Edge computing market sizing forecast

Introducing STL Partners’ edge computing market sizing forecast

This report presents the key findings of STL Partners’ new demand forecast model for edge computing services. Its purpose is to:

  • Assess the demand from 20 use cases which currently rely on edge or will require edge to fully develop;
  • Identify the total revenue across the value chain: hardware, connectivity, application, edge infrastructure (network and on-premise), and integration and support;
  • Output a full set of results for over 180 countries over the 2020–2030 period per use case and per vertical.

This report is accompanied by a dashboard which presents a summary of our model output and the associated graphics for the world’s regions and for 20 major markets. The dashboard also presents the full revenue output for the 180+ countries.

Download the accompanying spreadsheet (Edge Insights subscribers only)

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Edge computing addressable revenue will reach US$543 billion by 2030

High-level findings from the model indicate that:

  • The growth in the number of connected devices, as well as the need for higher levels of automation, operational efficiency and cost reduction, will drive the adoption of edge computing across many use cases and verticals over the next 10 years. This will result in increased spend across the value chain.
  • The total edge computing addressable market will grow from US$10 billion in 2020 to US$543 billion in 2030 at a CAGR of 49% over the 10-year period.
  • The total value chain breaks into five main components which are hardware, connectivity, application, integration & support, in addition to the edge infrastructure which includes both on-prem edge and network edge.

Total edge computing addressable revenue

Edge computing

Source: STL Partners

Table of contents

  • Executive Summary
  • Methodology
  • Revenue by value chain component
  • Revenue by use case
  • Revenue by vertical
  • Revenue by region
  • Appendix

For more information on STL Partners’ edge-related services, please go to our Edge Insights Service page.

The new forecast is intended to complement:

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Building telco edge infrastructure: MEC, Private LTE and VRAN

Reality check: edge computing is not yet mature, and much is still to be decided

Edge computing is still a maturing domain. STL Partners has written extensively on the topic of edge computing over the last 4 years. Within that timeframe, we have seen significant change in terminology, attitudes and approaches from telecoms and adjacent industries to the topic area.  Plans for building telco edge infrastructure have also evolved.

Within the past twelve months, we’ve seen high profile partnerships between hyperscale cloud providers (Amazon Web Services, Microsoft and Google) and telecoms operators that are likely to catalyse the industry and accelerate route to market. We’ve also seen early movers within the industry (such as SK Telecom) developing MEC platforms to enable access to their edge infrastructure.

In the course of this report, we will highlight which domains will drive early adoption for edge, and the potential roll out we could see over the next 5 years if operators move to capitalise on the opportunity. However, to start, it is important to evaluate the situation today.

Commercial deployments of edge computing are rare, and most operators are still in the exploration phase. For many, they have not and will not commit to the roll out of edge infrastructure until they have seen evidence from early movers that it is a genuine opportunity for the industry. For even more, the idea of additional capex investment on edge infrastructure, on top of their 5G rollout plans, is a difficult commitment to make.

Where is “the edge”?

There is no one clear definition of edge computing. Depending on the world you are coming from (Telco? Application developer? Data centre operator? Cloud provider? etc.), you are likely to define it differently. In practice, we know that even within these organisations there are differences between technical and commercial teams around the concept and terminology used to describe “the edge”.

For the purposes on this paper, we will be discussing edge computing primarily from the perspective of a telecoms operator. As such, we’ll be focusing on edge infrastructure that will be rolled out within their network infrastructure or that they will play a role in connecting. This may equate to adding additional servers into an existing technical space (such as a Central Office), or it may mean investing in new microdata centres. The servers may be bought, installed and managed by the telco themselves, or this could be done by a third party, but in all cases the real estate (e.g. the physical location as well as power and cooling) is owned either by the telecoms operator, or by the enterprise who is buying an edge-enabled solution.

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Operators have choice and a range of options for where and how they might develop edge computing sites. The graphic below starts to map some of the potential physical locations for an edge site. In this report, STL Partners forecasts edge infrastructure deployments between 2020 and 2024, by type of operator, use-case domains, edge locations and type of computing.

There is a spectrum of edge infrastructure in which telcos may invest

mapping edge infrastructure investmentSource: STL Partners

This paper primarily draws on discussions with operators and others within the edge ecosystem conducted between February and March 2020. We interviewed a range of operators, and a range of job roles within them, to gain a snapshot of the existing attitudes and ambitions within the industry to shape our understanding of how telcos are likely to build out edge infrastructure.

Table of Contents

  • Executive Summary
  • Preface
  • Reality check: edge computing is not yet mature, and much is still to be decided
    • Reality #1: Organisationally, operators are still divided
    • Reality #2: The edge ecosystem is evolving fast
    • Reality #3: Operators are trying to predict, respond to and figure out what the “new normal” will be post COVID-19
  • Edge computing: key terms and definitions
    • Where is “the edge”?
    • What applications & use cases will run at edge sites?
    • What is inside a telco edge site?
  • How edge will play out: 5-year evolution
    • Modelling exercise: converting hype into numbers
    • Our findings: edge deployments won’t be very “edgy” in 2024
    • Short-term adoption of vRAN is the driving factor
    • New revenues from MEC remain a longer-term opportunity
    • Short-term adoption is focused on efficient operations, but revenue opportunity has not been dismissed
  • Addressing the edge opportunity: operators can be more than infrastructure providers
  • Conclusions: practical recommendations for operators

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