Single vendor solutions to dominate Open RAN sales – Dell’Oro

• Research firm Dell’Oro has been tracking the Open RAN sub-sector for a few years already
• It expects Open RAN sales to account for 7% to 10% of the total RAN market this year
• By 2028, it expects Open RAN to account for 20% to 30% of the global RAN sector value
• The vast majority of those revenues in 2028 will be single vendor, rather than multivendor, sales, reckons the Dell’Oro team

There are some encouraging signs for the Open RAN sector in general just now following AT&T’s major commitment announced late last year and Verizon’s reminder this week that much of its virtual RAN (vRAN) rollout is Open RAN-capable, but those US developments don’t translate into positive news for all of the Open RAN sector’s vendor players, according to a new forecast from research house Dell’Oro Group.

The company has been tracking the Open RAN sector for a few years already, and believes that Open RAN sales will account for 7% to 10% of the total RAN market this year. With the total market set to be worth around $35bn, that puts the Open RAN equipment sector (comprising radio elements, distributed unit, or DU, and centralised unit, or CU, technology) at about $2.45bn to $3.5bn – which would actually represent a year-on-year decline, according to Dell’Oro. 

But while “market conditions will remain challenging over the near-term”, the “long-term forecast remains positive, with Open RAN set to account for 20% to 30% of worldwide RAN revenues by 2028,” predicts the research house. That positive view is driven by “the improved pipeline in the US” where Dish Network is also investing in Open RAN systems. Even if the value of the RAN sector remained flat over the coming five years, that would put the value of the Open RAN technology sector at between $7bn and $10.5bn in 2028. 

While that might sound encouraging for the likes of Mavenir and Parallel Wireless, which are trying to land deals as network operators migrate more towards Open RAN architectures, it might not be so great for those challenger vendors, according to the Dell’Oro team. 

That’s because it expects the majority of Open RAN contracts to be single vendor, rather than multivendor, deals and that plays into the hands of the likes of Ericsson – which is the main beneficiary of AT&T’s five-year, $14bn Open RAN contract – Nokia and Samsung Networks, which has been supplying the Open RAN-capable vRAN systems to Verizon for the past few years. 

“Current growth deceleration combined with the increased acceptance that Open RAN is not some kind of magic solution that will significantly alter barriers to entry or overall market concentration, is prompting more questions about the rationale behind Open RAN,” stated Stefan Pongratz, VP and analyst at Dell’Oro. “The fundamental assumptions shaping the role Open RAN will play in this RAN journey have not changed. Over time, operators will incorporate more virtualisation, intelligence, automation, and O-RAN into their RAN roadmaps. However, the business case for multi-vendor RAN is less compelling,” he added. 

As a result, Dell’Oro expects single vendor solutions to “drive the lion‘s share” of Open RAN revenues in the coming years, with single vendor Open RAN solutions expected to account for 15% to 20% of total RAN revenues in 2028, and multivendor Open RAN solutions accounting for just 5% to 10% of the total market – that’s slim pickings for the likes of Mavenir if the Dell’Oro team is correct. 

Now, a single vendor Open RAN deal doesn’t mean that every single element in a radio access network will be made and delivered by just one vendor – it just means that one main vendor will be the dominant technology supplier and be responsible for integrating some specialist partners selected by the network operator customer. An example is the AT&T contract, where Ericsson is the dominant vendor but it needs to supply systems with Open RAN specification-compliant fronthaul interfaces because AT&T wants to deploy some Fujitsu radio units as well as Ericsson radio units. In addition, the server hardware that supports the virtual RAN software isn’t Eriocsson’s technology – that comes from Dell Technologies. 

But that is still regarded as a single vendor solution because there isn’t a mix of virtual RAN software systems from different suppliers and a range of radio units. It’s possible, of course, that single vendor Open RAN deals could, in time, migrate to multivendor deployments, but it’s more likely that pivots will work the other way, where initial multivendor deployments eventually concentrate on one or two significant suppliers.    

What does this all mean for the Open RAN sector? Ultimately, it might mean that while Samsung becomes a stronger player in the RAN market in the coming years – it’s likely to factor in the massive Open RAN equipment tender that Vodafone Group has just launched – the opportunities for innovative new entrants in the Open RAN space might be focused on those companies developing xApps and rApps to run on RAN intelligent controller (RIC) platforms, and that’s not going to move the needle very much in terms of overall market share or the vendor weight scale. 

Operators might want a broader mix of vendors to choose from, but that’s only going to happen if they spread their contract awards a bit wider. According to Dell’Oro, though, there isn’t going to be as much of that kind of action as some might have hoped. 

- Ray Le Maistre, Editorial Director, TelecomTV