Worldwide spending on edge computing is expected to reach $176 billion in 2022, an increase of 14.8% compared with 2021, according to the International Data Corporation.
Enterprise and service provider spending on hardware, software and services for edge solutions is forecast to sustain this pace of growth through 2025, when spending will reach nearly $274 billion.
Edge is a technology infrastructure that extends and innovates on the capabilities found in core data centers, whether they are enterprise or service provider owned. The value of edge is the ability to move computing resources to physical locations where data is created. IDC defines edge as the technology-related actions that are performed outside of centralized data centers, where edge is the intermediary between the connected endpoints and the core IT environment. Characteristically, edge is distributed, software defined and flexible.
“Edge computing continues to gain momentum as digital-first organizations seek to innovate outside of the data center,” Dave McCarthy, research vice president of cloud and edge infrastructure services at IDC, said. “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.”
IDC has identified more than 150 use cases for edge computing across various industries and domains. The two edge use cases that will experience the largest investments in 2022 — content delivery networks and virtual network functions — are both foundational to service providers’ edge services offerings. Combined, these two use cases will generate nearly $26 billion in spending this year. In total, service providers will invest more than $38 billion in enabling edge offerings this year.
For enterprise adopters, the edge use cases with the largest investments in 2022 will include manufacturing operations, production asset management, smart grids, omnichannel operations, public safety and emergency response, freight monitoring and intelligent transportation systems. Use cases that will experience the fastest spending growth over the 2020-2025 forecast include public infrastructure maintenance, network maintenance, anatomy diagnostics and AR assisted surgery.
Across enterprise end user industries, discrete and process manufacturing will invest $33.6 billion in edge solutions this year. Retail and professional services will also experience spending of more than $10 billion on edge computing in 2022, while all 19 industries profiled in IDC’s spending guide will experience double-digit spending growth over the five-year forecast period.
“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. 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,” Marcus Torchia, research vice president of the customer insights and analysis group at IDC, said.
IDC expects hardware and services spending will account for 85% of all edge spending in 2022, with the remainder going to software. Hardware spending will be led by investments in edge gateways, which feature low-power components designed for running limited or single functions in environments where power and cooling availability is limited. Investments in compute and storage assets adapted for edge locations or deployment will grow at a faster rate and will nearly equal spending on edge gateways by the end of the forecast period. Services spending, comprised of professional and provisioned services, will grow at a faster rate than the other two groups, with a five-year CAGR of 19.6%. By 2025, services will account for nearly 50% of all edge spending, led by investments in provisioned services, including connectivity and edge-related infrastructure, platform and software as a service (IaaS, PaaS, and SaaS). Software spending will primarily be allocated toward system infrastructure and security software, with analytics and AI software experiencing faster growth within the group.
From a geographic perspective, the United States will be the largest investor in edge solutions, with spending in the country forecast to reach $76.5 billion in 2022. Western Europe and China will be the next largest regions, with spending totals of $30.6 billion and $20.8 billion, respectively. China will experience the fastest spending growth over the five-year forecast, with a CAGR of 19.7%, 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,” Alexandra Rotaru, research analyst with IDC’s European customer insights and analysis group, said. “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.”