AI hype is expected to fuel a global surge in spending on edge compute infrastructure and related services.

Nick Wood

March 15, 2024

2 Min Read

According to new forecasts from IDC, spending this year is expected to come in at an impressive $232 billion, an increase of 15.4 percent on last year.

Of that total, investments in infrastructure for multi-access edge computing (MEC), content delivery networks, and virtual network functions (VNFs) – very much telecoms-related stuff – will account for around 22 percent, which equates to just over $51 billion.

IDC expects edge spending to sustain strong growth over the years to come, reaching $350 billion by 2027.

Unsurprisingly, the telecom and tech sector's current obsession with all things AI extends to edge.

"Edge computing will play a pivotal role in the deployment of AI applications," said Dave McCarthy, research vice president, cloud and edge services at IDC. "To meet scalability and performance requirements, organisations will need to adopt the distributed approach to architecture that edge computing provides. OEMs, ISVs, and service providers are taking advantage of this market opportunity by extending feature sets to enable AI in edge locations."

In terms of enterprise use cases, IDC identifies augmented reality-enhanced maintenance (known simply as augmented maintenance), production asset management, AI-augmented supply and logistics, augmented diagnosis and treatment systems, supply chain resilience, in-home remote patient monitoring, and in-store contextualised marketing as those that will see large investments and rapid growth throughout the forecast period.

Emerging use cases that are expected to see the fastest spending growth include autonomous mining operations, site design and management, pipeline inspection, augmented training, and expert shopping advisors and product recommendations.

"Enterprise investments have continued to shift the past 24 months toward infrastructure expansion and greenfield deployments," said Marcus Torchia, research vice president, data and analytics, at IDC. "Companies are acting on plans to build more robust local computing infrastructure capabilities. And through it all, customer-facing new services and products and enabling new business processes are top enterprise drivers."

Connectivity and edge compute go hand-in-hand, given that one of the principle benefits is lower latency due to apps and data being physically closer to end users. On that note, IDC expects connectivity and infrastructure-as-a-service (IaaS) to claim the lion's share of spending on provisioned edge services by 2026.

From a geographic point of view, North America is expected to account for 40 percent of edge compute spending over the forecast period, followed by Western Europe and China respectively. In terms of fastest-growing regions, IDC expects these to be China and the Middle East and Africa (MEA), achieving CAGRs of 16.2 percent and 15.3 percent respectively.

With Dell'Oro this week painting a gloomy picture for the worldwide global telecoms equipment market, despondent vendors might want to try and find a means of capitalising on edge compute.

About the Author(s)

Nick Wood

Nick is a freelancer who has covered the global telecoms industry for more than 15 years. Areas of expertise include operator strategies; M&As; and emerging technologies, among others. As a freelancer, Nick has contributed news and features for many well-known industry publications. Before that, he wrote daily news and regular features as deputy editor of Total Telecom. He has a first-class honours degree in journalism from the University of Westminster.

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