Edge Data Center Market Size, Share & Trends Analysis Report By Component (Solution, Service), By Facility Size (Small & Medium, Large), By End-use (BFSI, Government), By Region, And Segment Forecasts, 2023 - 2030

Edge Data Center Market Size & Trends

The global edge data center market size was valued at USD 9.36 billion in 2022 and is expected to grow at a compound annual growth rate (CAGR) of 18.4% from 2023 to 2030. Global demand for edge data centers is expected to increase as more industries are adopting emerging technologies such as the Internet of Things (IoT), big data, artificial intelligence, cloud, streaming services, and 5G. These technologies generate a high volume of data in the network, creating new performance and computing demands for data centers, which is ultimately driving the demand for edge data center solutions and services. In addition, the demand for low operating costs, real-time data analysis, reduced network traffic, improved application performance, and business agility will accelerate the growth of the edge data center industry.

The COVID-19 pandemic had a positive impact on the edge data center market. Increased corporate awareness regarding the benefits of edge computing services, increased pressure to provide more secure and robust IT environments, as well as the establishment of local data centers throughout the regions, have all contributed to the data center industry growth. In addition, the growing popularity of over-the-top (OTT) platforms and e-commerce has promoted the utilization of edge data centers. To provide an optimal user experience, OTT services such as Netflix, Disney+, and Amazon Prime rely on fast and reliable content delivery.

Edge data centers can provide localized processing and storage resources that minimize latency and increase performance, ensuring customers have a seamless streaming experience. For instance, e-commerce platforms such as Amazon.com Inc, Alibaba Group Holding Limited, and Walmart rely on timely and dependable customer delivery. Edge data centers can help support these platforms by offering localized processing and storage resources, which reduce delivery times and enhances inventory management.

For instance, in October 2021, Schneider Electric, an automation and energy management company, introduced a new range of edge data center solutions. These solutions include pre-integrated small data centers that are easy to set up and can be deployed in a wide range of settings, including branch offices, production floors, and remote sites.

Edge data centers reduce latency by managing and storing data closer to the edge by facilitating real-time data processing applications such as industrial automation, autonomous automobiles, and video streaming. Several AI applications, such as speech and image recognition, machine learning, and natural language processing, are being implemented by edge data centers. Organizations aim to enhance speed and cut costs by processing data closer to the edge, thereby reducing the amount of data that needs to be transmitted to central data centers for processing.

For instance, in May 2022, Dell Technologies submitted results to ML Perf Inference v2.0 benchmark suite that provides solutions for measuring how fast systems operate in various deployment scenarios. The Dell PowerEdge XR 12 and PowerEdge XE2420 servers are designed for workloads that involve edge computing. The design criteria are based on real-world scenarios such as severe dust, heat, and vibration from factory floors. This server is created for high-performance edge applications including streaming analytics, manufacturing logistics, 5G cell processing, and other AI applications. To address the demand for low-latency data processing and edge computing capabilities, several companies are introducing new products and services in the edge data center industry, which is expected to expand rapidly in the forecasted period.

Health safety compliances and mandatory containment measures have put huge pressure on remote operations in several industries, such as automotive, manufacturing, retail, and logistics. For instance, numerous automotive companies, such as Fiat Chrysler, Ford, and GM, had shut down their centers and operations across Europe and North America. This has resulted in the demand for edge computing solutions to support remote monitoring across these industries.

North American edge data centers are expanding significantly because of the rising demand for data processing and storage that is more rapid and reliable. In North America, several large companies, including Equinix Inc., EdgeConneX Inc., and vXchnge, are making significant investments in edge data centers. For instance, with a focus on delivering localized data processing and storage capabilities, Equinix, Inc. has been growing its edge data center presence across the U.S. Additionally, there has been an increase in the use of modular data centers, which are ideal for edge computing applications as they can be quickly deployed and easily scaled.

Component Insights

In terms of components, the edge data center market is segmented into solutions and services. The solution segment accounted for the largest revenue share of 87.7% in 2022. It is expected to continue to dominate the edge data center industry over the forecast period. The solution segment includes hardware & software solutions such as networking equipment, IT racks & enclosures, DCIM software, and data center analytics solutions.

Factors such as the emergence of next-generation DCIM offerings, the rise in data center workloads during COVID-19, and the need to improve data center energy efficiency are driving the demand for edge data center solutions. Hardware solutions are placed on-site or in a third-party data center and tailored to a company's unique requirements. The software manages and coordinates processing and data storage in edge data centers. This can include software-defined networking systems, data analytics tools, and applications that enable real-time data processing.

The service segment is anticipated to witness the highest growth rate of 20.3% during the forecast period. The service segment is bifurcated into professional services and managed services. Edge data center professional services improve service delivery, simplify IT operations, and enable cloud initiatives. It includes services such as integration & implementation and consulting services. Managed and professional services facilitate the efficiency of edge data centers by tracking and analyzing system performance, identifying roadblocks, and putting standard procedures into action. By outsourcing the operation and maintenance of its edge data center solutions, managed and professional services are helping organizations to reduce costs by freeing up internal resources and decreasing the requirement for specialized IT workers.

Facility Size Insights

The large facility segment held the largest revenue share of 79.3% in 2022. Facilities with 12-49 racks or more and a power draw of 12 to 14 kW/rack or cabinet fall under the large facility segment. As they easily expand and support an organization's data center capabilities, these large facility data centers are perfect for businesses with several branch offices. They are also ideal for reducing space, deploying quickly, and offering ways to cut costs.Edge data centers are designed to be smaller and more localized than standard data centers.  However, the growing demand for faster and more efficient data processing and storage, as well as the trend toward distributed computing, are projected to accelerate the rise of edge data centers in future years.

On the other hand, the small and medium facility segment is expected to witness the highest growth rate of 19.2% during the forecast period. In the upcoming years, SMEs are anticipated to rapidly adopt edge data center solutions since they are undergoing firm digitization and providing online services, both of which require intensive data applications. Thus, demand for small and medium-edge data centers is expected to increase during the forecast period. Small and medium-sized edge data centers are more cost-effective in comparison to traditional data centers owing to their smaller size and localized nature. This can be particularly beneficial for small and medium-sized businesses that require data processing and storage capabilities but have limited resources.

End-use Insights

Based on the end-use industry, the global edge data center market is segmented into manufacturing & automotive, IT & telecom, BFSI, government, healthcare & life science, retail & E-commerce, gaming & entertainment, and others. The IT & telecom segment held the largest revenue share of 39.6% in 2022 and is expected to maintain its position over the forecast period. With the introduction of various technologies such as IoT, 5G, augmented and virtual reality, and AI/ML, the IT & telecom sector is growing to meet the needs of large data processing and low latency. Thus, to meet these demands IT & telecom data centers are going through a transformation to handle low latency and high data volume needs, which is ultimately driving the demand for edge data centers.

The manufacturing & automotive sector is expected to witness the highest growth rate of 20.9% during the forecast period. Increasing adoption of technologies such as 5G and edge computing in the automotive sector as they can provide high bandwidth, low latency, and mobile applications in a reliable and secure manner, is the major factor behind the segment growth. Edge data centers advance automation in the manufacturing and car industries by offering real-time analysis and control of connected equipment and systems. This can help to eliminate human error, increase efficiency, and improve safety.

Edge data centers can be utilized to improve supply chain management in the automotive and industrial industries. For instance, edge data centers can provide insights into the location of various items, their condition, and performance by analyzing data from sensors and other connected devices in real-time, allowing businesses to optimize logistics and decrease costs.

Regional Insights

North America dominated the edge data center market with a share of 33.1% in 2022 and is anticipated to retain its position over the forecast period. The high adoption of edge data center solutions and services in this region is the major factor behind the market growth. In addition, North America has prominent edge data center solutions and service providers, which makes North America a promising region for the market.

The region is likely to witness significant growth owing to the growing commercialization and deployment of 5G networks. North America's growth is attributed to the growing adoption of edge data centers for various reasons, including the requirement to serve future technologies such as 5G, IoT, and AI, which demand low latency and high bandwidth connections. Edge data centers can lower latency by directly bringing data processing and storage resources to end users, substantially boosting application and service performance.

Asia Pacific is anticipated to grow at the highest CAGR of 19.3% during the forecast period. The market for edge data centers in this region is driven by the rise in investments in the IT sector, the growth of end-use industries, and the vast presence of edge computing companies such as Huawei Technologies Co., Ltd, and Fujitsu. One of the primary drivers of edge data center adoption in the Asia Pacific is the region's huge population and rapid urbanization. The demand for faster and more reliable connectivity grows as more people relocate to cities and prefer digital services. Edge data centers can address the demand by bringing storage and computational resources closer to end-users, reducing latency, and improving software and service quality.

Key Companies & Market Share Insights

The edge data center industry has a fragmented competitive landscape as it features various global and regional market players. Leading industry players are undertaking strategic initiatives such as product launches, collaborations, and partnerships to survive the highly competitive environment and expand their business footprints. For instance, in June 2022, Cisco Systems Inc. and Kyndryl announced a technology collaboration to aid enterprise customers to increase their transformation into data-driven businesses powered by Kyndryl-managed services and Cisco solutions.

By utilizing cloud computing technologies that simplify difficult hybrid IT management with increased manageability, visibility, and flexibility, Cisco Systems Inc. and Kyndryl will work together to assist businesses in transforming their operations. In addition, in October 2021, to support the acceleration of HPE's edge-to-cloud strategy, Hewlett Packard Enterprise Development LP announced strategies to extend its venture financing program, Hewlett Packard Pathfinder. Over the upcoming year, Pathfinder aims to considerably increase the rate of its investments, beginning with new investments that address three important client challenges such as cloud, edge, and data. Some prominent players in the global edge data center market include:

• ATC IP LLC

• Cisco Systems Inc.

• Dell Inc.

• Eaton

• EdgeConneX Inc.

• Endeavor Business Media, LLC.

• Fujitsu

• Hewlett Packard Enterprise Development LP

• Huawei Technologies Co., Ltd.

• IBM

• NVIDIA Corporation

• Schneider Electric

• Vertiv Group Corp.

• CommScope

• 365 Data Centers

Edge Data Center Market Report Scope

Global Edge Data Center Market Report Segmentation

This report forecasts revenue growth at global, regional, and country levels and provides an analysis of the latest industry trends in each of the sub-segments from 2018 to 2030. For the purpose of this study, Grand View Research has segmented the global edge data center market report based on component, facility size, end-use, and region:

• Component Outlook (Revenue, USD Billion, 2018 - 2030)

  • Solution

    • Hardware

    • Software

  • Service

    • Professional

    • Managed

• Facility Size Outlook (Revenue, USD Billion, 2018 - 2030)

  • Small And Medium Facility

  • Large Facility

• End-use Industry Outlook (Revenue, USD Billion, 2018 - 2030)

  • IT And Telecom

  • BFSI

  • Healthcare And Lifesciences

  • Manufacturing & Automotive

  • Government

  • Gaming And Entertainment

  • Retail And E-Commerce

  • Others

• Regional Outlook (Revenue, USD Billion, 2018 - 2030)

  • North America

    • U.S.

    • Canada

  • Europe

    • U.K.

    • Germany

    • Italy

    • France

    • Spain

  • Asia Pacific

    • China

    • India

    • Japan

    • Australia

    • South Korea

  • Latin America

    • Brazil

    • Mexico

    • Argentina

  • Middle East & Africa

    • UAE

    • Saudi Arabia

    • South Africa