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Distributed Edge Computing Vendors Adapt to Change

The 5G edge network value chain of players has an upside opportunity to generate new revenue and gain visibility in a market that includes IT data center companies, enterprise end verticals, public cloud service providers, and content delivery network (CDN) providers.

5G edge networks will play a key role in unlocking the commercial potential of new use cases such as private wireless communications. According to the latest worldwide market study by ABI Research, 5G private networks revenue will grow from $1.6 billion in 2021 to $65 billion in 2030, with a Compound Annual Growth Rate (CAGR) of 60.1 percent.

5G Edge Network Market Development

"With 5G edge networks, every enterprise engagement is a custom job. Consequently, communications service providers (CSPs) and vendors seek to establish business models that are governed by different KPIs, both technical and commercial," said Don Alusha, senior analyst at ABI Research.

This opportunity stands in contrast with product-led solutions that fit well with mass-market, country-specific or region-specific subscriber models. 5G edge network deployments mark the industry's first focus on business evolution and integration with vertical industries.

To that end, tier-1 service providers such as AT&T, Telefonica, Verizon, and Vodafone -- and their infrastructure supplier vendors such as Ericsson, and Nokia -- are establishing enterprise business units.

Moreover, public cloud hyperscalers like Amazon, Google, and Microsoft are taking a strategic approach with new solutions aimed at unlocking the value of 5G and edge computing networks.

"CSPs own edge infrastructure that holds potential in terms of local compute and low-latency connectivity, but they have limited cloud experience. Cloud providers are agile and innovative. With the right collaboration arrangements in place, there is no reason why 5G edge computing cannot yield value for all parties involved," says Alusha.

At present, however, nobody can accurately predict where this market is going to evolve. It will be a captivating journey to see how different parties collaborate and co-create to unlock the value of the 5G edge networks being built today.

According to the ABI assessment, 5G edge networks face several key barriers that could impact market maturity. The business cases remain a key area where further work is required from the industry at large.

The business case for advanced use cases depends on the market’s appetite for 5G edge networks and enterprise desire to modernize their operations. Furthermore, the technology ecosystem for edge computing is immature. It will take time to re-engineer existing hardware and software for highly distributed, space- and resource-constrained edge locations.

A good starting point to drive ecosystem maturity is for the industry to acknowledge that building a 5G edge network is the first step. The second step is to figure out how to best integrate these new technologies into enterprise verticals’ business processes.

Outlook for 5G Edge Applications Growth

"That may not be a matter of technology but a matter of the degree of effort required to initiate service convergence and a process change that spans marketing, sales, product design, and so on. This strand remains the topic of much discussion in the industry," Alusha concludes.

That said, I believe IT vendors who are prepared for the distributed edge computing opportunity will demonstrate their ability to proactively help customers uncover the most compelling use cases, and then assist those enterprise buyers to create the required business case for CFO and CEO consideration.

Besides, every new IT investment must compete with a variety of other vendor proposals that CIOs and CTOs will consider as potential projects. Return on investment (ROI) comparisons and the promise of associated business outcomes will drive the customer decision-making process. A vendor's professional service organization will likely have a key role in this complex procurement process.

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