The radio access network (RAN) market ended up being a lot more rosy in 2020 than analysts at Dell’Oro Group had predicted, ending the year with record revenues despite the pandemic and a generally bad economy.
The firm said full-year 2020 revenues for the 2G-5G RAN market ended with a new record since it started tracking them in 2000.
It should be noted that the firm correctly identified the overall trajectory of the market going into the year and kept a positive outlook even as the pandemic intensified and economists adjusted their GDP projections sharply downward, according to Stefan Pongratz, vice president and analyst with the Dell'Oro Group.
However, “we also need to recognize that we completely underestimated the magnitude and the breadth of the ascent in the fourth quarter and for the full year 2020, reflecting stronger than expected results in multiple regions," he added in a statement.
When it comes to the RAN performance, the results in the fourth quarter and for the full-year 2020 were stronger than expected in multiple regions, especially in North America and China, according to Pongratz.
The RAN market also surprised on the upside in Europe, with revenues increasing at the fastest pace in seven years across the continent, he said.
“We attribute the stronger-than-expected results to a confluence of factors,” he told Fierce. “First and foremost, we underestimated the magnitude and depth of the 5G rollouts, including both sub-6 GHz wide-band and narrow-band 5G.”
Their analysis suggests macro New Radio (NR) shipments approached 2 million to 3 million in 2020, approximately 20% higher than what they projected going into 2020.
Last summer, Dell’Oro Group upwardly revised its projections for the sector, saying the RAN market will grow at a healthy pace over the next several years. Cumulative investments over the 2020-2025 forecast period are now expected to be over $210 billion.
Same vendors dominate
Initial estimates suggest that vendor ranking remained stable between 2019 and 2020, although revenue shares were affected to some degree by the state of 5G rollouts in China and North America, according to Dell’Oro Group.
It’s no surprise that Ericsson and Nokia maintained their No. 1 and No. 2 RAN revenues rankings excluding China. Both suppliers improved their RAN revenue shares outside of China, accounting for 35% to 40% and 25% to 30% of the overall RAN market, respectively, according to the report.
Despite being shut out of some geographies due to security concerns, Huawei maintained its No. 1 ranking for the global RAN market, reflecting share gains in China.
Open RAN rising
The movement to open RAN is happening and it represents the chance for a lot of newer vendors to take market share, but it likely will be years rather than quarters before open RAN deployments show a meaningful impact on the overall vendor dynamics, Pongratz said. Dell’Oro Group estimates open RAN will approach 1% to 2% of the RAN market in 2021.
“The non-traditional RAN suppliers need to ramp up investments to ensure they have broad and competitive portfolios addressing multiple RAN segments – it will not be enough to focus on LTE and 5G NR niche cases,” he said.
Dell’Oro Group said earlier this month that it expects worldwide sales of open RAN revenues to grow at double-digit rates over the next six years with cumulative open RAN investments, including hardware, software and firmware excluding services, projected to approach $10 billion over the 2020-2025 forecast period.