Enterprises in Asia Pacific are projected to invest a staggering $43.7 billion in edge technologies in 2023, marking a substantial 17 percent increase compared to the previous year, as revealed by IDC’s latest Worldwide Edge Spending Guide.
This surge in edge spending is expected to maintain a steady growth trajectory, reaching an estimated $81 billion by 2027. Key drivers for this investment surge are the imperative need for low latency, real-time processing, and heightened operational efficiency across various applications within businesses and industries across the region.
Defining the Edge: IDC defines “edge” as technology-related actions conducted outside of the centralized datacenter. The edge serves as an intermediary between connected endpoints and the core IT environment. It is characterized by being distributed, software-defined, and flexible. The true value of the edge lies in moving computing resources to the physical location where data is created, significantly reducing the time to value and enabling instant business processes, decisions, and intelligence outside the core IT environment.
Strategic Focus on Mobile Edge and 5G: A strategic focus area in this surge is the integration of mobile edge with the burgeoning 5G network. IDC foresees the deployment of mobile edge nodes across the region, particularly in service providers (SPs), picking up momentum. A noteworthy aspect is the placement of some mobile edge nodes within 5G private wireless networks with single tenants, indicating a synergistic relationship between these two emerging technologies.
Dominant Edge Use Cases and Investments: Among the plethora of identified edge use cases, three categories are set to witness the largest investments in 2023: content delivery networks, virtual network functions, and multi-access edge computing (MEC). These foundational use cases will account for nearly 20 percent of all edge spending this year, particularly driven by service providers’ edge services offerings.
Innovations Driving Investment Growth: Prominent edge use cases driving spending growth over the forecast period (2022-2027) encompass product development in virtual reality, asset maintenance, logistics and package delivery management, and 360-degree educational video viewing. These are indicative of the dynamic landscape in which edge technologies are evolving and finding diverse applications.
Enterprises’ Objectives and Industries’ Participation: Enterprises’ primary objectives for investing in edge infrastructure are to reduce operational costs, enhance storage capacities, and bolster IT infrastructure security. From a sectoral standpoint, discrete and process manufacturing will spearhead investments in edge solutions for 2023, followed by state/local government and professional services. IDC projects a promising double-digit spending growth across all 19 industries profiled in the Spending Guide, led by service providers with a remarkable five-year compound annual growth rate (CAGR) of 21.2 percent.
Technological Dynamics and Geographic Outlook: In the realm of edge hardware spending, investments in edge gateways, servers, and network equipment will drive the sector. Connectivity services will dominate the services sector, representing nearly half of the services spending, followed by software as a service (SaaS) and support & deployment services. Looking at the geographic perspective, China (PRC) is poised to lead edge spending, contributing over 70 percent of the total spending in the region, with a five-year CAGR of 17.5 percent, followed by Asia/Pacific excluding Japan and China (APeJC).