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The term Industry 4.0 has fallen out of fashion within the telecoms sector, but that doesn't mean what it represented went away. Simply the model has evolved and its success will depend on how composable IT markets evolve.
Ed Finegold
What is B2B2x and what’s it got to do with Industry 4.0?
Before the telecom industry fell head over heels in love with AI, it had dalliances with a few different significant others. Sure, our old flame 5G is still in the picture, and 5G SA is the idealized relationship, but telco also flirted with Industry 4.0 and now one must wonder, is it the one that got away? It doesn’t have to be because Industry 4.0 is alive and is a B2B2x opportunity.
In 2022, the World Economic Forum defined Industry 4.0 as “the ‘smart’ and connected production systems that are designed to sense, predict, and interact with the physical world, so as to make decisions that support production in real-time.” Examples of this include smart factories, smart cities, and smart utilities; basically, anything in the capital infrastructure world that can be made more productive and efficient through software-based automation falls into this very large bucket.
With the rise of 5G came a rush to illustrate use cases that would best leverage and showcase 5G SA’s new and improved capabilities. The shine wore off many of these early use cases as markets for autonomous vehicles and remote surgery proved a bit far fetched for the timeframe. But Industry 4.0 carries on as manufacturers, airports, mines, oil and gas producers, and other infrastructure-heavy industries continue to seek ways to leverage cloud, connectivity, and AI services to add value to their businesses.
Though projections and what comprises the sector may vary, iMarc’s recent, middle-of-the-road estimate projects the global Industry 4.0 market to reach more than $570 billion by 2033 from just under $165 billion in 2024. Drivers like the growth of data-driven decision-making; government-led smart technology initiatives; and the adoption of IoT, AI, and robotics together are fueling this projected growth.
For comparison’s sake, iMarc projects the 5G infrastructure market to reach $369 billion by 2033 from $14.8 billion in 2024. From this perspective, Industry 4.0 is a larger overall market than 5G infrastructure. That said, the 5G services market – which comprises most of the global mobility market in the coming decade – projects to top $4.4 trillion by 2033. Industry 4.0 and 5G are related markets and growth in Industry 4.0 should be a contributor to growth in telco.
But how can it happen when most telcos don’t offer or call out an Industry 4.0 product today? The answer lies in B2B2x business models.According to TM Forum B2B2x is a business model in which partners combine capabilities to deliver value-added services and solutions to consumer, business or public sector customers. Within the B2B2X model, a CSP may sell to, through, or with other players. If they sell to partners, they may not have any role in managing the end user. If they sell through partners, they may purchase capabilities to enhance their own offers. If they sell with partners, they co-create products and services to sell to end customers, with each partner retaining ownership of its relationship with the customer.
Within the B2B2x model, telcos may engage as the first or second B, or both. The first B speaks to the telco’s core business providing connectivity and network-based data services like location or user authentication. The second B speaks to added value, like an identity management service built on a mobile network’s authentication services or security and dynamic configurability added to connectivity.
As a telco climbs the value chain, it can open more layers of value to more users. For example, while wholesale customers may only opt for raw connectivity a smart enterprise might consume raw connectivity, AI-ready networking, and end-to-end customer identity management from various layers of the telco value chain. This means more customers, more value offered, and more opportunities to win business in markets like Industry 4.0.
A scan of a dozen telcos’ more recent financials shows that telcos are in fact growing because of the forces we call Industry 4.0. For example, China Mobile, Vodafone Group, China Telecom, Saudi Telecom, NTT DoCoMo, Telefonica Brasil, Turkcell and Ooredoo Group each announced between 2% and 9% growth in B2B services between 2023 and 2024, driven in each case by a mix of demand for cloud, ICT, cybersecurity, data centers, digital platforms and smart infrastructure. All are considered components of Industry 4.0.
Similarly, companies like Telefonica Tech and Orange Business have experienced their most significant growth in systems integration services provided to deliver end-to-end digital and connected solutions to large enterprises and government agencies. For example, though Telefonica Group revenue grew 1.6% in FY24, Telefonica Tech grew 10% and contributed more than $2.3 billion to the group’s top line as a result.
These markets are in their infancy today. As a result, projects tend to revolve around large scale programs that transform factories, mines, airports, and government services. But this market is evolving and the bet is that demand will roll downhill into SMB markets.
Companies and governments are likely to adopt more AI, digital platforms, and cloud-based services to engage customers and cut time and cost out of their business processes. They are also facing a wave of scams and related identity management challenges that threaten their businesses and demand solutions. This is where B2B2x really comes in.
One of the key aspects of making B2B2x business models fly will be the evolution of composable IT marketplaces. In such marketplaces solution partners can collaborate to deliver dynamically assembled mashups of ICT, IoT, 5G, AI and the rest of the Industry 4.0 acronym salad as repeatable, digital solutions. Shifting the B2B2x model – and the Industry 4.0 market – from custom systems integration programs to repeatable, digital solutions will be a crucial inflection point for telcos to grow significantly more with B2B2x and, by extension, Industry 4.0 offerings.
For a closer look at the B2B2x market, composable IT ecosystems, and how TM Forum is creating components, automation, and standards to make it all work seamlessly, please download our report B2B2X business models: Making sense of partner platforms today.
