Industry Voices—Raynovich: What are the next great 5G edge apps and will service providers be able to monetize them?

Futuriom analyst Scott Raynovich handicaps the field of the most promising edge cloud and 5G use cases and service providers' roles in deploying them. (Pixabay)

A couple of weeks ago I wrote about the evolution of the cloud edge, spurred by the deployment of 5G, as well as some of the things service providers need to do to avoid bungling this huge opportunity. One of the keys will be identifying new apps and services that can be deployed with 5G. 

RELATED: Raynovich: How service providers can avoid bungling the edge

Let's call this "Part II" of an ongoing series on edge cloud. (It might have 10 parts!) We've long heard the debate in the industry about whether service providers are just "dumb pipes" or "plumbing." The 5G edge cloud has the potential to really change that, because it will become the smartest infrastructure we've ever seen. 

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Futuriom just spent several months researching the evolution of the edge cloud, including interviewing and surveying dozens of communications service providers, cloud providers, and technology providers for our 5G Edge Catalysts report. 

We think that 5G will serve as a spark of the new cloud platform—the edge cloud—that can spur development of an entirely new generation of apps and services. There are several characteristics of the 5G edge cloud that make it so:

• It's the first fully virtualized telecom infrastructure, enabling faster creation, deployment and orchestration of services;

• The higher bandwidth and lower latency open the door for a whole new range of applications and services;

• Cloud-native technologies deployed at the edge with AI and analytics present a powerful development platform—potentially even more powerful than the cloud itself. 

As laid out before, this is setting the stage for a battle on the edge cloud, where cloud providers, service providers, and technology vendors are looking to plant their flags. The key will be new apps and services -- the mother's milk of infrastructure revenue. The key to success will be enterprises and service providers finding more “edge-enabled” apps and services.

What are the new edge apps?

So what are these new edge apps and how will they be developed?  

My three kids were gathered in the kitchen the other night. (They emerged from their rooms!) They were seated at the counter all laughing and sharing their phones. They did this for an hour. What was the trigger? Tik Tok, the hottest app to come out of nowhere. Right now kids all over the world are spending enormous time obsessed with Tik Tok. 

The history of technology platforms is one of mysterious services and apps that appear out of nowhere. Examples include the Web, the iPhone, Instagram, and Amazon Web Services (AWS.) When these new services first emerged, they gained a hardcore following among the technorati, but it was hard to predict the massive success in the mainstream. Just think of how long Amazon was pumping billions of dollars into AWS before the lightbulb went off in the minds of competitive organizations.  

There is already commercial activity that hints at the early apps that have potential at the edge cloud, but nobody knows what will take off just yet. Let's outline a few of the areas that have the most potential/

Vehicle-to-everything (V2X) communications—Vehicles must be one of the greatest 5G target markets in the world. There are approximately 92 million new vehicles produced every year. Research firm Bernstein projects a total of two billion cars by 2040. That doesn't count trucks, drones, and the fleets of weird science-fiction autonomous vehicles coming our way. 

They all need to be connected. Many will use 5G, or a mixture of wireless technologies. They'll use the new dynamic wireless capabilities of 5G for a variety of use cases, including monitoring, navigation, and entertainment. Do the math: Let's say that one billion vehicles get connected over the next 10 years. With incremental average revenue per user (ARPU) of $100 per vehicle per year, that's $100 billion dollars in revenue! Who wants it? Potential valued-added V2X services include safety features such as collision warning and lane changing, truck freight platooning, autonomous driving, and communications services. The On-Star button on my 18-year old Saab doesn't work anymore, but the concept is still intriguing. 

Augmented reality (AR)—I think some overhyped technologies such as virtual reality have given AR, which is a multi-faceted version of the technology, a bad rap. AR, which combines data with real-time immersion to create enhanced experiences, has a lot of potential in industrial and commercial applications. Retail, automotive and gaming are good places to see AR develop. Retail can provide remote education or simulation experiences. Imagine the potential for the healthcare industry to use AR to gather more information and provide better patient care in remote healthcare situations. Because AR can be edge-compute intensive and requires persistent connectivity, it's a good area to watch for 5G-enabled services. 

Smart retail—This is a key area to watch in the development of 5G. It may or may not also include AR. Large retailers are intrigued by the potential to use wireless connectivity and edge-cloud analytics to provide a better experience for customers. Amazon has been notable in its experimentation with its Go stores, which use sophisticated edge-cloud deployments and wireless connectivity. Privacy concerns aside, one can imagine the future of retail as a highly customized, artificial intelligence driven experience, in which the retail outlet you visit can know everything about you and even automate delivery. 

Where's the money?

So where can money be made in the new edge cloud? And will it be the service providers or cloud providers that harvest these new opportunities? There are opportunities for both of them to develop value-added services, potentially in partnership.

I think these markets will unfold much as the smartphone ecosystem evolved: Engagement first, development of more sophisticated business models later. The potential is huge, especially as new consumer and commercial devices such as automobiles and buildings get increasingly connected. Everywhere you look, there is the potential to add value with a smart analytics service that can be billed as monthly recurring revenue. 

My money is on V2X and connected vehicles and smart retail as two of the leading opportunities in the next 2-5 years. I can already imagine a number of services that I would be willing to pay for in my car as well as on my phone to deliver efficiency and better customer experience.  

Who's ready to deploy and innovate? The key to making money with smart pipes, not dumb pipes, is to build smart applications. It's these applications that will drive new business and services. The best innovators need to figure out how this infrastructure will deliver more value for their customers and then build apps and services to support them. 

R. Scott Raynovich is the founder and chief analyst of Futuriom. For two decades, he has been covering a wide range of technology as an editor, analyst, and publisher. Most recently, he was VP of research at SDxCentral.com, which acquired his previous technology website, Rayno Report, in 2015. Prior to that, he was the editor in chief of Light Reading, where he worked for nine years. Raynovich has also served as investment editor at Red Herring, where he started the New York bureau and helped build the original Redherring.com website. He has won several industry awards, including an Editor & Publisher award for Best Business Blog, and his analysis has been featured by prominent media outlets including NPR, CNBC, The Wall Street Journal, and the San Jose Mercury News. He can be reached at [email protected]; follow him @rayno.

Industry Voices are opinion columns written by outside contributors—often industry experts or analysts—who are invited to the conversation by FierceTelecom staff. They do not represent the opinions of FierceTelecom.

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