Edge spending on track to hit $176 billion this year

Enterprises and service providers alike are preparing to spend big to unlock the benefits of edge computing.

IDC on Thursday predicted that global spending on hardware, software and services for edge solutions will reach $176 billion this year, up 14.8 percent on 2021. As momentum accelerates and more players want in on the market, spending is forecast to grow to $274 billion by 2025.

“In the service provider segment, a five-year compound annual growth rate (CAGR) of 21.6 percent reflects the edge infrastructure build-out 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,” said Marcus Torchia, research vice president at IDC’s customer insights and analysis division, in a research note.

Investments in hardware and services are expected to account for 85 percent of edge spending this year, IDC said, with the rest ploughed into software. When it comes to specific bits of hardware, edge gateways are predicted to lead the way, followed by compute and storage equipment.

In geographic terms, IDC said the US is expected to be the biggest spender at $76.5 billion this year. By comparison, Western Europe and China are expected to spend $30.6 billion and $20.8 billion respectively.

As for use cases, these vary according to whether you are an enterprise or an edge services provider. IDC reckons the two biggest use cases for edge services providers in 2022 will be content delivery networks and virtual network functions. Combined, these two use cases are predicted to generate $26 billion of the $38 billion of expected service provider spending on edge this year.

When it comes to enterprise use cases, the discrete and process manufacturing sectors are expected to spend a combined $33 billion on edge in 2022. Retail and professional services will spend more than $10 billion.

“Edge computing continues to gain momentum as digital-first organisations seek to innovate outside of the data centre,” said Dave McCarthy, research vice president, cloud and edge infrastructure services, 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.”

BT is one such company hoping to capitalise on the opportunity to help those so-called digital-first organisations. The telco has established a new division within its enterprise arm called ‘Division X’. It has been tasked with scaling up and commercialising BT’s 5G private networking, IoT and edge computing solutions.

On Thursday, BT appointed Marc Overton as managing director of Division X. He joins from IoT and enterprise networking specialist Sierra Wireless, where he served most recently as chief solutions officer and SVP of EMEA and APAC. Before that, he worked at Cisco’s IoT unit. He has also had stints at various mobile operators including EE and Three UK.

“I’m really excited to be leading a unit which will act as an innovation hub for our enterprise customers. We’ll be focused on turning emerging tech like 5G, IoT, edge and AI into solutions that we can scale, sell, and which will drive sustainable growth,” Overton said.

In light of IDC’s new edge predictions, one of Overton’s most pressing jobs might be to ensure that Division X has the budget needed to turn BT into a major player.