New IDC spending guide forecasts double-digit growth for investments in edge computing

NEEDHAM, Mass. – Worldwide spending on edge computing is expected to be $176 billion in 2022, an increase of 14.8% over 2021. Enterprise and service provider spending on hardware, software, and services for edge solutions is forecast to sustain this pace of growth through 2025 when spending will reach nearly $274 billion, according to the International Data Corporation (IDC) Worldwide Edge Spending Guide.

Edge is the foremost technology infrastructure that extends and innovates on the capabilities found in core datacenters, whether they are enterprise or service provider owned. The value of edge is the movement of computing resources to the physical location where data is created, dramatically reducing time to value and the instant enablement of business processes, decisions, and intelligence outside of the core IT environment. IDC defines edge 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. Characteristically, edge is distributed, software defined, and flexible.

"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. In total, service providers will invest more than $38 billion in enabling edge offerings this year.

For enterprise adopters, the edge use cases with the largest investments in 2022 include manufacturing operations, production asset management, smart grids, omni-channel operations, public safety & emergency response, freight monitoring, and intelligent transportation systems. Use cases that will see the fastest spending growth over the 2020-2025 forecast include public infrastructure maintenance, network maintenance, anatomy diagnostics, and AR assisted surgery.

Across enterprise end user industries, discrete and process manufacturing combined will invest $33.6 billion in edge solutions this year. Retail and professional services will also see spending of more than $10 billion on edge computing in 2022 while all 19 industries profiled in the Spending Guide will experience double-digit spending growth over the five year forecast period.

"In the service provider segment, a five-year compound annual growth rate (CAGR) of 21.6% reflects the edge infrastructure buildout underway to deliver edge cloud services. For enterprise edge technology buyers, growing at a 14.1% 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, Customer Insights & Analysis group.

IDC expects hardware and services spending will account for 85% of all edge spending in 2022 with the remainder going to software. Hardware spending will be led by investments in edge gateways, which feature low-power components designed for running limited or single functions in environments where power and cooling availability is limited. Investments in compute and storage assets adapted for edge locations or deployment will grow at a faster rate and will nearly equal spending on edge gateways by the end of the forecast period. Services spending, comprised of professional and provisioned services, will grow at a faster rate than the other two groups with a five-year CAGR of 19.6%. By 2025, services will account for nearly 50% of all edge spending led by investments in provisioned services, including connectivity and edge-related infrastructure, platform, and software as a service (IaaS, PaaS, and SaaS). Software spending will primarily be allocated toward system infrastructure and security software with analytics & AI software seeing faster growth within the group.

From a geographic perspective, the United States will be the largest investor in edge solutions with spending forecast to reach $76.5 billion in 2022. Western Europe and China will be the next largest regions with spending totals of $30.6 and $20.8 billion, respectively. China will see the fastest spending growth over the five-year forecast with a CAGR of 19.7%, followed by Latin America at 19.4%.

"The European edge market has developed significantly in the last couple of years and is expected to nearly double in value over the forecast period," said Alexandra Rotaru, research analyst with IDC's European Customer Insights & Analysis group. "With nearly 30% of European organizations planning to start using edge technologies in the next two years and going beyond the pilot phase, solutions related to smart buildings, manufacturing operations, or production asset management will become more prevalent."

The IDC Worldwide Edge Spending Guide quantifies the edge computing market by forecasting enterprise and service provider spending across 17 technology markets, six technology domains, 19 industries, and nine geographic regions. This version (V2 2021) of the Spending Guide also includes 50 new use cases that were segmented across various industries and domains bringing the total number of named use cases to 155.