Edge computing facing strong growth

Global spending on edge computing is set to increase significantly in the coming years. According to the market research company IDC, it will reach around USD 265 billion in 2025 and is expected to grow to around USD 450 billion by 2029. This would correspond to average annual growth of around 15 percent. IDC publishes the figures in the „Worldwide Edge Spending Guide“ and aims to demonstrate the dynamic nature of distributed IT architectures and edge AI.

At the edge of the network

A key driver is the increasing use of artificial intelligence directly at the edge of the network. Companies want to process data where it is generated in order to enable real-time decisions and reduce latency. According to IDC, the combination of mature edge architectures and rapidly advancing AI development will change the way organizations use data. Edge AI is no longer experimental, but is already being used in areas such as industrial automation, connected commerce, autonomous vehicles and healthcare. 

IDC segments edge spending into more than 1,000 specific use cases in six technology domains, including AI, IoT, AR, VR, drones and robotics. The field of artificial intelligence is expected to develop particularly dynamically. Many companies are planning AI-supported applications that require low latency, local inference and robust, distributed infrastructures. Edge computing will serve as the fundamental layer for these technologies.

“The combination of maturing edge architectures and the rapid development of AI is defining data processing.
fundamentally new way of working.”

Alexandra Rotaru,
Data and Analytics Manager,
IDC Europe

Hardware remains the largest investment category at the beginning of the forecast period. This is due to the expansion of AI-accelerated infrastructures and increasingly powerful edge systems. Companies want to design their architectures in such a way that complex AI workloads can be processed directly on site. By 2029, however, the cumulative service segments, including provided and professional services, are expected to account for a larger share than hardware. Within the provided services, Infrastructure as a Service is the fastest growing area. Accordingly, organizations are increasingly relying on scalable, flexible and usage-based models to cover increasing AI-driven computing requirements at the edge. Across industries, retail is expected to continue to account for the largest share of edge investments. Reasons for this include AI and IoT applications such as video analysis or the optimization of processes in real time. Industry follows with use cases such as AI-supported quality control, predictive maintenance and automated material flow. According to IDC, the fastest growing sector is the financial sector, which wants to use distributed architectures for AI-based fraud detection.

AI-enabled edge platforms

Service providers are also expected to expand their investments in AI-enabled edge platforms. These include multi-access edge computing environments, content delivery networks and virtualized network functions. According to the forecast, these providers could account for almost a third of the overall market by 2029. North America is likely to continue to record the highest spending on edge computing worldwide. This is primarily due to the rapid introduction of edge AI workloads and the expansion of modern infrastructures. This is followed by Western Europe and China, where investments from industry and the public sector in particular are expected to drive the development of AI-supported applications. The analysts expect the strongest growth in the USA and Latin America. In both regions, companies are currently increasingly expanding use cases that rely on low latency times and AI-based evaluations and benefit from distributed edge architectures. (Source: IDC)