In 2022, global investment on edge computing is estimated to reach $176 billion, up 14.8 percent from 2021, according to a new study by IDC. Enterprise and service provider spending on hardware, software, and services for edge solutions would continue to expand at this rate through 2025, reaching about $274 billion.
Hardware and services will account for 85 percent of all edge investment in 2022, according to IDC, with software accounting for the rest. Edge gateways, which include low-power components designed for operating restricted or single operations in situations with limited power and cooling, will be the most expensive hardware. By the conclusion of the projected period, investments in compute and storage assets modified for edge locations or deployment will have nearly equaled expenditure on edge gateways.
With a five-year CAGR of 19.6%, services spending, which includes professional and supplied services, will expand faster than the other two areas. By 2025, provisioned services, such as connectivity and edge-related infrastructure, platform, and Software-as-a-Service (IaaS, PaaS, and SaaS)., will account for about half of all edge spending, according to Gartner. System infrastructure and security software will get the majority of software investment, with analytics and AI software growing at a faster rate.
“Edge computing continues to gain momentum as digital-first organizations seek to innovate outside of the data center,” said Dave McCarthy, Research Vice President, Cloud and Edge Infrastructure Services at IDC. “The diverse needs of edge deployments have created a tremendous market opportunity for technology suppliers as they bring new solutions to market, increasingly through partnerships and alliances.”
Service Providers vs. Enterprises
IDC has found more than 150 edge computing application cases in a variety of sectors and areas. Content delivery networks (CDNs) and virtual network functions (VNF), the two edge use cases that will attract the most investment in 2022, are both crucial to service providers’ edge services offerings. These two use cases would produce roughly $26 billion in expenditure this year if they are combined. This year, service providers are expected to invest more than $38 billion on supporting edge offerings.
Manufacturing operations, production asset management, smart grids, omni-channel operations, public safety & emergency response, freight monitoring, and intelligent transportation systems are among the edge use cases with the most expenditures in 2022 for enterprise adopters. Public infrastructure maintenance, network maintenance, anatomical diagnostics, and AR aided surgery are among the use cases that will have the greatest spending rise throughout the 2020-2025 projection.
Discrete and process manufacturing will invest $33.6 billion in edge solutions this year across all enterprise end user industries. In 2022, retail and professional services will spend more than $10 billion on edge computing, while all 19 industries highlighted in the Expenditure Guide will witness double-digit spending increases throughout the projected period of five years.
“In the service provider segment, a five-year compound annual growth rate (CAGR) of 21.6% reflects the edge infrastructure buildout underway to deliver edge cloud services,” said Marcus Torchia, Research Vice President, Customer Insights & Analysis group, IDC. “For enterprise edge technology buyers, growing at a 14.1% CAGR, provisioned services such as IaaS will grow significantly and capture an increasing share of total expenditures over the forecast period.”
Edge Markets in U.S., Europe, China
Edge computing is the technology infrastructure for extending and improving the capabilities of core data centers, whether they are controlled by enterprises or service providers, stated IDC. The utility of edge computing is the relocation of computing resources to the actual area where data is produced, lowering time to value and enabling business operations, decisions, and insight outside of the central IT system immediately.
Edge, according to IDC, is the middleman between connected endpoints and the core IT environment, performing technology-related tasks outside of the centralized datacenter. Edge would be known for being distributed, software defined, and adaptable.
In terms of geography, the United States will be the top investor in edge solutions in 2022, with expenditure expected to reach $76.5 billion. With expenditure totals of $30.6 billion and $20.8 billion, Western Europe and China will be the next largest areas. With a CAGR of 19.7% over the next five years, China will have the fastest expenditure rise, followed by Latin America at 19.4%.
“The European edge market has developed significantly in the last couple of years and is expected to nearly double in value over the forecast period,” said Alexandra Rotaru, research analyst with IDC‘s European Customer Insights & Analysis group. “With nearly 30% of European organizations planning to start using edge technologies in the next two years and going beyond the pilot phase, solutions related to smart buildings, manufacturing operations, or production asset management will become more prevalent.”