Has Edge Computing Lived Up to Its Potential? Barriers to Deployment

Despite years of touting and hype, edge computing (aka Multi-access Edge Computing or MEC) has not yet provided the payoff promised by its many cheerleaders.  Here are a few rosy forecasts and company endorsements:

In an October 27th report, Markets and Markets forecast the Edge Computing Market size is to grow from $44.7 billion in 2022 to $101.3 billion by 2027, which is a Compound Annual Growth Rate (CAGR) of 17.8% over those five years.

IDC defines edge computing as the technology-related actions that are performed outside of the centralized datacenter, where edge is the intermediary between the connected endpoints and the core IT environment.

“Edge computing continues to gain momentum as digital-first organizations seek to innovate outside of the datacenter,” said Dave McCarthy, research vice president, Cloud and Edge Infrastructure Services 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 (2022). In total, service providers will invest more than $38 billion in enabling edge offerings this year.  The market research firm believes spending on edge compute could reach $274 billion globally by 2025 – though that figure would be inclusive of a wide range of products and services.

HPE CEO Antonio Neri recently told Yahoo Finance that edge computing is “the next big opportunity for us because we live in a much more distributed enterprise than ever before.”

DigitalBridge CEO Marc Ganzi said his company continues to see growth in demand for edge computing capabilities, with site leasing rates up 10% to 12% in the company’s most recent quarter. “So this notion of having highly interconnected data centers on the edge is where you want to be,” he said, according to a Seeking Alpha transcript.

Equinix CEO Charles Meyers said his company recently signed a “major design win” to provide edge computing services to an unnamed pediatric treatment and research operation across a number of major US cities. Equinix is one of the world’s largest data center operators, and has recently begun touting its edge computing operations.

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In 2019, Verizon CEO Hans Vestberg said his company would generate “meaningful” revenues from edge computing within a year.  But it still hasn’t happened yet!

BofA Global Research wrote in an October 25th report to clients, “Verizon, the largest US wireless provider and the second largest wireline provider, has invested more resources in this [edge computing] topic than any other carrier over the last seven years, yet still cannot articulate how it can make material money in this space over an investable timeframe.  Verizon is in year 2 of its beta test of ‘edge compute’ applications and has no material revenue to point to nor any conviction in where real demand may emerge.

Gartner believes that communications and manufacturing will be the main drivers of the edge market, given they are infrastructure-intensive segments. We highlight existing use cases, like content delivery in communications, or
‘device control’ in manufacturing, as driving edge compute proliferation. However, as noted above, the market is still undefined and these are only two possible outcomes of many.”

Raymond James wrote in an August research note, “Regarding the edge, carriers and infrastructure companies are still trying to define, size and time the opportunity. But as data demand (and specifically demand for low-latency applications) grows, it seems inevitable that compute power will continue to move toward the customer.”

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BofA Global Research – Challenges with Edge Compute:

The distributed nature of edge compute can pose several risks to enterprises. The number of nodes needed between stores, factories, automobiles, homes, etc. can vary wildly. Different geographies may have different environmental issues, regulatory requirements, and network access. Furthermore, the distributed scale in edge compute puts a greater burden on ensuring that edge compute nodes are secured and that the enterprise is protected. Real-time decision making on the edge device requires a platform to be able to anonymize data used in analytics, and secure data in transit and information stored on the edge device. As more devices are added to the network, each one becomes a potential vulnerability target and as data entry points expand across a corporate network, so do opportunities for intrusion.

On the other hand, the risk is somewhat double-sided as some security risk is mitigated by keeping the data distributed so that a data breach only impacts a fraction of the data or applications. Other barriers to deploying edge applications include high costs as a result of its distributed nature, as well as a lack of a standard edge compute stack and APIs.

Another challenge to edge compute is the issue of extensibility. Edge computing nodes have historically been very purpose-specific and use-case dependent to environments and workloads in order to meet specific requirements and keep costs down. However, workloads will continuously change and new ones will emerge, and existing edge compute nodes may not adequately cover additional use cases. Edge computing platforms need to be both special-purpose and extensible. While enterprises typically start their edge compute journey on a use-case basis, we expect that as the market matures, edge compute will increasingly be purchased on a vertical and horizontal basis to keep up with expanding use cases.

References:

The Amorphous “Edge” as in Edge Computing or Edge Networking?

Edge computing refuses to mature | Light Reading

Multi-access Edge Computing (MEC) Market, Applications and ETSI MEC Standard-Part I

ETSI MEC Standard Explained – Part II

Lumen Technologies expands Edge Computing Solutions into Europe

 

2 thoughts on “Has Edge Computing Lived Up to Its Potential? Barriers to Deployment

  1. Bullish Forecast for Edge Computing:

    The global edge computing market size is projected to reach USD 155.90 billion by 2030 and register a CAGR of 38.9% from 2022 to 2030. The integration of artificial intelligence (AI) into the edge environment is expected to propel market expansion. An edge AI system can assist businesses in making quick decisions in real-time.

    Key Industry Insights & Findings from the report:

    The COVID-19 outbreak has bolstered the use of edge computing and data centers as more and more businesses are prioritizing the development of communications infrastructure.
    Based on component, the hardware segment captured a significant revenue share in 2021 due to the increasing number of IIoT and IoT devices. Edge cloud servers must have powerful routers that are flexible and able to handle a volume of incoming traffic while maintaining low latency.
    The Industrial Internet of Things (IIoT) applications segment dominated the global edge computing market in 2021 owing to the rampant digitization of services and the emergence of industry 4.0.
    Based on industry vertical, the energy and utility segment accounted for a revenue share of over 15% in 2021 as a result of the rising adoption of smart grids that mandates device edge infrastructure.
    Smart grids are being installed to aid alternative renewable power generation from sources such as wind and solar. Smart grids enhance operational efficiencies, including incorporation with smart appliances, real-time consumption control, and microgrids to support power generation from dispersed renewable sources.
    Geographically, Asia Pacific accounted for a significant market share due to the widespread development of connected device ecosystems in countries such as India and China.
    Read 254 page full market research report for more Insights, “Edge Computing Market Size, Share & Trends Analysis Report By Component, By Application, By Industry Vertical, By Region And Segment Forecasts From 2022 To 2030”, published by Million Insights.

    Edge Computing Market Growth & Trends

    Moreover, the necessity to reduce privacy breaches related to the transmission of massive volumes of data, as well as latency and bandwidth limitations that restrict an organization’s data transmission capabilities, is expected to drive market growth in the forthcoming years.

    Precision monitoring and machinery control are a few use cases that employ AI on the edge. A fast-moving production line needs the minimum amount of latency possible, which can be achieved by using edge computing. It can be very beneficial to move data processing close to the manufacturing facility because it can be accomplished with AI. Many different endpoint devices, including sensors, cameras, smartphones, and other Internet of Things (IoT) devices, can make use of artificial intelligence-based edge devices.

    Edge computing is currently in its early phases of development. Its operating and deployment models are still in their nascent stages; nonetheless, edge computing is anticipated to present considerable growth opportunities for new entrants in the coming years. As communications infrastructure continues to be developed, demand for edge computing will increase in the years following the COVID-19 pandemic. Working from home is gradually replacing traditional office work and the telecommunications industry is making strides in the development of video conferencing software.

    Prominent platforms such as Zoom and Microsoft Teams are creating new solutions to cater to the growing demand. For example, in December 2020, Amazon Web Services and SK Telecom collaborated to launch 5G MEC-based edge cloud services. Energy & utility, healthcare, agriculture, transportation & logistics, retail, telecommunication, and real estate industries are rapidly adopting edge computing as it improves application performance and results, lowers operational costs, and eliminates centralized storage and redundant transmission expenditures.

    https://www.prnewswire.com/news-releases/edge-computing-market-to-be-worth-155-90-billion-by-2030-million-insights-301683681.html

  2. Light Reading: Demand for edge computing is taking longer than expected to develop

    According to two giant US technology companies – data center operator Equinix and 5G provider Verizon – demand for edge computing seems to have stalled.

    Both companies have argued that they’re well positioned to provide speedy access to computing services via a geographically distributed network of data center locations. But both have also reported slower-than-expected demand for such edge services.

    “Equinix is the leading edge provider for use cases today, as it can cover over 80% of the US population with 10 milliseconds of latency,” noted the financial analysts at Wells Fargo in a report to investors, citing their recent conversation with Equinix’s VP of business development Jim Poole.

    However, the analysts argued that there’s not much demand for anything faster. “There are no material use cases today that require <10 milliseconds, which haven't necessitated Equinix to go deeper into the 'metro edge' (i.e. secondary or tertiary markets)," the analysts explained. "In other words, the challenge on moving deeper into the edge is not a technology issue, but rather an ecosystem one in which developers have not been able to create economic models around new use cases that require those types of low latencies. But Equinix is clearly watching closely and could potentially make a move deeper into secondary/tertiary markets if the opportunity presented itself."
    Equinix is one of the world's biggest data center operators with more than 200 sites around the world.

    Resetting expectations

    On edge computing, Verizon executives have made similar comments.

    "On the MEC [multi-access edge compute], what we are finding is demand is taking a little longer to go," explained Verizon Business CEO Sowmyanarayan Sampath during a recent investor event.

    He added that Verizon now expects to generate MEC revenues starting sometime late next year and into 2024.

    As noted by FierceTelecom, that timeline represents yet another delay for the operator. Verizon CEO Hans Vestberg said in 2020 that Verizon would generate meaningful revenues from MEC in 2022. Then, earlier this year, Verizon CFO Matt Ellis said the operator's public MEC business would generate "significant" revenues starting in 2023.

    "So it's going to take a little longer," Sampath said.

    Verizon, for its part, offers more than two dozen public edge computing locations scattered across the US via a deal with Amazon Web Services (AWS).

    Of course, the lack of widespread demand for edge computing hasn't stopped vendors from hyping the technology. For example, AWS touted its edge computing offerings during its recent re:Invent trade show, according to SDxCentral.

    And Ericsson – one of the world's biggest suppliers of 5G radios – recently wrote that edge computing ought to be a core component of future mixed reality (XR) services. "Without having a sufficiently densified network in terms of RAN [radio access network] and multi-access edge computing (MEC) with an optimized network configuration, wide-area and mobility-supporting XR will be difficult to deliver," Ericsson's Du Ho Kang wrote on the company's website, in outlining the potential networking implications of metaverse-style services.

    https://www.lightreading.com/the-edge/demand-for-edge-computing-is-taking-longer-than-expected-to-develop/d/d-id/782116?

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