IDC trims edge compute forecast, but the future is still bright

While that represents a healthy 14% increase on 2023, it is nonetheless slightly lower than IDC's earlier forecast of $232 billion, which was published in March.

Furthermore, the research firm last February predicted that edge spending in 2023 would total $208 billion. However, if this latest forecast for 2024 spending represents a 14% uptick on last year's figure, it means that actual spending for 2023 was $200 billion, slightly less than what IDC predicted.

This suggests that IDC's predictions when it comes to edge are pretty close to the mark, albeit perhaps slightly on the optimistic side.

That might be because there is good cause for optimism.

Thanks partly to AI fever, demand for edge compute infrastructure is expected to be very healthy for the foreseeable.

Indeed, while training large language models (LLMs) for AI applications requires large data centres and supercomputers to do all the number crunching, actually putting a trained AI to use in the real world is not as intensive.

However, its performance would nonetheless benefit from low latency connectivity, and its appeal strengthened if customers know they can host AI applications close to or on-premises. This is where edge compute comes in.

"This trend not only optimises operation efficiencies but also fosters new business models that were previously not possible with centralised infrastructure," said Dave McCarthy, research vice president, cloud and edge services, at IDC. "Distributing applications and data to edge locations enables faster decision-making with reduced network congestion."

In terms of industry verticals, manufacturing is expected to account for the largest proportion of edge spending, thanks to demand for real-time monitoring of equipment and processes, plus AI-enabled predictive maintenance. Utilities are similarly keen to leverage edge to help with critical infrastructure monitoring and smart grid management.

Banking is the fastest-growing segment though, again thanks to AI, which is being put to use to improve data processing, fraud detection, and customer interaction.

"Enterprises are now accelerating their investments in edge and AI to drive real-time analytics, automation, and enhanced customer experiences, particularly in manufacturing, utilities, healthcare, and retail. Key technologies like AI-powered devices, edge servers with GPUs, and 5G connectivity are gaining traction, enabling organisations to process data closer to the source and achieve higher performance," said Alexandra Rotaru, IDC's manager of data and analytics, Europe.

In addition to these enterprise verticals, service providers are expected to spend heavily on edge compute infrastructure, using it for content delivery networks, virtual network functions, and multi-access edge computing (MEC).

"In this journey, the service providers will play a critical role by offering tailored solutions, from infrastructure deployment to AI integration and edge management, helping enterprises seamlessly adopt edge and AI and unlock its full potential for advanced innovation," she said.

Propelled by these use cases, IDC reckons that global spending on edge compute will surge to almost $378 billion by 2028.

Kit makers, software vendors and managed services providers will be hoping that this particular, longer-term forecast from IDC doesn't prove to be too optimistic as well.