Edge Computing Market

Market Overview

The global edge computing market size was valued at USD 18.3 billion in 2022. It is estimated to reach USD 112 billion by 2031, growing at a CAGR of 44.7% during the forecast period (2023–2031).

A distributed computing paradigm called "edge computing" brings computation and data storage closer to the data sources. This should shorten response times and save bandwidth. Edge computing is a type of distributed processing that is location- and topology-sensitive, not a particular technology. In order to deliver real-time, action-driven solutions, Edge focuses on processing data faster and in greater volume close to its generation site.

The idea of edge computing was first established in the late 1990s, when content-distributed networks (CDNs) were created to provide web and video content from edge servers positioned close to users. As a result of these networks' evolution to host applications and application components on edge servers, the first commercial edge computing services that hosted applications like dealer locators, shopping carts, real-time data aggregators, and ad insertion engines were developed in the early 2000s. Some examples of edge use cases include automated retail, self-driving cars, robotic arms, and data from smart devices.

Market Dynamics

Global Edge Computing Market Drivers

Widespread Adoption of the Cloud and Growth of Latency-specific Applications 

The global enterprise propensity toward the adoption of AI is influencing the demand for data feed models, which possess low latency. With the rise of demand for real-time applications, the adoption of edge computing has significantly increased. Although centralized cloud computing systems provide easy collaboration and access, they are remote from data sources. So this requires data transmission, which causes delays in processing the information due to network latency. As modern technology expects low latency and high speed to provide a superior customer experience, as one cannot afford to have cloud computing for every need, there is an increasing demand for edge computing.

In the industrial space, the increasing adoption of IoT is augmented by 5G operations, primarily driven by lower latency and network slicing features. Additionally, it is challenging to process the accelerating amounts of data produced by industrial robots and connected devices with various sensors. 5G applications are resolving these problems thanks to their low latency and high reliability, which simplify offloading some of this processing to edge or cloud-based servers and reduce complexity. Similarly, the cloud's flexibility, scalability, and cost-effectiveness drive its adoption in businesses, aiding the market to grow further.

Evolving Network Technologies 

Enterprises worldwide are increasingly adopting new technologies enabling business process transformation, which is putting pressure on network technology, and it is evolving, in turn, to accommodate the growing needs. A survey of 300 senior IT and business executives by Accenture found that only 36% were very satisfied, and bandwidth and reliability were the top concerns. Network capabilities are changing with rising demand and cloud usage, and there is an increasing need for innovative technologies that can handle network traffic.

Furthermore, AI is another branch that enables better network usage and ensures efficiency in continuous alignment according to the business needs. According to Cisco, over 50% identify AI as a priority investment needed for delivering their ideal network, and 17% believe that a lack of maturity in AI technology poses an obstacle to network modernization. In addition, according to the uptime, half of all workloads (over 50%) will be run outside the enterprise data center by 2021, either in cloud and data center infrastructures or at the network edge. Such developments are influencing the demand for edge computing.

Global Edge Computing Market Restraint

Security Concerns in Edge Computing 

With each device representing a possible endpoint, especially in the IoT network framework, distributing data across a vast network of various devices and data centers running from enterprise locations can cause network visibility and management issues. Other devices that use Edge have similar problems, and loopholes in Edge security can provide hackers easy access to the core network. Moreover, the lack of a 'global' perimeter and no single-owner ecosystem controlled by different actors that must cooperate in the networks make it even more vulnerable. Attacks that are very localized and with impact limited to the geographical location can control a portion of the infrastructure. With the global adoption of IoT, any network node points increase further increases security concerns. Such factors restrict market growth.

Global Edge Computing Market Opportunities

Proliferation of IoT

Data has significantly increased due to the proliferation of linked devices and the Internet of Things, fuelling the demand for effective data evaluation and access. The use of centralized cloud computing and storage solutions is growing among businesses. Concerns about latency and financial viability arise when moving the entire IT infrastructure to the cloud. As a result, businesses using IoT actuators, sensors, and other devices are becoming increasingly interested in edge computing solutions like edge nodes, devices, and hyper-localized data centers.

Additionally, edge computing reinforces the cloud concept by moving data processing closer to the data source, allowing organizations to make decisions more quickly. For example, Purdue University and a vendor of edge computing solutions worked together to study and improve plant development and food production processes employing numerous sensors and devices. The collaboration enables the institution to collect, organize, process, and share the enormous data the sensors produce using wireless and edge computing technology. By facilitating speedier communication and speeding and improving research, technology aids the institution in saving time and money. Therefore, growth in IoT adoption across industries is estimated to create opportunities for market expansion.

Regional Analysis

North America Dominates the Global Market

Based on region, the global edge computing market is bifurcated into North America, Europe, Asia-Pacific, Latin America, and the Middle East and Africa.

North America is the most significant global edge computing market shareholder and is anticipated to exhibit a CAGR of 43.45% during the forecast period. North America comprises the U.S. and Canada. The U.S. is expected to be the first market to adopt 5G widely, and the country has the highest ROI in the telecom industry. Further, enterprises across industries have expressed interest in edge computing, and its adoption has begun in the past few years. For instance, Dropbox, a file storage and sharing company, has developed its edge network to deliver better connectivity and faster file access for its customers. The company shifted to edge computing to enhance its customer service capabilities, especially outside the United States. In addition, Canada is known to be an early adopter of new technologies. Most new technologies at present are data-intensive. With the amount of new data generated and used at present, these infrastructures would not support the needs of their customers. The most important metric for the company, out of all those concerned, will be latency. In June 2021, Bell Canada signed a contract with Amazon Web Services (AWS) to deploy cloud connectivity, edge computing, and storage solutions, thereby driving market growth in the region.

Europe is estimated to exhibit a CAGR of 45.13% over the forecast period. The European region is divided into the U.K., France, Germany, and the Rest of Europe. The U.K. dominated the regional market owing to the adoption and deployment of advanced and innovative digital technologies such as the Internet of Things (IoT), cloud computing, artificial intelligence (AI), and 5G, and increased development. In 2021, the first 5G phones were sold nationwide, while mobile network providers have also launched large-scale 5G trials. Currently, in the United Kingdom, EE offers 5G in 71 UK towns and cities, Three in 66, Vodafone in 41, and O2 in 21. In addition, companies are entering into agreements to provide technologies with innovations. Eurostat further mentioned that latency and security were the two most important factors, due to which cloud enterprises did not prefer computing. Edge computing is likely the most effective technology to address those concerns. Therefore, the factors above, in turn, drive regional market growth.

The Asia-Pacific market is estimated to grow exponentially due to the presence of key countries such as China, Japan, and Australia. Among these countries, China contributed the largest revenue share in the region. The country's edge computing market is anticipated to benefit from telecom investments to roll out new technology. Owing to the rapid growth of mobile services and the increase of operation cost pressure, the telecom industry in the country has taken measures to improve user experience, increase profits, optimize network operation, and enhance resource utilization efficiency by introducing new technologies and products. In addition, enterprise customers in the country hope to offer them more valuable and secure network connections with lower latency. Owing to this, a few operators rolled out 5G technology in the country. China's launch of 5G is fueling growth in emerging high-tech industries, including edge computing.

Latin America includes two key regions, namely, Brazil and Mexico. Brazil is proving to be a famous destination for 5G equipment vendors. Ericsson and Nokia have shown significant interest in the country, with Ericsson announcing plans to invest USD 238.3 million to install a new assembly line for 5G in the country. Further, Nokia is hoping to attract opportunities in the market with the future auction of the 5G spectrum. The government's initiatives to increase connectivity in Mexico have boosted the connected cars market. Due to the huge amount of data generated by autonomous vehicles, edge computing would play a significant role in handling this data and performing functions like battery monitoring and smart traffic management, thereby propelling regional market growth.

Segmental Analysis

The global edge computing market is segmented by components and end-users.

Based on components, the global edge computing market is bifurcated into hardware, software, and services. 

The hardware segment dominates the global market and is projected to exhibit a CAGR of 39.77% over the forecast period. Hardware for edge computing must be tough enough to endure deployment in high-risk situations, including frequent shocks, vibrations, dust, debris, and extreme temperatures. Rugged-edge computers are distinguished by their fanless designs. In addition, edge computing hardware makers may develop completely closed systems due to the fanless design, eliminating the need for vents and openings to cool the system. The market is also witnessing strategic partnerships and collaborations with several hardware providers to expand its offerings and market presence. For instance, in recent years, Software AG has partnered with Dell and Eurotech to collaborate on Software AG's edge solution with Dell and Eurotech hardware. An integrated software and hardware solution may enable these companies to expand their customer base jointly. Such initiatives by hardware providers are expected to boost hardware adoption in edge computing solutions.

The deployment of various hardware solutions for edge computing entails using software solutions to analyze the data generated from the hardware solutions. The software solutions enable the edge computing hardware components to run smoothly. Companies like Microsoft Azure and Amazon have developed software systems for using the Edge. For instance, Amazon Web Services launched edge-focused software, AWS Greengrass, which allows effective integration of edge computing, machine learning, and the Internet of Things (IoT). Google provides products, like Edge TPU and Cloud IoT Edge, for developing and deploying smart connected devices at scale. Also, Google launched the Home SDK, a development toolkit to boost edge computing in the smart home. Microsoft Corporation's Azure IoT Edge is a dynamic software platform that delivers cloud solutions to edge devices and equipment.

Based on end-user, the global edge computing market is segmented into the financial and banking industry, retail, healthcare and life sciences, industrial, energy and utilities, telecommunication, and others. 

The industrial segment owns the highest market share and is estimated to exhibit a CAGR of 44.30% during the forecast period. One of the most prominent edge computing use cases is in the industrial manufacturing sector, where new technologies could potentially lead to massive productivity gains. Edge computing facilitates localized processing, which helps reduce latency issues and enables smart and intelligent manufacturing through predictive analytics. In addition, manufacturing businesses have embraced edge computing quickly to improve IoT device compatibility, lower unanticipated downtime difficulties, and boost production efficiency. In order to collect and analyze data in real time, the edge computing framework dramatically reduces the complexity of networked systems. Additionally, it may enable devices to gather important data at distant locations with patchy or expensive network connectivity. IoT-enabled equipment, gateways, sensors, and single-board computers can all be edge devices.

Retail is expected to exhibit significant growth prospects in terms of adopting edge computing solutions in the industry during the forecast period due to the advent of e-commerce, which is changing the retail landscape rapidly. Due to the global coronavirus outbreak, online grocery and mobile-enabled grocery deliveries have ramped up the data flow; hence, the industry needs edge computing. In the retail sector, there is a huge amount of customer data flowing from point-of-sale terminals (POS), websites, mobile apps, and loyalty management platforms. Digital transformation and technological advancements enable retailers to enhance the customer experience in online and brick-and-mortar stores and optimize the supply chain to develop new revenue opportunities.

Recent Developments

• March 2023: Lenovo introduced new software solutions to expedite the deployment of edge solutions as part of the next era of ThinkEdge remote automation and orchestration.
• April 2023: Dell, AT&T, and VMware collaborated to launch a private wireless mobile multi-access edge compute (MEC) solution. The MEC product combines 5G connectivity, infrastructure-as-a-service, and multi-cloud compatibility.