Global spending on edge computing is forecast to reach $378 billion by 2028, growing at a solid double-digit CAGR.
This growth is driven by growing demand for real-time analytics, automation, and enhanced customer experiences. The projected market growth, revealed in a recent International Data Corporation (IDC) report, represents a significant expansion from current levels as organisations across industries increasingly adopt edge computing solutions. For 2024, IDC, in its Worldwide Edge Spending Guide, foresees global spending on edge computing to reach an estimated US$228 billion, marking a 14% increase from 2023.
Since edge computing brings data processing closer to the information-generation sources to reduce network latency and bandwidth usage generally associated with cloud computing, it is a key enabler for many future technologies, such as 5G, the Internet of Things (IoT), augmented reality, and vehicle-to-vehicle communications.
“Edge is a crucial technology infrastructure that extends and innovates on the capabilities found in core data centres, whether enterprise- or service-provider-oriented,” the IDC highlighted. The report, published on September 10, highlights several key factors contributing to the expected surge in edge computing investments, including real-time analytics, automation and enhanced customer experiences.
Alexandra Rotaru, manager of Data and Analytics at IDC Europe, said, “Enterprises are now accelerating their investments in edge and AI to drive real-time analytics, automation, and enhanced customer experiences, particularly in manufacturing, utilities, healthcare, and retail.”
She reckons key technologies like AI-powered devices, edge servers with GPUs, and 5G connectivity are gaining traction, enabling organisations to process data closer to the source and achieve higher performance.
In terms of industries, manufacturing accounts for the most significant portion of spending on edge, as it enables real-time monitoring of equipment and processes, reducing downtime and improving operational efficiency.
For utilities, the edge is a critical solution for companies to help process vast amounts of data quickly and securely, especially with the increasing deployment of renewable energy sources, smart grids, and IoT-enabled devices.
The fastest-growing industry in terms of edge computing spending is banking. “Driven by the rise of AI-powered services, edge transforms how banks handle data processing, fraud detection, and customer interactions. Examples of use cases include AI-optimised operations, augmented fraud analysis and investigation, and others,” IDC noted.
Interestingly, the service provider segment will see the largest CAGR over the forecast period. “In the service provider domain, investments in edge service delivery are built on infrastructure spending for multi-access edge computing (MEC), content delivery networks, and virtual network functions,” IDC noted in its report.
Multi-access edge computing (MEC) represents the fastest growing area, becoming increasingly critical for supporting the ultra-reliable, low-latency communications required by next-generation applications steered by the widespread use of 5G networks, IoT, and artificial intelligence.
In addition, the increased bandwidth and lower latency offered by 5G will enable more sophisticated edge computing applications, particularly in areas such as augmented reality, virtual reality, and autonomous systems.
Regarding technology spending, IDC said the most significant investment will stay within hardware at the beginning of the forecast, driven by AI processors and accelerators in edge infrastructure systems that are projected to generate increased demand in the coming years.
However, provisioned services are estimated to surpass the hardware share by 2028. Infrastructure-as-a-service will represent the fastest growth category within provisioned services as a great tool that facilitates rapid development, deployment, and iteration of AI models and edge computing applications.
Although minor in terms of overall spending, on-premises software will remain a critical component of edge infrastructure, driven by accelerated demand for analytics and AI software.
From a geographic perspective, North America will continue leading-edge spending throughout the forecast period, followed by Western Europe, with Germany and the United Kingdom leading the spending. However, IDC noted that China, Latin America, and Asia/Pacific (excluding Japan and China) will experience the fastest spending growth over the five-year forecast.
(Photo by Taylor Vick)
See also: Global edge data centre market to cross $300bn by 2026
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