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Edge Computing
Overview
Edge computing refers to computing that takes place close to the source of data (i.e. the device that generates the data) by decentralizing data storage and processing. In contrast, cloud computing hinges on centralized data storage and processing. Edge computing generally complements cloud computing and is not likely to replace it. This is because not all information generated by devices needs to be processed in a time-sensitive manner, and therefore can continue to use the cloud for data storage so as to reduce the pressure on the edge data center.
Industry Updates
Market Sizing
The US Edge Computing market could reach USD 12.9 billion–19.4 billion by 2027
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Use cases
Edge computing-based solutions are commonly used across various industries, with the consumer discretionary and information technology sectors being particularly prominent. This specifically includes the diversified consumer services and specialty retail subsegments for consumer discretionary as well as the IT services subsegment under information technology.
The adoption levels were relatively high in product development, delivered through the faster processing speeds, reliability, and cybersecurity delivered by edge computing. Moreover, edge computing has commonly been used for data center management to optimize data center performance and help scale applications and websites through localized data hosting.
We have identified key edge computing use cases below:
Market Mapping
Most of the disruptors in the edge computing space typically specialize in a specific element of the value chain, while it is common for incumbents to offer both hardware and software for the edge. However, the data center market is dominated by disruptors, as many players specialize in offering hyperlocal to hyperscale data centers in key locations. That said, the software, platforms, and services segment has the highest number of disruptors, led by analytics and Internet of Things (IoT) edge software providers. The segment also includes data center software and edge application software. Meanwhile, the hardware segment comprises on-device hardware components as well as routers, servers, and processors.
Around half of the disruptors and watchlist companies identified in this report are in the early stage, with the remainder fairly evenly split between seed and growth stages.
Data center
Data center software
On-device hardware components
Edge IoT and analytics software
Routers, servers and other
Edge application and other software
The Disruptors
Data center startups remain the largest funded
The main disruptors we identified primarily offer data center related services (commonly colocation centers—where clients’ servers will be hosted and maintained in the data center providers’ facilities), hardware, and software. While disruptors are dispersed across the value chain, they typically focus on one core segment. Data center providers, including Vertiv, vXchnge, and DC Blox, feature among the highest funded disruptors, followed by software and hardware providers.
Funding History
Competitive Analysis
Incumbents
Partnerships with telcos and growth through acquisitions remain common
Leading cloud computing vendors play a critical role in the edge computing market as players such as Microsoft and Amazon offer their services across the value chain, and feature in each of the broad segments. This is in contrast to disruptors, which typically specialize in a given segment.
Most incumbents offer a range of products, including various software and platforms to assist users in adopting edge computing. Notably, IT hardware manufacturers such as Hewlett-Packard Enterprises (HPE) and Dell play a leading role in providing edge servers for the market, while players such as Google offer chips for devices, in essence making them edge devices.
It is common for cloud providers to collaborate with telcos to enhance their offerings. This was seen in leading telcos Verizon and AT&T choosing to form strategic partnerships with Google and Amazon as opposed to competing with them for cloud services. The partnerships are likely to offer synergies by combining the reach of telcos with the software, solutions, and data centers of edge computing incumbents. For instance, Google and AT&T partnered to benefit from Google’s technology (artificial intelligence, machine learning, edge computing, etc.) and AT&T’s network.
In addition to cloud providers, leading tech firms have also invested heavily in the edge computing market and offer a wider range of products. HPE has invested around USD 4 billion in the industry, which also has diversified conglomerates such as General Electric (GE).
Incumbents have used acquisitions as a main means of inorganic growth to enhance their existing offerings. For instance, GE acquired Bit Stew and Wise.io to improve the intelligence and machine learning capabilities of its Predix platform.
Notable Investors
