Individual technologies are no longer siloed, but are becoming ever more connected and interdependent – and their impact and value are increasing as a result. There are five key ecosystems whose interconnection is driving the revenues of the technology, media and telecommunications (TMT) industry today. These are smartphones, computers, TVs, enterprise data centres and software, and the internet of things (IoT). We call these the “Big Five”. For the foreseeable future, the big bucks will gravitate towards the Big Five, with everything else being relatively niche.
The three most critical elements among these are the use of enterprise robotics, private 5G networks and artificial intelligence (AI)-based chips. These elements are bound to play an important role in the Indian market during 2020.
Robots on the move
The idea of robots picking items from warehouse shelves may seem futuristic today. However, the future may be closer than many people think. Almost 1 million robots are expected to be sold for enterprise use in 2020. Just over half of them will be professional service robots and will generate revenue of more than $16 billion, up 30 per cent from 2019. With regard to enterprise spending, the market for professional service robots is growing much faster than that for industrial robots. Considering the recent trends, professional service robots may surpass industrial robots in terms of units in 2020 and in terms of revenue in 2021.
The market in India is experiencing a similar trajectory in terms of trends. With a low robot density in the manufacturing industry (four industrial robots per 10,000 employees), India is at the cusp of an industrial automation revolution. The demand for industrial robots is driven by the automotive, rubber/plastic, metals and electrical/electronics industries. The automotive industry, in particular, has been at the forefront of this demand. This high demand for robotic solutions, along with a low automation level in the manufacturing industry, can help foster growth in the industrial robot space in India. We can expect this growth to continue for the next few years.
In contrast, the professional service robot market in India is yet to emulate the development in the industrial robot segment. However, this market has the maximum growth potential, indicated by professional service robots’ widespread applications in different sectors. For instance, the Centre for Artificial Intelligence & Robotics, the automation arm of the Defence Research and Development Organisation, is in the process of developing a multi-agent robotics framework, which could be used in scenarios such as the Pathankot attack. In addition, healthcare, especially the public healthcare system, is an area that could see potential growth with the coming in of a new class of digitally enhanced healthcare workers. Retail is another area that could open the floodgates for professional service robots.
On the domestic service side, the cleaning robot market is expected to grow at a compound annual growth rate (CAGR) of more than 17 per cent during the forecast period of 2020-25. This growth will be driven by the increasing demand from the residential and commercial sectors, and the rising disposable income. In addition to the two categories mentioned above, India is also one of the growing markets for software robots, including robotic process automation (RPA), cognitive, and AI-driven process automation. The RPA market in India is scheduled to grow at a CAGR of more than 20 per cent during the forecast period.
Private 5G networks
During 2020, telecom service providers are expected to take a conservative approach and build their 4G networks with a view to complement it with 5G in select geographies. Collaboration across industry to develop unique and relevant use cases for the Indian market to spur demand would be a key demand driver.
For enabling enterprise connectivity, a company is likely to have two options. It can connect to a public 5G network or it can opt for a private 5G network, either by purchasing its own infrastructure while contracting for operational support from a mobile operator, or by building and maintaining its own 5G network using its own spectrum. For many of the world’s largest businesses, private 5G would become the preferred choice, especially for manufacturing plants, logistics centres and ports. We predict that about a third of the 2020-25 demand for private 5G networks would originate from ports, airports and similar logistics hubs. We expect these sectors to be among the first movers.
However, these are still early days with regard to private 5G networks. The use cases for private networks could vary for manufacturing facilities, buildings, large businesses and/or education campuses, and the healthcare and mining sectors. These use cases provide a differentiating factor for service providers to work with and invest in the ecosystem to ensure more reliable networks with lesser variation and interference. Further, like any other network, private 5G networks will have to build in security.
Meanwhile, the adoption of 5G offers a rare opportunity for India to play a part in designing an inclusive and indigenous technology by building R&D capabilities, developing home-grown intellectual property, and carrying out design-led manufacturing.
For laying the foundation for 5G:
- About 10 Indian academic institutions are expected to join the International Telecommunication Union. The number is expected to increase to about 40 in the near term.
- The data centre market in India is expected to grow to about $4 billion at a CAGR of about 9 per cent between 2018 and 2024.
- The number of connected IoT devices is forecast to increase to about 25 billion at a CAGR of 10 per cent between 2018 and 2025.
Bringing AI to the device
A new generation of Edge AI chips are set to bring AI to the device. In 2020, more than 750 million Edge AI chips, chips or parts of chips that perform or accelerate machine learning tasks on device, rather than in a remote data centre, are likely to be sold. Further, the Edge AI chip market will continue to grow faster than the overall chip market. By 2024, sales of Edge AI chips are expected to exceed 1.5 billion, possibly by a huge margin.
These Edge AI chips will likely find their way into an increasing number of consumer devices such as high-end smartphones, tablets, smart speakers and wearables. They will also be used in multiple enterprise segments such as robots, cameras, sensors and other IoT devices.
The consumer Edge AI chip market is much larger than the enterprise market, but it is likely to grow more slowly, with a CAGR of 18 per cent expected between 2020 and 2024. The vast majority of these Edge AI chips will go into high-end smartphones, which account for more than 70 per cent of all consumer Edge AI chips currently in use.
It is noteworthy to mention that the first commercially available enterprise Edge AI chip was launched only in 2017. Although very recent, the enterprise Edge AI chip market is growing much faster, with a predicted CAGR of 50 per cent over the same time frame.
Edge AI can open up many new possibilities for enterprises, particularly with regard to IoT applications. Using Edge AI chips, companies can greatly increase their ability to analyse, not just collect data from connected devices and convert this analysis into action, while avoiding the cost, complexity, and security challenges of sending huge amounts of data into the cloud.
AI chips have the capacity to process information and data at the device level and do not need connectivity at the cloud level. This is very critical in a country like India where we do not have very good networks but want to use technology in sectors such as agriculture and logistics. s
Excerpts from Deloitte India’s “TMT Predictions 2020” report