’s liquid cooling uses conductive copper piping instead of PVC and is able to cool the systems with warm water instead of prechilled water, which consumes additional energy. Compared to air cooled server systems, Lenovo claims that Neptune can reduce energy consumption for server fans and data center air conditioners by 40%. Lenovo also pairs its in-house liquid cooling design expertise with its data center design and planning, implementation and management services to facilitate liquid cooling technology adoption for AI workloads.

 

Of the major server OEMs, Lenovo is the quickest to point out that not all enterprise AI use cases require high-performance computing. Lenovo’s edge computing business, which is now integrated with its AI business, features its ThinkEdge server portfolio including multiple small form factor servers that operate in edge environments. These servers are the foundation for many of the AI use cases featured in the 165-plus ISV solutions built through Lenovo’s AI Innovators Program.

Responsible AI Serves as Lenovo’s Guiding Principle

Lenovo’s company vision of hybrid AI, in which personal, enterprise and public data sets are used to inform AI agents, is the natural evolution of AI technology but is not without risks around security, privacy and sustainability.

 

In response to these risks, Lenovo has proactively implemented its own AI governance organization to create AI policies and establish trust among its employees, customers and partners. Lenovo has combined its chief security officer and chief AI officer positions into one role under Doug Fisher, based on the company’s belief that security, privacy and ethics are central to designing AI solutions.

Behind the Scenes, Lenovo Is Honing Its Strategy Execution

Following the pandemic and a related multiquarter slump in PC demand that impacted top-line revenue and profitability, Lenovo has underscored its strategy to diversify revenue away from PC, which made up about 74% of total revenue in 2021.

 

While Lenovo has made progress on this goal to some extent, as ISG and SSG have both experienced revenue growth, the company acknowledges it needs to make changes across its portfolio and go-to-market strategies to further accelerate revenue growth.

Lenovo 360 Continues to Target Growth Through Partner Channel

An effective channel strategy is critical to executing on Lenovo’s broad growth initiatives, particularly those around driving ISG hardware to profitable growth. The company’s Lenovo 360 partner framework has simplified the partner process by drastically reducing the number of partner programs and incentive structures, streamlining certification processes, and creating a digital hub that supports demand-generation activities and helps partners track their deal pipeline and sales performance.

 

In tandem with transforming partner engagement, Lenovo is simplifying the ISG product portfolio to focus on the hardware configurations that comprise the most sales volume. This strategy is one of the key ways Lenovo plans to trim costs within its operations and make its portfolio easier for channel partners to sell. Additionally, a simplified infrastructure portfolio will also help Lenovo more easily maintain healthy channel inventory levels.

 

Lenovo acknowledges that the landscape of resellers is evolving from traditional value-added resellers to a services-led approach. As such, the company is evolving its partner framework to better engage with a broader set of ecosystem players, including managed services providers and global systems integrators, that are increasingly relevant partners in complex, multivendor solutions.

Lenovo Will Expand into Tangential Markets Where It Can Tap into Existing Strengths

Lenovo wants to capitalize on new markets, including the auto industry where technology is shifting from using multiple distributed computing resources throughout vehicles to more centralized computing, specifically around infotainment and autonomous driving systems.

 

Yong Rui, Lenovo’s former CTO, has been appointed to lead the company’s newly formed Emerging Technology Group (ETG), which will spearhead the expansion into in-vehicle computing as well as other emerging tech areas.

 

Lenovo feels its strengths in hardware design and manufacturing will help it expand into a brand-new market with an entirely different set of competitors. Through this expansion, Lenovo will remain true to its own DNA, focusing specifically on compute and leaving other aspects such as software, algorithms and vehicle manufacturing to ecosystem partners.

Lenovo Is Investing in Brand Recognition and Perception

Lenovo is investing in brand recognition through major sports sponsorships. At Tech World, Lenovo announced an expansion of its existing sponsorship of Formula One, which will include Lenovo’s subsidiary Motorola becoming the global smartphone partner for Formula One.

 

Further, Lenovo announced a partnership with FIFA to become the technology partner for the FIFA World Cup 2026 and the FIFA Women’s World Cup 2027. These investments will help Lenovo drive brand recognition and expand into key growth markets including premium PC, premium smartphone, IT infrastructure and related solutions and services.

Evolving IT Infrastructure Consumption Services: Expectations for 2025


 

What Will IT Infrastructure Services Portfolios Look Like in 2025?

While the marketing buzz around consumption-based IT infrastructure solutions has quieted in 2024 in favor of promoting AI, these solutions continue to mature, and vendors are integrating them into their portfolios. In 2025 vendors will increasingly evolve their major “as a Service” portfolios, including HPE GreenLake, NetApp Keystone and Lenovo TruScale, to address current market needs, such as AI adoption, sustainability, hybrid cloud and infrastructure management.

 

In this TBR Insights Live session, IT Infrastructure research leads Principal Analyst Angela Lambert and Senior Analyst Ben Carbonneau look at how IT infrastructure consumption services have evolved in 2024 and what TBR expects to see from the services in 2025.
 

In The Above TBR Insights Live Session on IT Infrastructure Consumption Services You’ll Learn:

  • How infrastructure consumption services are evolving to meet AI demand
  • How infrastructure consumption services will play an increasing role in sustainability
  • TBR’s projections for the infrastructure consumption services market opportunity, including adoption drivers and barriers

 

Consumption-based infrastructure portfolios have evolved

TBR Insights Live preview: Evolving Infrastructure Consumption Services

TBR Insights Live sessions are held typically on Thursdays at 1 p.m. ET and include a 15-minute Q&A session following the main presentation. Previous sessions can be viewed anytime on TBR’s Webinar Portal.

Fujitsu’s Strategic Evolution: Transforming for a Future with Uvance at the Core

On Oct. 1, TBR attended Fujitsu’s Executive Analyst Day in Santa Clara, Calif., and engaged with Fujitsu leaders, including Tim White, chief strategy officer; Ted Okada, SVP and head of Technology; Ted Nakahara, SVP and Head of Strategic Alliances; Fleur Copping, VP of Strategic Alliances in Regions; and Asif Poonja, EVP and CEO of Fujitsu Americas. The following reflects main stage presentations, breakout sessions and one-on-one discussions, as well as TBR’s ongoing analysis of Fujitsu’s business model, strategy and performance.

Fujitsu in Transition, with Clear Direction and Intent, Playing to Strengths

Three things about Fujitsu stand out in a crowded IT services and consulting market. First, the company is in the middle of an organizational evolution, changing its business model to fit emerging client demands and orienting its go-to-market strategy around Uvance. Second, Fujitsu’s commitment to change in the Americas has completely remade the company around IT services and consulting, with aspirations to become a technology consulting leader. And third, Fujitsu’s alliances strategy, while still dependent on labor-intensive relationships and persistent account-level management, includes all the best practices TBR has seen from larger competitors, with at least one unique twist. In short, Fujitsu’s evolution will likely make the company a highly capable contender as the IT services and consulting market changes.

 

At the start of the analyst event, Tim White, chief strategy officer, explained that Fujitsu’s transition has been underway for a few years and has included allowing the Americas business to shed everything except services. As part of the overall transition, Fujitsu committed to expanding consulting while continuing to deliver on core IT services and modernizations. White noted that Fujitsu is roughly halfway through a three-year plan to grow services and the Americas region has already surpassed targets for 2024. For example, Uvance accounts for 37% of Fujitsu Americas’ business, above the 30% goal.

 

Critically, according to White, Fujitsu has not lost a step on technology advances or quality of services delivered, so clients and alliance partners continue to be well served. The change — the evolution — is primarily in how Fujitsu sees itself and its future. And that future is Uvance.
 

In TBR’s view, understanding Fujitsu’s existing and evolving business model, strategy and performance requires, perhaps surprisingly, a certain separation from the typical analysis, if only because of Fujitsu’s current transition.
 
While there is perhaps some uncertainty among analysts around Fujitsu’s brand, specific offerings and organizational structure, TBR sees no evidence that Fujitsu’s clients and technology alliance partners lack the clarity required to make decisions about Fujitsu’s capabilities, scale and skills.
 
Undoubtedly, Fujitsu’s brand in the Americas could use a significant boost — without which a ceiling could remain for the company’s growth — but the importance of marketwide brand recognition pales in comparison to a successful track record of delivering IT services and consulting, providing innovative solutions, and leveraging the latest technologies to solve clients’ problems.

 

Uvance Is “the Future State of Fujitsu’s Portfolio”

Fujitsu’s leaders stressed the centrality of Uvance in the company’s strategy and vision for IT services, consulting and technology. White described Uvance as “the future state of Fujitsu’s portfolio.” Asif Poonja, CEO of Americas, said, “Uvance is the center of our strategy.” At the center of Uvance is consulting. Fujitsu announced a goal to hire 10,000 consultants, but White and others explained that Fujitsu’s focus is not the number but the portfolio shift toward consulting while still serving clients who need core IT services and modernization.
 
Poonja noted that Fujitsu will focus on technology consulting, rather than McKinsey-style business consulting, playing to Fujitsu’s legacy technology strengths. In TBR’s view, technology-led consulting reflects the current demand among enterprise consulting buyers to infuse every consulting engagement with technology, a trend well underway before the hype began around generative AI (GenAI). Fujitsu’s leaders added that Uvance Wayfinders — essentially business and technology consultants — are able to pull together all of Fujitsu’s capabilities and offerings.

 

In TBR’s view, Uvance is the framework around the company’s “SaaS-like” business model, with the leaders using the term “SaaS-like” but recognizing the phrasing may need further refinement and/or explanation. Fujitsu will use platform-enabled services to drive higher-value conversations and engagements, led by the consultants the company is planning to hire and/or acquire. Fujitsu will sell IP when needed and drive managed services through its delivery capabilities. The shift in the Americas toward becoming an asset-light organization is the first step, and the second step is expanding consulting capabilities and scale. The third step is organizing delivery under a globally run P&L (which Fujitsu may have already begun).
 
Meanwhile, modernization services — moving from mainframe to cloud — remains the engine that keeps Fujitsu running. The company still has its own data centers outside the U.S. and also still has plenty of clients running on mainframe, especially in their core verticals, like public services. For TBR, Uvance’s success may depend on broader adoption of the asset-light Americas strategy, albeit at a pace that does not compromise quality or lose clients in core markets. Again, Uvance is the future state of Fujitsu’s portfolio.

Fujitsu Americas: “Leveraging Global Pillars to Grow”

As described by Poonja and White, Fujitsu in the Americas has persistently pared down its offerings to focus only on IT services and technology consulting, playing to Fujitsu’s strengths and concentrating on industries in which the company has proven capabilities, well-established relationships with clients and differentiated offerings.

 

Poonja added that, although Fujitsu Americas earned a small percentage of Fujitsu’s overall revenues, corporate leadership in Japan recognize the importance of the Americas market and understand the challenges of building a more widely known brand. Poonja stressed that Fujitsu Americas would continue “leveraging global pillars to grow” while staying focused on regional strengths, specifically in government, manufacturing and AI.

 

In TBR’s view, Fujitsu Americas’ current state and trajectory align well with Fujitsu’s overall corporate strategy. The business aspires to be a top technology consulting company and appreciates the difference between being skilled at technologies and being able to make the business case for Fujitsu’s solutions. As an integral part of its strategy, Fujitsu Americas consistently pulls in the global company’s broader strengths and capabilities.

 

The use cases that Fujitsu’s leaders shared during the event highlighted the company’s technology, such as 5G and AI, and its deployable, offshore scale. Overall, Fujitsu Americas’ leadership presented a compelling story of evolution, strategic focus, early positive results and appreciation for current weaknesses. In contrast to analyst events dominated by marketing messages, Fujitsu maintained a substantive and clear-eyed atmosphere, with discussions centered on realistic expectations for Fujitsu Americas’ changing position in the IT services and consulting market.

Fujitsu’s Alliances: Doing the Hard Work While Taking Customer Zero to Another Level

In both the formal presentations and the informal discussions, Fujitsu’s leaders impressed TBR with the fullness and maturity of the company’s alliances strategy. The ecosystem has changed substantially in recent years, forcing companies to rethink their partnering strategies and more closely examine the best practices of peers, competitors and alliance partners. This shift has been an ongoing focus of TBR’s research, which has increasingly been used by alliance leaders at global technology companies as they undergo this transformation.

 

As part of this research, TBR has analyzed a wide range of alliance strategies and activities, from inadequate and underfunded to strategically thoughtful and exceptionally well managed. Fujitsu Americas, in TBR’s assessment, lands solidly in the latter category, based on the full range of investments and activities that Fujitsu’s leaders described with respect to their five strategic partners: Amazon Web Services (AWS), SAP, Microsoft, Salesforce and ServiceNow. (Note: See TBR’s ecosystem reports for more information.)

 

According to Fujitsu’s leaders, the next strategic partner will be determined by Uvance’s business strategy and continued evolution in the technology space, particularly AI. Keeping perspective on the challenges of managing technology partners, Fleur Copping, VP of Strategic Alliances in Regions, noted that every alliance relationship requires constant attention and, often, engagement-by-engagement reinforcement around Fujitsu’s offerings, capabilities and value proposition. Copping further acknowledged that Fujitsu needs to strengthen partner cosell activities. In other words, even when executing on all the best practices, alliance management remains a hard slog.

 

During the event, TBR noted two additional points on alliances — areas that are perhaps unique to Fujitsu. First, TBR has consistently heard that the customer zero approach to new technologies and offerings resonates with clients by bringing credibility and assurance. IT services companies, consultancies and their technology partners have also told TBR that the customer zero approach helps solidify alliances and can lead to innovations and new solutions. Fujitsu appears to be taking customer zero to the next level. For example, Copping described how Fujitsu brought its internal human resource management professionals to a client meeting about a joint Fujitsu-ServiceNow opportunity. The Fujitsu professionals told the client about their own experiences using the ServiceNow solution. This more personal touch resonated with the client and demonstrated the fullness of Fujitsu’s capabilities to alliance partner ServiceNow.

 

Second, Copping noted that because many of Fujitsu’s customers “don’t have as much of a voice” with the cloud vendors and software giants as the largest enterprises, Fujitsu can be an advocate for these small and midsize enterprises, amplifying their concerns and needs to the likes of Microsoft and SAP. TBR has not heard Fujitsu’s peers explicitly state this marketing message. As a matter of positioning, particularly with technology partners, Fujitsu’s message could be another way of gaining mindshare and differentiating from IT services and consulting competitors.

Consulting Is Harder Than It Looks; Fujitsu Has a Good Plan

White “unabashedly” characterized Fujitsu as a technology company, but emphasized using technology as a means to deliver services rather than making technology a commodity play. In the Americas in particular, Fujitsu would not “move away from our heritage as a technology company” but would more fully embrace consulting and the future portfolio of Uvance.

 

In TBR’s view, keeping Fujitsu’s heralded research, innovation and technology capabilities as foundational strengths makes strategic sense while leaving open questions around consulting. For example, one Fujitsu leader outlined the company’s AI sales approach in four basic steps:

  1. Get the client interested in Fujitsu’s technology
  2. Do a proof of concept with Fujitsu’s AI platform
  3. Allow the client to use a precommercial instance of the platform
  4. Bring in Uvance to develop a full solution, highly customized to the client

 

The fourth step, at a minimum, requires consulting skills, business knowledge and industry expertise, although many of Fujitsu’s peers include those elements throughout the sales and delivery process. Recruiting (or acquiring), retaining and managing consulting talent could affect Fujitsu’s corporate culture and undoubtedly will challenge Fujitsu’s leadership.

 

Further, and perhaps the most significant obstacle for Fujitsu in the Americas, will be gaining permission from clients to deliver consulting. By narrowing its scope to technology consulting — not the broad swath of strategy and operations consulting — Fujitsu plays to its own strengths, lessens the marketing load, and likely does not give up market share as the company is unlikely to displace firms like McKinsey & Co. or Boston Consulting Group (BCG).

 

Part of gaining permission, in TBR’s view, will be positioning Fujitsu differently with its current clients, particularly with respect to the key personas interacting with Fujitsu professionals. During the event, one Fujitsu leader described current clients’ struggles to adopt GenAI as a combination of an inability to do the basic work of making their data usable, the uncertainty around return on investment, and a fear of running afoul of the law as new regulations come into effect.

 

Yes, Fujitsu can address all of these concerns, but these hurdles impact and reflect the responsibilities of three different personas within an enterprise. Fujitsu’s challenge will be to become the preferred technology consulting provider for all three personas. In short, consulting is harder than it looks, and TBR believes Fujitsu has the right vision, strategy and approach. We will continue to monitor the company’s ability to execute.

 

TBR’s ongoing coverage of Fujitsu includes dedicated quarterly reports and inclusion in appropriate benchmarks, market landscapes and ecosystem reports. Log in to TBR Insight Center to view all current research.

6G Will Not be Like the Other G’s

TBR Perspective on 6G

6G is unlikely to look like the other G’s in terms of cycle length and scope and level of investment as the beleaguered telecom industry continues to struggle with implementing and realizing ROI from 5G. The telecom industry must also contend with supporting new use cases and how to embed AI, ML and sustainability into the fabric of the network while covering security gaps and preparing for a post-quantum cryptography world. Though there is tremendous brainpower (spanning the public and private sectors as well as academia) assembled to tackle these issues, growth prospects for the telecom industry continue to look challenging.
 
6G is shaping up to be an addendum to LTE and 5G, providing a new antenna overlay that supports net-new frequency bands, as well as enhanced spectral efficiency features and capabilities that provide further network performance and operational improvement. The missing link in the value equation remains how the telecom industry will monetize these new technologies beyond traditional mobile broadband (MBB) and fixed wireless access (FWA) services, and this lack of clear monetization threatens to relegate 6G to a continuation of what was observed during the LTE and 5G eras.
 
TBR continues to see no fundamental change or catalyst on the horizon that will bring CSPs more revenue. The primary incentive for CSPs to invest in 6G, therefore, will remain reduction in the cost per bit to support growing data traffic. This means the ROI for 5G still does not exist, which will likely limit the appetite and scope of investment in 6G. As such, TBR expects CSP capex investment for 6G will be subdued compared with previous G’s and deployment of the technology will be tactical in nature, which is a marked deviation from the multihundred-billion-dollar investments in spectrum and infrastructure associated with the nationwide deployments during each of the prior cellular eras.
 
Additionally, the 6G cycle may be significantly longer in duration than prior cellular generations due to the exponential increase in complexity inherent in these systems and the pace of data traffic growth, which has been slowing.
 
Against this backdrop, private cellular networks represent a real, significant threat to CSPs, as enterprises can extract most, if not all, of what they need from networks without requiring CSPs in the value chain. CSPs’ edge assets continue to be considered a key vector for CSPs to reassert themselves in the market, but this overlooks the alternative paths that enterprises and hyperscalers have to bypass CSPs to get what they need (e.g., real estate, access to power and fiber) at the edge layer.
 
The 5G cycle is now 5 years old, and the telecom industry is still struggling to adopt and deploy virtualization, open RAN and network slicing, much less a 5G standalone (SA) network architecture. This reality implies expectations for 6G will need to be tempered further. TBR believes 6G (at least the first phase of 6G, which will be represented in the 3rd Generation Partnership Project’s [3GPP] Release 21 standards) will only bring spectral and cost-per-bit efficiency improvements and potentially some net-new enterprise-specific features and capabilities. 6G is unlikely to bring any more significant or profound outcomes than 5G, at least not from CSPs.
 
TBR believes hyperscalers, government entities (especially the defense sector) and large enterprises are likely to reap the most benefit from 6G. For CSPs, 6G is likely to primarily be an infill solution to address complex environments and enhance network capacity and speed for existing MBB and FWA offerings.
 
Taken together, 6G will ultimately happen, and commercial deployment of 6G-branded networks will likely begin in the late 2020s, but it remains to be seen whether 6G will be a brand only or a legitimate set of truly differentiated features and capabilities that bring broad and significant value to the global economy. Either way, the scope of CSPs’ challenges is growing, while new value continues to be created outside their purview or goes over the top of their pipes.
 

Watch On Demand: TBR Principal Analyst Chris Antlitz discusses the Looming Business Disruption Among Operators and Vendors as They Strive to Change from Telco to “Tech-co” in the Coming Years

Impacts and Opportunities in 6G

Upper-midband Spectrum Is in Play for 6G

After an initial belief several years ago that 6G would leverage millimeter wave and terahertz spectrum, the wireless technology ecosystem has settled on the upper midbands, specifically in the 7GHz-24GHz range (also known as the Frequency Range 3 [FR3] tranche). Within FR3, 7GHz-15GHz is considered to be the golden range for 6G as it has the best balance between coverage and capacity and there is approximately 1600MHz of total bandwidth that could be made available in the U.S.
 
However, one of the biggest issues with these “golden bands” is the need for CSPs to coexist with incumbent users, such as government entities and satellite operators, which utilize some of these channels for various purposes and would need to either be cleared, refarmed or shared with CSPs for use in cellular communications. The telecom industry already has some experience with shared spectrum through CBRS, which operates in the 3.5GHz band, so there is a pre-existing framework and mechanism in place (i.e., Spectrum Access System) from which to begin establishing a spectrum sharing system for these new bands.
 
Ultimately, TBR believes that 6G will end up leveraging a mix of spectrum tranches, with midband, upper midband and mmWave frequencies all in play. Carrier aggregation and other frequency-combination technologies, as well as advancements in beamforming and endpoint devices, make these spectrum bands perform better when working together. Additionally, FR3 spectrum is not good at penetrating walls. Given around 80% of wireless traffic is generated indoors — a statistic that is unlikely to change materially in the 6G era — FR3 bands would need to be complemented with lower bands to penetrate walls and provide optimal coverage and capacity.

Nonterrestrial Networks (NTN), aka Satellite Connectivity, Enters the Mainstream

The NTN domain is flourishing, and satellite connectivity will be a mainstream technology for both businesses and consumers by the end of this decade. Satellite-provided connectivity will cover most of the Earth (and nearly the entire human population) with at least basic text messaging services, though some NTN providers will also provide high-speed broadband services as well as a range of other communications services, such as voice, just like a traditional CSP.
 
The most disruptive impact of NTN will be closing the cellular coverage gap and reducing the digital divide. Approximately 10% of Earth’s surface and 5% of the global human population, or around 800 million people, still lack cellular network coverage, and satellites can close this gap relatively quickly and at a significantly lower price compared to building out terrestrial macro base station sites in rural and remote areas. The ability to provide truly global network coverage has created a new paradigm in the telecom industry, shaping end-user expectations and pushing CSPs to align with (and increasingly compete against) NTN providers.

FWA Is Not Getting the Attention It Deserves

The mobile industry continues to largely view FWA as an ancillary offering, and the use case is not receiving the level of attention and innovation that it should given FWA’s resounding success in the market. Some attendees noted that current standards do not adequately factor in and focus enough on FWA and that networks are not architected to optimally support this use case. Spectral efficiency technologies tailored to optimize FWA traffic could free up significant capacity on existing networks that could be utilized for other purposes.
 
There are also energy-efficiency considerations for FWA. Mobile network operators (MNOs) have a vested interest in pushing standards bodies and network vendors to innovate on FWA because margins are low and there is room to alleviate some of this margin impact by applying technological innovations. In addition, MNOs want standards bodies and vendors to focus on architecting cellular standards to support unlicensed spectrum bands so that network coverage and capacity can be enhanced with minimal investment by aggregating licensed spectrum with unlicensed spectrum. The 6GHz band is especially pertinent to these considerations.

The Energy Problem Has No Easy Fix

Though the wireless technology ecosystem will continue to eke out gains on energy efficiency and performance, an as-yet-undetermined paradigm shift will be required to fundamentally break the linear relationship between network performance and energy usage. Additionally, AI is unlikely to help address this issue when factoring in the net energy impact because AI workloads are inherently power hungry.
 
Given this rising demand for energy, in addition to driving further reduction in the cost per bit, the broader economy and public sector should focus more on innovations in energy production and distribution, such as more deeply exploring small modular [nuclear] reactors (SMR) and cold fusion, to produce and widely distribute high-output, sustainable, low carbon-footprint energy. Said differently, it will become increasingly difficult to squeeze energy efficiency out of network infrastructure, so focusing on creating cleaner energy at greater scale is a sounder long-term strategy than emphasizing a lower net utilization of energy to achieve sustainability goals.

AI and ML Will Initially be Leveraged for Network Optimization

AI and ML will come into the network domain slowly. Network optimization-related use cases will likely be the initial focus areas, as AI and ML can provide significant outcomes by running complex simulations, such as ray tracing, propagation modeling and channel management (e.g., spectrum access sharing and dynamic spectrum sharing) at scale.
 
Though AI and ML promise a higher degree of automation to accomplish optimization-related tasks, there is concern that the amount and cost of energy required to run these simulations will outweigh the benefits. There is some validity to this concern, but attendees were confident there will be pockets of use cases or workarounds that will mitigate energy consumption and make networks more resilient and higher performing by leveraging AI and ML.

Western Governments Need to be More Proactive to Keep Their Countries at the Forefront of Innovation

Evidence suggests the West is falling behind China in key technologies, most notably in 5G SA, 6G, quantum computing, SMR and other key areas, despite Western governments allocating unprecedented sums of fiscal and monetary support for the technology sector and broader economy during and immediately after the COVID-19 pandemic. Governments, therefore, will need to take a more assertive approach rather than setting big-picture guidelines and relying on the private sector to figure things out. Since the current model is not yielding the desired results, a change will be needed to alter the trajectory. Greater reliance on hyperscalers will likely factor into the equation for a solution.
 
The most glaring deficiency in the Western world is regulatory clarity and policy agenda. For example, the U.S. Federal Communications Commission has been restrained and restricted from advancing important spectrum policies, and special interests have been creating encumbrances that slow down or prevent the wireless technology ecosystem from optimally moving forward (e.g., inconsistent policies around private spectrum and the use of shared bands like 6GHz create harmonization challenges and disincentivize attaining critical mass in the broader industry).

Scope of Government Support for the Telecom Industry Will Likely Increase

The persistent lack of ROI to justify private sector investment in 6G (and cellular networks more broadly) will ultimately push governments deeper into the telecom industry, prompting governments to increase the scope of their involvement in the wireless technology ecosystem as well as make these support structures more embedded in nature. During the first half of the 5G cycle, governments from various countries around the world pumped many hundreds of billions of dollars in aggregate into their respective domestic technology sectors via various stimulus programs, which provide direct or indirect, low- or zero-interest rate loans, subsidies and other means of market support.
 
Additional government backing will be required to enable the full benefits of 6G to come to fruition. Governments have a vested interest in supporting the telecom industry and the broader technology sector as it provides innovations of societal and national security importance and serves as foundational infrastructure to support long-term economic development. TBR expects governments in technology-forward countries (especially the U.S., China, Japan and South Korea) and regional blocs (e.g., the European Union) to continue underpinning R&D programs, subsidizing and/or directly paying for infrastructure deployment, and backstopping industry players that relate to national security concerns.
 
This model of industry stimulation was witnessed at unprecedented scale during the COVID-19 pandemic and now serves as a model for further government involvement. Workforce development has also emerged as a top-of-mind initiative for some governments as a means of preparing domestic workforces to handle new technologies and to offset the negative economic externalities that emerge from the impact of these new technologies (e.g., labor displacement from AI and how this can be mitigated).

Conclusion

6G will happen one way or another, with commercial deployments and services branded as 6G likely to commence by pioneering CSPs by 2030 (as originally expected within the confines of 10-year cellular generation cycles), but the wireless technology ecosystem seems to be absorbing much more than it can handle.
 
In addition to addressing the evolution of 3GPP standards for 6G, the ecosystem must also incorporate AI, ML, quantum and other nascent technologies as well as meet societal objectives, such as carbon zero, to align with theoretical expectations for the new G and the new use cases the technology is expected to enable.
 
The requirements for 6G are causing complexity to increase and are likely to make the ecosystem fall short on delivering these outcomes. Greater investment, collaboration and alignment across the public and private sectors, as well as with academia, will be required to address these challenges and set the telecom industry on a better path.