The Open RAN market has witnessed a rollercoaster of fortunes over the past few years, marked by periods of rapid growth and sudden declines. From 2019 to 2022, Open RAN technology experienced substantial expansion, captivating the telecommunications sector with its promise of more flexible and cost-effective network solutions. However, the tide turned dramatically by 2023, with the market suffering a drop of around half a billion dollars. These struggles have continued into 2024, making it a trying period for Open RAN, particularly between the first and third quarters.
Decline in Market Performance
Revenue Declines in 2023 and 2024
The significant downturn in Open RAN revenues in 2023 raised eyebrows across the industry, a harbinger for the challenges that carried into 2024. According to the Dell’Oro Group, which has closely monitored the RAN market, Open RAN revenues have seen a sharp decrease year-over-year, particularly from the first to the third quarter of 2024. Specifically, the market faced a steep decline of approximately 30% during this period. This drop has been attributed to several factors, including market saturation, competition from established RAN technologies, and delays in network upgrades.
Compounding the difficulties for Open RAN, the virtualized RAN sector also faced setbacks, reporting a 15% decline within the same timeframe. These declines illustrate the broader struggles within the RAN market, showcasing the volatility and unpredictability that have come to define the present landscape. The combined impact of these declines has left industry stakeholders cautious and uncertain about the short-term future, questioning whether Open RAN’s initial promise can be sustained amid these adversities.
Positive Long-Term Outlook
Stephan Pongratz’s Projections
Despite these immediate hurdles, there is a glimmer of optimism for the long-term prospects of Open RAN, as suggested by Stephan Pongratz, VP of RAN market research at Dell’Oro. Pongratz’s analysis indicates that while 2024 may have been challenging, the overall trajectory for Open RAN technologies holds promise. Key to this outlook is the expected increase in 5G network activities in regions like the United States and Japan. These activities could potentially spur a resurgence in Open RAN deployments, providing the market with a much-needed boost to navigate through current challenges.
Furthermore, Pongratz posits that new modernization plans incorporating the latest Open RAN interfaces might clarify the short-term market direction and contribute to an upward trend. His projections foresee Open RAN representing a mid-single-digit share of the overall 2024 RAN market. When combined with proprietary network technologies, Open RAN could account for 8-10% of total revenues, reflecting a gradual but essential integration into the broader telecommunications landscape.
Insights from Mobile Experts
Complementing Dell’Oro’s analysis, a parallel assessment by Mobile Experts in October highlighted the erratic nature of Open RAN’s growth trajectory. The firm described it as “the most bizarre market growth profile ever seen in the wireless market.” The comment underscored the unpredictable expansions and contractions Open RAN has experienced. Notably, the pace of Open RAN deployments significantly slowed in 2024. Mobile Experts, however, remain cautiously optimistic about future growth, suggesting that deployment strategies like brownfield projects may stimulate the market.
For instance, major players like AT&T are exploring strategies that integrate multiple open radio vendors and proprietary software from industry giants like Ericsson. These innovative approaches could pave the way for increased adoption and development of Open RAN technologies. Such hybrid deployment strategies may address some of the current issues and lead to a more stable growth pattern in the future, demonstrating the market’s adaptive nature.
Broader RAN Market Struggles
Dell’Oro’s November Report
Dell’Oro’s November report on the overall RAN market revealed a continuation of challenging conditions, with global RAN revenues experiencing year-over-year declines for six consecutive quarters. The broader RAN market saw a significant drop of 10-20 percent in revenue from the previous year, a decline that’s substantial, although less severe compared to the Open RAN segment. Several factors have contributed to this overall revenue reduction, including adjusted capital expenditures (capex), tougher market comparisons due to previous high-growth years, and issues such as excess capacity and monetization difficulties.
Additionally, the concept of capex fatigue—where companies are hesitant to invest heavily in new technologies after extended periods of high spending—has emerged as a critical factor. These elements combined have created a challenging environment for the entire RAN market, not just Open RAN. The persistence of these adverse conditions has made it clear that stakeholders need to adapt their strategies to navigate the market’s evolving complexities.
Market Recovery and Projections for 2025
The Open RAN market has experienced a series of highs and lows over the past few years. Between 2019 and 2022, this technology garnered significant attention and growth, promising the telecommunications sector more adaptable and cost-efficient network solutions. However, by 2023, the market faced a steep downturn, losing nearly half a billion dollars. The downward trend continued into 2024, making for a challenging year, particularly from the first through the third quarters.
One of the main drivers behind Open RAN’s initial success was its potential to revolutionize the way networks are built and managed, offering a more open and competitive environment compared to traditional RAN systems. This brought hope to many telecommunications companies seeking to reduce expenses while enhancing their service offerings. However, various obstacles, such as integration issues, security concerns, and slow adoption rates, have hindered its progress. Consequently, the initial enthusiasm has waned, leading to the current period of struggle and reevaluation within the industry.
