Managed edge services revenue expected to hit $2.8 billion by 2025

Telcos, network vendors, hyperscalers and IT providers have been working overtime to hype up multi-access edge computing (MEC), and that excitement is trickling down to the enterprise market.

New stats published by IDC on Monday predict that managed edge services revenue will reach $445.3 million this year, up 43.5 percent on 2020. By 2025, it expects revenue to hit $2.8 billion, representing an impressive compound annual growth rate (CAGR) of 55.1 percent over the 2021-25 forecast period.

With enterprises keen to offer compelling new services – and under constant pressure to improve internal processes – it is little wonder they are keen on MEC, which has been positioned as the technology that will enable low-latency, or even real-time connected applications.

“Managed edge services represent a significant monetisation opportunity for service providers to capitalise on their investment in edge compute,” said Ghassan Abdo, research vice president, worldwide telecom, virtualisation and CDN, at IDC.

That investment is already sizeable and growing strongly. Earlier this month, Dell’Oro shared its prediction that spending on servers and packet core user plane functions for MEC deployments will grow at a CAGR of 140 percent over the next five years, with cumulative MEC investments coming in at $11 billion.

When it comes to managed edge services, competition is expected to be fierce, with those aforementioned telcos, network vendors, hyperscalers and IT providers all wanting a piece of the action.

“Service providers are keenly aware of the potential impact of the edge on their current market position and are watching closely for unforeseen competition from adjacent markets and new disruptors,” Abdo said. “Technology vendors including network equipment providers (NEPs) and software, data centre, and networking vendors are vying to shape this market and play a significant role in delivering innovative edge services.”

Deals and partnerships abound too, as players coming from different areas of the market look to tap one another’s respective strengths. June was a particularly busy month: Vodafone outsourced its European MEC infrastructure to Amazon Web Services (AWS); Ericsson and Google agreed to collaborate on edge solutions for mutual benefit; and AT&T decided it was better off selling its Network Cloud technology to Microsoft.

In terms of enterprise edge deployment models, IDC is tracking what it thinks will be the big three. First up is on-premises, which as the name suggests is when the edge infrastructure is installed in the customer’s office or factory or whatever. This lends itself to extremely low-latency applications like mixed reality, and industrial and healthcare use cases. This is expected to be the fastest-growing segment, with a CAGR of 74.5 percent in the five years to 2025.

Next up is the service provider edge deployment, where the kit is rolled out at the edge of the telco network, whether that be fixed or mobile. IDC reckons this type of deployment model will support a broad range of sector-specific connectivity services. The CAGR forecast here is 59.2 percent.

The third and final deployment model concerns content delivery network (CDN) PoPs and edge locations. This has the potential to usher in a new age of highly-personalised, interactive media services, apparently, and will show a CAGR of 41.9 percent.

Partnerships and new technology are good for hype but only really offer a small hint at what the overall MEC market might look like. End-user demand is what really matters, and based on IDC’s forecast, the market is looking healthy.