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Why Global Edge-Native Apps will Gain Momentum

Cloud computing solutions continue to move closer to the edge of networks across the globe, where compute and storage are located near the source of the data. Worldwide spending on edge computing is forecast at $176 billion in 2022 -- that's an increase of 14.8 percent over 2021.

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, according to the latest worldwide market study by International Data Corporation (IDC).

IDC defines edge as the technology-related actions that are performed outside of the centralized data center, where edge computing is the intermediary between the connected endpoints and the core IT environment. Characteristically, the edge is distributed, software-defined, and flexible.

Edge Computing Market Development

"Edge computing continues to gain momentum as digital-first organizations seek to innovate outside of the data center," said Dave McCarthy, vice president 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."

IDC has identified more than 150 use cases for edge computing across various industries and domains. The two edge use cases that will see 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 computing offerings this year.

For enterprise adopters, the edge use cases with the largest investments in 2022 include manufacturing operations, production asset management, smart grids, omnichannel operations, public safety & emergency response, freight monitoring, and intelligent transportation systems.

Use cases that will see 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 combined will invest $33.6 billion in edge solutions this year. Retail and professional services will also see spending of more than $10 billion on edge computing in 2022 while all 19 industries profiled by IDC 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 percent reflects the edge infrastructure buildout underway to deliver edge cloud services. For enterprise edge technology buyers, growing at a 14.1 percent CAGR, provisioned services such as IaaS will grow significantly and capture an increasing share of total expenditures over the forecast period.

IDC expects hardware and services spending will account for 85 percent 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 percent. By 2025, services will account for nearly 50 percent 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 data analytics and artificial intelligence (AI) software seeing faster growth within the group.

Outlook for Edge Computing Applications Growth

From a geographic perspective, the United States will be the largest investor in edge computing applications, with spending forecast to reach $76.5 billion in 2022. Western Europe and China will be the next largest regions with spending totals of $30.6 and $20.8 billion, respectively.

China will see the fastest spending edge computing applications growth over the five-year forecast with a CAGR of 19.7 percent, followed by Latin America at 19.4 percent.

According to the IDC assessment, 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. Nearly 30 percent of European organizations are planning to start using edge computing in the next two years.

That said, I anticipate more CIOs and CTOs will distribute multi-cloud workloads to the edge -- pushing apps and services closer to where people, data, and things connect to the Global Networked Economy. These solutions will enable organizations to run, manage, and secure edge-native apps across multiple clouds at both near-edge and far-edge locations.

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