AI-Led Edge Computing Spends to Reach $350B Soon

Artificial intelligence is turning everything it touches into a golden investment opportunity. Edge computing – which is set to play a pivotal role in deploying AI, according to International Data Corp. – is in line to receive $350 billion worth of investments by 2027.

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Enterprise and service providers will spend $232 billion on hardware, software and professional and provisioned services in 2024, says the IDC Worldwide Edge Spending Guide.

Edge computing acts as an intermediary between endpoints and the core IT environment. It brings cloud services closer to users for faster response times by reducing lag, and it allows companies to optimize bandwidth by processing data locally, sending only relevant information to central servers, which cuts costs.

In AI deployment, edge computing is a necessity. It processes data locally and reduces latency, which is crucial for real-time AI applications such as autonomous vehicles and facial recognition. Edge computing can enable AI functions without internet connectivity and distributes processing across multiple edge devices, which can help with scalability and load balancing.

Gartner predicted in a 2018 report on edge computing that more than 75% of enterprise-generated data would be created and processed outside the data center or cloud by 2025. The forecast is not far off the mark, as a September 2023 report from Accenture shows that about 65% of companies across more than a dozen industries currently use edge.

Edge computing reportedly takes up only 5% of AI makeup currently, but that is likely to change soon.

Original equipment manufacturers, software vendors and service providers are extending feature sets to enable AI in edge locations to take advantage of the market opportunity, said Dave McCarthy, research vice president of cloud and edge services at IDC.

North America will account for more than 40% of the forecasted spend, followed by Western Europe and China, the report says. China, and the Middle East and Africa region are likely to experience the fastest spending growth over the next five years.

Hardware will make up for nearly half of the investments to build out edge capabilities, driven by service provider infrastructure such as edge gateways, servers and network equipment. But provisioned services by enterprises will likely surpass the hardware share by 2026. Connectivity will represent the greatest share, and infrastructure as a service will be the fastest growth category. While on-premises software will be a critical component of edge infrastructure, IDC expects it to be the smallest category in terms of overall spending.

In the service provider industry, infrastructure spending for multi-access edge computing, content delivery networks and virtual network functions will make up for nearly 22% of all edge spending this year.

Enterprises prioritize spending on edge use cases such as augmented reality, production asset management, AI-augmented supply and logistics, augmented diagnosis and treatment systems, supply chain resilience, in-home remote patient monitoring and in-store contextualized marketing.

“Enterprise investments have continued to shift the past 24 months toward infrastructure expansion and greenfield deployments, said Marcus Torchia, research vice president of data and analytics at IDC. “And through it all, customer-facing new services and products and enabling new business processes are top enterprise drivers.”