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Managed Edge Services Market to Reach $445.3 Million

Cloud computing infrastructure is moving out to the edge of enterprise networks as more organizations explore ways to re-engineer their architecture in support of new and emerging information technology (IT) use cases.

Managed cloud edge services will become a high-growth market as enterprises look for low-latency edge services to address process efficiencies, support new applications, comply with data sovereignty, and deal with IT security threats.

According to the latest global market study by International Data Corporation (IDC), worldwide revenues for managed edge services will reach $445.3 million in 2021 -- that's an increase of 43.5 percent over 2020. Over the 2021-2025 forecast period, the compound annual growth rate (CAGR) for managed edge services will be 55.1 percent.

Managed Edge Services Market Development

Given the nascent demand for managed edge services, a wide range of IT service providers and business technology vendors are looking at this market as the next big revenue growth opportunity.

IDC believes public cloud providers will be key enablers of edge services through the partnerships they are establishing with 5G mobile network service providers. Some are considering edge services as the catalyst for the fourth industrial revolution, while content delivery network (CDN) providers are already shifting their investments toward edge applications.

"Managed edge services represent a significant monetization opportunity for service providers to capitalize on their investment in edge compute," says Ghassan Abdo, vice president at IDC.

At the same time, service providers are aware of the potential impact of the edge on their market position and are watching closely for unforeseen competition from adjacent markets and new disruptors.

Technology vendors including network equipment providers (NEPs), enterprise software, data center, and networking vendors are all vying to shape this market and play a role in delivering edge services.

Based on extensive discussions with service providers and technology vendors, IDC has identified three primary deployment models for managed cloud edge services.
  • On-premises deployment: This represents managed edge use cases where the edge compute infrastructure is deployed at the enterprises' premises, also referred to as private deployment. This deployment model is intended to address the need for extra low latency and is applicable to industrial use cases, healthcare, and AR/VR applications.
  • Service provider edge deployment: This represents managed edge services provided by edge compute deployed at the provider edge, both fixed and mobile. IDC expects this deployment model to spur the development of a wide range of vertical use cases.
  • CDN edge deployment: This represents managed edge services provided by edge compute deployed at the CDN POPs or edge locations. These use cases will enhance content delivery with personalized, high-fidelity, and interactive rich media customer experience.

Outlook for Edge Services Applications Growth

IDC predicts that the on-premises edge will be the fastest-growing segment with a five-year CAGR of 74.5 percent. The service provider edge will be the second-fastest growing segment with a CAGR of 59.2 percent, which will enable it to become the largest market segment by 2022. Meanwhile, the CDN edge segment is expected to have a five-year CAGR of 41.9 percent.

I anticipate that the leading IT colocation facility service providers will also experience new growth opportunities as more CIOs and CTOs search for lower-cost methods to deploy infrastructure in managed facilities that provide multi-tenant services.

Note, this is the first forecast provided by IDC on this new and developing market. I believe that as other IT industry analysts cover this sector, we'll likely learn more about the competition for customers with the development of additional offerings.

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