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The Edge Data Center market is projected to reach a value of USD 22.11 billion, with a Compound annual growth rate (CAGR) of 23.57% between 2023 and 2028. Market growth is propelled by increasing mobile data traffic, driven by digitalization and IoT devices across various industries. Vendors develop edge computing platforms to manage data at the network edge, enhancing efficiency and reducing costs. Hewlett Packard Enterprise launches the HPE Edgeline EL8000 to process real-time data for communication service providers.
Consolidation of edge data centers emerges as a trend for cost reduction and enhanced security. Enterprises adopt high-density storage solutions and virtualization to reduce server numbers and operate in green colocation facilities, positively impacting market growth across industries.
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This market trends and analysis report extensively covers market segmentation by end-user (IT and telecommunication, manufacturing and automotive, BFSI, healthcare and life sciences, and others), component (IT infrastructure, general construction, power management systems, cooling systems, and others), and geography (North America, APAC, Europe, South America, and Middle East and Africa). It also includes an in-depth analysis of drivers, trends, and challenges. Furthermore, the report includes historic market data from 2018 - 2022.
The market share growth by the IT and telecommunication segment will be significant during the forecast period. The market segment for BFSI refers to the utilization of edge information centers specifically tailored to meet the requirements and challenges faced by the BFSI industry. Centers are smaller-scale facilities located closer to end-users and provide low-latency, high-performance computing capabilities at the edge of the network.
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The IT and telecommunication segment was the largest and was valued at USD 1.60 billion in 2018. In the BFSI sector, centers are employed to support a variety of critical applications and services, such as real-time transaction processing where the centers enable fast and secure processing of financial transactions, ensuring minimal latency and improving overall customer experience. Hence, the demand in the BFSI sector is driven by the need for improved performance, compliance with regulatory requirements, and enhanced data security. As the industry continues to digitize and adopt technologies such as cloud computing, artificial intelligence, and the Internet of Things (IoT), the importance of the market is expected to grow further in supporting BFSI operations during the forecast period.
In the market, the IT infrastructure segment plays a crucial role. IT infrastructure refers to the hardware, software, network components, and systems that are required to support and operate information technology services within an organization or information center environment. In addition, networking infrastructure forms a critical part to ensure efficient data transfer and connectivity. This includes switches, routers, firewalls, load balancers, and other network components that facilitate data transmission between the center, core information centers, and end-user devices. The IT infrastructure segment within the market is driven by the increasing demand for low-latency and high-bandwidth applications such as IoT, edge computing, content delivery, and real-time analytics. As more organizations and service providers adopt edge computing strategies, the need for robust and scalable IT infrastructure at the edge will continue to grow in the forecast period.
The Edge Data Center Market experiences robust growth driven by increasing mobile data traffic and the need for efficient data processing closer to end-users. A notable trend is the consolidation of edge data centers, streamlining operations, and optimizing resources across multiple locations. However, challenges arise in monitoring edge data center equipment dispersed over diverse geographical areas.
Industries such as streaming services, e-commerce platforms, and autonomous automobiles heavily rely on edge data centers to manage network traffic and ensure seamless operations. Modular data centers equipped with hardware and software solutions cater to diverse industry needs, from manufacturing and retail to logistics and healthcare.
To address challenges, automation and energy management companies offer solutions like DCIM software and data center analytics, enhancing efficiency and performance. Professional and managed services play a crucial role in supporting edge data center workloads and ensuring optimal energy efficiency. Overall, the edge data center market thrives on innovation and adaptation to evolving industry demands across various sectors.
The surge in mobile data traffic notably propels market growth. The rise in digitalization, the increasing adoption of automation technologies across various industries, and the growing usage of social networking platforms and IoT devices contribute to the exponential increase in mobile data traffic. Establishing a center in a hotspot of emerging Internet traffic can alleviate congestion and enhance service speed in specific locations. Market vendors are actively developing and introducing new edge computing platforms to enhance clients' data management capabilities at the network edge.
For instance, in February 2021, Hewlett Packard Enterprise Development unveiled the HPE Edgeline EL8000 Converged Edge System, tailored for communication service providers (CSP) to process vast volumes of data in real time at the edge, leveraging open standards to enhance flexibility and reduce costs. Consequently, the rising mobile data traffic is anticipated to positively influence market growth throughout the forecast period.
Consolidation of edge data centers is an emerging trend shaping market growth. There are many reasons for enterprises to consider consolidation projects, mainly for cost reduction. Increased OPEX through high power consumption and carbon emission is expected to lead to more consolidation in the future. Consolidation helps in cost savings by up to 30%, enhanced security by up to 35%, improved efficiency by 50%, and reduced power consumption by 55%. Many enterprises are involved in consolidating existing facilities, moving their operations to colocation centers, and adopting cloud-based services. The consolidation of information centers commenced a few years ago.
Moreover, center consolidation is gaining traction with the growing adoption of new strategies like high-density storage solutions and server and storage virtualization. These consolidation initials reduce the number of servers operated and enable the operation of these infrastructures in wholesale collocation facilities, which are being constructed to be green information centers. Introducing these green information centers will have a positive effect on market growth and trends during the forecast period.
Monitoring edge data center equipment across multiple locations is a significant challenge hindering market growth. Monitoring equipment across multiple locations is difficult because edge sites house their own power and cooling systems. Maintaining an accurate inventory of all assets across these sites requires real-time views of cabinet equipment, such as servers, networking equipment, PDUs, and patch panels, as well as infrastructure devices and structured cabling. To address this challenge, end-users need a dashboard to check real-time power and environment status on a single screen. This information provides advance warning of issues such as hot spot formation, power capacity limitations, and loss of redundancy.
In addition, NOC requires proactive and preventive management to monitor the IT equipment housed inside the information center. Deploying proactive management solutions at multiple locations of the center can adversely affect the IT racks & enclosures budget allocated by the client. Thus, the effective monitoring of equipment across multiple locations is a challenge for operators in the forecast period.
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North America is estimated to contribute 48% to the growth of the global market during the forecast period. Technavio’s analysts have elaborately explained the regional trends and drivers that shape the market during the forecast period. The market in this region is primarily driven by the increasing adoption of cloud services by enterprises across industries in the US and Canada. Enterprises are opting for cloud solutions to reduce the operating and capital expenditure incurred by on-premises information centers. Enterprises are increasingly adopting cloud solutions from hyper-scale providers such as AWS, Microsoft, and Oracle to meet the computing capacity requirements with minimum expenditure. Also, the region has several information centers already established by enterprises. For instance, Apple Inc. (Apple) has all 11 data centers, of which six are located in this region. The demand in North America is also propelled by the rise in the adoption of high-performance computing (HPC) systems by industries such as government, BFSI, healthcare, and others.
Furthermore, real-estate enterprises are supporting the growth of the market in North America. The US, followed by Canada, has been at the forefront of driving the adoption of new technologies, and this trend is expected to continue during the forecast period. It is also likely to drive the market in North America during the forecast period.
The market forecasting report includes the adoption lifecycle of the market, covering from the innovator’s stage to the laggard’s stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the market growth and forecasting report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their growth strategies.
Customer Landscape
Companies are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.
365 Data Centers - The company offers network connectivity, colocation, and managed hosting services.
Compass Datacenters LLC - The company offers information centers that design, install, and provide maintenance support for more than 200 major cloud and content provider telecom shelters.
DC BLOX Inc. - The company offers information centers which are built to a tier III basis of design and come with 100 percent power service level guarantee.
The market growth analysis report also includes detailed analyses of the competitive landscape of the market and information about 20 market companies, including:
Qualitative and quantitative analysis of companies has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize companies as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize companies as dominant, leading, strong, tentative, and weak.
The market is witnessing unprecedented growth, driven by the surge in big data and the demand for real-time data analysis. Edge data center solutions and services cater to diverse industries, optimizing application performance, enhancing business agility, and ensuring a seamless streaming experience. Major players like Amazon, Alibaba Group Holding Limited, and Walmart are investing in automation and energy management to reduce operating costs. Pre-integrated small data centers are gaining popularity for branch offices, production floors, and remote sites. With a focus on data processing and storage resources, industries such as automotive, manufacturing, retail, logistics, and healthcare are leveraging edge data centers for efficient operations. North American edge data centers, including vXchnge, are at the forefront, offering modular solutions, hardware, software, and next-generation DCIM offerings.
This dynamic market addresses diverse needs, from large facilities to small and medium segments, across industries like IT, telecom, government, healthcare, retail, gaming, and more. Cutting-edge technologies, including Dell PowerEdge XR 12 and PowerEdge XE2420 servers, support high-performance edge applications, ensuring health safety compliances and mandatory containment measures. As industries evolve, edge data centers play a pivotal role in meeting the demands of AI applications, speech and image recognition, machine learning, and natural language processing. The market is also shaped by benchmarks like ML Perf Inference v2 and considers factors such as heat, vibration, and energy efficiency for sustainable growth.
The market research and growth report forecasts market growth by revenue at global, regional & country levels and provides an analysis of the latest trends and growth opportunities from 2018 - 2022.
Edge Data Center Market Scope |
|
Report Coverage |
Details |
Page number |
198 |
Base year |
2023 |
Historic period |
2018 - 2022 |
Forecast period |
2024-2028 |
Growth momentum & CAGR |
Accelerate at a CAGR of 23.57% |
Market Growth 2024-2028 |
USD 22.11 billion |
Market structure |
Fragmented |
YoY growth 2023-2024(%) |
22.33 |
Regional analysis |
North America, APAC, Europe, South America, and Middle East and Africa |
Performing market contribution |
North America at 48% |
Key countries |
US, China, Japan, Germany, and UK |
Competitive landscape |
Leading Companies, Market Positioning of Companies, Competitive Strategies, and Industry Risks |
Key companies profiled |
365 Data Centers, Compass Datacenters LLC, DC BLOX Inc., Dell Technologies Inc., Digital Realty Trust Inc., Eaton Corp. Plc, EdgeConneX Inc., Equinix Inc., Flexential Corp., Friedhelm Loh Stiftung and Co. KG, Fujitsu Ltd., Hewlett Packard Enterprise Co., Hitachi Ltd., Huawei Technologies Co. Ltd., International Business Machines Corp., Johnson Controls International Plc, Panduit Corp., Schneider Electric SE, Vapor IO Inc., and Vertiv Holdings Co. |
Market dynamics |
Parent market analysis, Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, COVID-19 impact and recovery analysis and future consumer dynamics, Market condition analysis for the forecast period |
Customization purview |
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1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation by End-user
7 Market Segmentation by Component
8 Customer Landscape
9 Geographic Landscape
10 Drivers, Challenges, and Trends
11 Vendor Landscape
12 Vendor Analysis
13 Appendix
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