Alex Holt, Global Head of Telecoms and Media at KPMG, discusses the more than US$500 billion in value across the 5G and edge computing ecosystem via five use cases, enabling telecom industry to emerge from COVID-19 stronger than ever.
5G was one of the most exciting prospects as we enter 2020 but the world has now changed forever. Kirby d-19 has delivered a terrible blow to human life and brought about an economic downturn.
An indisputable business fact is that the need for organizations to be digital has never been greater and I believe 5G along with edge computing will play a key role in our global economic recovery across all industries, our clients are telling us about the imperative to accelerate their digital transformation.
Crider co mid-nineteen digital have momentum, everybody could see the imperative. Now the need is greater, perhaps even one of survival.
Connectivity plays a key role in any digital transformation and this has been seen in both fixed and wireless for more than two decades while the 5G business case was strong before it's even stronger now.
I'm Alex Holt's, I'm the global head telecoms and media at KPMG. I'm on lockdown here at home in Silicon Valley and over the next 10 minutes I'm going to share with you why I believe that by investing in 5G an edge computing, the telcos can position themselves to come out of this crisis stronger than ever.
I'd like to quickly take you back to Mobile World Congress 2019 where I presented research and data on the business case for 5G. We've been doing a lot of work for the telcos around the world as they tried to figure out their 5G strategies.The messages we presented in 2019 were clear and simple. The business case for 5G was far stronger in beta B than in beta see, where we've shown a light on four point three trillion dollars of upside.
We said that consumers won't pay enough incrementally for 5G to cover the cost of the new networks like we saw in 3G and 4G and therefore telcos should focus their attention on beta be more so than ever before. We said that the global trajectory for rollouts will be gradual through the 20s with private networks going first followed by cities and then some nationwide coverage.
KPMG analysis by sector showed that those industries that are most geographically centralized will benefit from 5G first and as you can see here Manufacturing is a good example. We had a great reaction to the analysis but our clients encourages to go further and reveal exactly how you tap into such a big number which brings us nicely to 5G and edge computing which we believe when correctly integrated could be one of the most powerful synergies of technology's ever to coexist. The intersection between 5G and edge is the key value creator and critical to the business case for 5G. 5G provides the capability to support billions of connected devices transmitting huge volumes of data, autonomous vehicles manufacturing, transport healthcare and many other sectors and activities that depend on instant data transfer. Edge computing is around bringing the processing or storage of data for an application much closer to the end-user instead of needing sent processing loads deep into the network to access the cloud. These loads can be dealt with at the edge of the network creating significant Network and Technology optimization to bring this all to life.
We looked who is in the emerging 5G edge computing ecosystem, we examined the main players that determine how telcos can best position themselves and what they need to do to gain a share of the increasingly large prize. As you can see here, we found that there are four main players in the ecosystem. These players will work together and also compete for their piece of the prize the next thing. You're probably asking is about the size of the opportunity, how is this total opportunity to find and likely to be shared across the different players and if you're compelled by the numbers, we're about to show you the next step is for you to create a value plan to maximize your position in the ecosystem and while every Center is likely to benefit from 5G edge computing, we wanted to highlight the sectors where the new service delivered as a result of their combination was most illuminating analysis from KPMG and IDC estimated the addressable market across the ecosystem for just these five industries to be worth more than 500 billion dollars by 2023.
In selecting these five industries our intention wasn't just to go after the biggest dollar signs but to capture the imagination of those in the ecosystem and the vertical to see the art of the possible. We've released a paper with the full details for you to download but let me bring a couple of these examples to life.
Let's start with manufacturing through predictive maintenance 24/7 asset monitoring minimize downturn and improve safety performance. Manufacturing can be truly transformed, higher quality products produce faster and that lower cost with less waste, lower maintenance material, energy costs reduced and a more sustainable low emission environment but what about a covid 19, no fate, many factories have been forced to close during the pandemic but the benefits of 5G energy computing to the manufacturing environment are so compelling that it could hold the key to accelerate recovery for manufacturers by accelerating digitization manufacturers, can reduce costs and improve the speed and quality of products. We're not suggesting the cost of a 5G upgrade will be an option for every but the harsh reality is that those able to make the upgrade are likely to leave the rest of their peers behind as the markets come out of the economic downturn, the numbers are clear for manufacturing an incremental 51% addressable market worth 206 billion by 2023.
It seems right that our second example we highlight healthcare, which is arguably one of the biggest beneficiaries of better data and AI, whether in the hospital or out in the community, patients can be monitored constantly via sensors that collect and analyze health information and alert physicians and caregivers.
The hospital of the future can also track location and performance of its high-value medical equipment .The outcome of such advances is improved care, better quality of life at lower cost hospitals and clinics meanwhile get better value from those expensive assets with less downturn Amoco bid 19 impact or the healthcare sector has done an astonishing job during this pandemic and a huge thank you to all the caregivers around the world. There's no doubt a more digitized healthcare sector through virtualized and remote care would help patients and providers. We believe that five GNH computing will help track infections across the population and provide real-time insights but minimize spread and protect health workers. 5gn edge will create an incremental 66% addressable market going to forty five billion by 2023 but most importantly it will be helping to save lives I thought. It would also be helpful to see how the dollars are split between the various players in the ecosystem.
You should note that connectivity alone is only eleven percent of the total market so if you're a telco it's important to think about your current trajectory and if your best place to capture that 5g Plus edge computing opportunity so we've outlined four steps that we think will help. Firstly protect the core while much of the value is beyond the connectivity layer, your core business today is vital diversifying capabilities the future is going to look very different from the past. AT&T for example are retraining nearly half of their workforce.
What are your plans embed connectivity can you use M&A to strengthen your position and vertical eyes, we believe those who create specific vertical propositions in this space will truly prosper at KPMG. We call the companies that lead in digital outpaces and I believe that tomorrow's outpaces will use 5g and edge computing to deliver the next Industrial Revolution. Kovach 19 is creating a global crisis but it's not how your organization went into Kovach 19 that will define your future it's how you come out of it. So we humbly suggest the following be in the future.
Our forecast to capture the five hundred and seventeen billion dollars outlined here are only two twenty twenty three. There is a huge amount happening on the horizon and if you're going to be an out pacer you need to know the direction things are moving.
Make new friends, we cannot stress enough how important close partnerships are to succeeding in this market cultivate, strong relationships nurture them and help your partners. Invest big deploying 5g edge is not cheap but the rewards are significant. With the massive push the digital the cost of being left behind is arguably greater. Create your future, we've only covered five use cases today, the truth is that there are hundreds more.
Stay ahead of the game by finding an edge in uncharted territory experiment and take risks and finally start doing. Strong leadership is needed to move things forward and we all need to stop talking about it and start doing it. Today is as good as any day to get going. Over the last two decades we've seen economies and societies prosper as communications infrastructure progresses. Telcos have the opportunity to seize the 5g and edge opportunity and in doing so I believe creates a key pillar in our global economic recovery.