Edge Data Center Market Size, Share & COVID-19 Impact Analysis, By Component (Solutions and Services), By Facility Type (Small & Medium Facility and Large Facility), By Industry (IT & Telecom, BFSI, Gaming & Entertainment, Government, Healthcare, Manufacturing, and Others), and Regional Forecast, 2023-2030

The global edge data center market size was valued at USD 9.30 billion in 2022. The market is projected to grow from USD 11.02 billion in 2023 to USD 41.60 billion by 2030, exhibiting a CAGR of 20.9% during the forecast period.

Edge data centers are the primary building blocks of the infrastructure edge and of its aggregation and access sublayers. It houses a number of racks and is located closer to the consumers, bringing computational resources closer to end users and their devices where data is being generated. The infrastructure edge layer might be seen as the mid-point between the traditional centralized cloud and the device edge, aiming to blend the advantages of both. These centers serve as an extension to the primary data centers, enabling a hybrid infrastructure environment that offers both distributed and centralized storage and computing capabilities.

The market moved from theoretical concepts until 2018 to a wave of investments and product launch announcements in 2019. Further, in the next mid-term, 2020-2023, the market witnessed several governmental investments in smaller data centers to attract investments, a rise in solution/service providers, an increase in strategic partnerships and acquisitions, and the demand for industry-focused data center solutions. In the next six years, 2024-2030, the market is expected to showcase a significant growth rate.

The increasing relevance of e-commerce and OTT market is heavily driving the demand in this market. The need for edge solutions across the market is expected to promise a healthy growth. The trends driving the market include the proliferation of 5G and Internet of Things (IoT), industrial IoT applications, video streaming, and the growing popularity of the AR/VR ecosystem. In addition, the recent AI boom, which is centered on generative AI, is not currently catalyzing the edge computing ecosystem. However, in the coming years, it is expected that the AI market will be bolstering the demand for edge solutions in the coming years.

COVID-19 IMPACT

Inclination toward Digital Transformation Bolstered the Need for Data Center Solutions

The pandemic elevated the importance of business continuity and latency among enterprises that had shifted their business operations digitally. Employees and students had to work and study from home, leading to the increase in internet traffic, the use of collaborative software, and the need to maintain data security. The use of edge computing capabilities helped better address these concerns.

The year 2019 was an important year for the edge computing market as several companies actually transitioned from theoretical concepts to investments and relevant business strategies. For instance, in February 2022, NxtGen Datacenter & Cloud Technologies planned to invest around USD 173.4 million with the objective of setting up 236 edge centers across India. The company had also planned to raise around USD 100 million for the expansion of data centers across the country.

Furthermore, as the world shifts towards digital transformation with the adoption of several new-age technologies, such as artificial intelligence, machine learning, blockchain, big data, and others, the need for edge computing capabilities grows. This further bolsters the demand for data center solutions.

Edge Data Center Market Trends

Technological Advancements, Video Streaming Services, and Well-crafted Business Strategies Adopted by Market Leaders 

Technological advancements, industrial IoT applications, video streaming, and Augmented Reality (AR)/VR are among the top trends driving the market development. In recent years, with the expanded and distributed IT footprint, businesses have realized the importance of latency and proximity for the successful delivery of their customer service. For instance, in a video streaming scenario, edge reduces the distance between the data center and consumers. This addresses the increasing amount of data being transported and processed, resulting in a cost-effective and enhanced user experience. Thus, with the aim of advancing their streaming services, companies have been investing in deploying data centers.

Moreover, with the proliferation of 5G and the rising popularity of AR/VR, the edge computing ecosystem will continue to flourish in the coming years.

To add to this, another trend is the expansion of the geographic presence and expertise through partnerships and acquisitions by key players operating in the market. For instance, in May 2023, DartPoints completed the acquisition of Louisiana's data center infrastructure and cloud services company, Venyu. With this acquisition, the company would expand 11 data centers across ten U.S. markets, three regions, and five states, including over 325,000 square feet of space and 20 megawatts of power.

As the market is developing, the industry is expected to witness several companies strategically crafting their business operations to enhance their position in the global market.

Edge Data Center Market Growth Factors

Governmental Push Accelerates the Demand for Edge Data Center Solutions

Government organizations across the globe have been partnering with market players to set up new data centers, which further accelerates the market growth. For instance, in  November 2023, CtrlS Datacenters Ltd signed an MoU with the intent of investing over USD 2.5 billion with the Uttarakhand government (India) for developing a Greenfield edge data center in the state with a 10 MW capacity in the coming years. With this, the company expects to provide colocation, cloud, and managed services to host complex workloads. This edge facility is also expected to support latency-dependence and Industry 4.0 applications.

In addition, governments are also promising noteworthy funding to substantially advance the edge ecosystem. Such instances encourage small-scale players to expand their efforts in developing their expertise in the technology. Moreover, the adoption of edge solutions across smart city initiatives is proving to speed up the market’s future. Edge solutions in a smart city initiatives provides a real-time insights into transportation modes, air quality, weather, and others. These insights further help identify problems before they hamper the population and help serve public services such as transportation management efficiently. Thus, the growing governmental push to adopt edge computing solutions has driven the market growth in recent years.

RESTRAINING FACTORS

Rise in Energy Costs, Supply Chain and Component Shortages, and Cybersecurity Concerns May Hamper the Market Growth

Some of the factors restraining the market include a rise in energy costs, supply chain and component shortages, and cybersecurity concerns. Power costs contribute over a quarter to two-thirds of the operational costs of a data center. Thus, a rise in such costs might force enterprises to charge more for their products. Moreover, as the industries were recovering from the pandemic, the Russia-Ukraine war projected a darker and even more complex scenario affecting electricity prices, raising cybersecurity concerns and increasing supply chain issues. The pandemic clearly boosted the demand for data centers. However, the war created restraining factors for the market growth. A major factor highlighted after the war was cybersecurity concerns. Critical infrastructure is among the likely targets for attackers. Energy companies, governments, data centers, and IT services companies are considered critical infrastructures. Thus, data center operators are required to strengthen their defenses against distributed denial-of-service, ransomware, and other attacks.

Edge Data Center Market Segmentation Analysis

By Component Analysis

Increase in Adoption of Edge Data Center Solutions to Drive the Market Growth

Based on component, the market is segmented into solutions and services.

The solution segment is further classified into DCIM, power, cooling, network equipment, and IT racks and enclosures. Currently, the market is governed by solution providers. The hardware and network infrastructure providers are dominating the market. As the market is still in its early stages and is witnessing a wave of deployment of the edge infrastructure, the hardware and network equipment providers have been at the forefront of receiving heavy demands. Along with this, governmental organizations across the globe have been pushing enterprises to set up new data centers, which further accelerates market growth.

However, the services segment is expected to grow with the highest CAGR in the coming years owing to the popularity of the as-a-service model and the need for professionals who can help navigate through the intricacies of the edge ecosystem.

By Facility Type Analysis

Large Facility Segment Dominates Owing to the Rise in Demand for Data Center Solutions

Based on facility type, the market is subdivided into small & medium facility and large facility. Large facilities can be defined as facilities with 12 - 49 racks with a power draw of 12 - 14 kW/cabinet (or rack). Small & medium facilities can be defined with 1 - 12 racks with a power draw of 6 - 12 kW/cabinet.

Currently, the large enterprises holds the largest share of the market. These large businesses have been thriving in a space that is expanded and distributed, this makes it imperative for them to focus on proximity, latency, and performance while delivering their services. An edge data ecosystem brings processing power closer to the end users, further enhancing service performance and bolstering innovation through proximity. Thus, a rise a demand for edge solutions across large enterprises is driving the market growth.

In the coming years, small & medium facilities are expected to contribute heavily to the edge data center market growth. Such small data centers prove to be more cost effective than traditional data centers. Moreover, sustainable business goals are proving to be positive factors for the adoption of data center solutions across small and medium facilities.

By Industry Analysis

Heavy Adoption Rate Showcased by the IT & Telecom Sector Promises a Positive Growth for the Market

Based on industry, the market is segregated into IT & telecom, BFSI, gaming & entertainment, government, healthcare, manufacturing, and others (transportation, energy & utilities).

Currently, the IT & telecom segment accounts for the largest portion of the market revenue. The sector has been among the early adopters of edge computing solutions and the need to facilitate the faster performance of cloud and mobile services drives this demand.

To follow this, gaming and entertainment ranks second, as the current market is heavily driven by OTT adoption among consumers and e-commerce players.

In the forecast period, the manufacturing segment is expected to grow with the highest CAGR. According to a study, the manufacturing industry generates over 45% of enterprise data across the globe. It requires a structured architecture that helps manufacturers access data from their several machines, systems, and processes. Thus, the market will witness a huge demand for data center solutions from the sector.

REGIONAL INSIGHTS

The market has been studied with a focus on five key regions: North America, South America, Europe, the Middle East & Africa, and Asia Pacific.

Currently, the market is dominated by the North American region due to its early adoption of new-age technologies, increase in the number of connected devices, cloud adoption, the need for instantaneous processing, and a well-crafted network structure. Another reason accelerating the region’s dominance is the technological leadership and data center dominance of the U.S.

Following this region, the Europe holds the second position in the overall global edge data center market share. The presence of several small-scale solution/service providers, the governmental push toward implementing edge solutions, and a reliable network of cloud computing solutions help bolster the regional market.

Over the forecast period, the Asia Pacific region is expected to grow with the highest CAGR. The inclination of key market players to expand in the region, the rise in the number of investments in relation to the market, and the increase in the consumption of data are the major reasons propelling the market expansion across the region. Most importantly, the region has been at the forefront of prioritizing the implementation of sustainable edge solutions, further driving the interest of market players to expand in the region. Besides, a rising rate of investments across India, Australia, and emerging markets in China and Southeast Asia are propelling the region’s position in the global market. The following recent development highlights the expansion of the region across India.

• September 2023: A South Korean technology solutions provider, SOLIS-IDC, planned to invest over USD 2 billion in India with the aim of developing an edge data center. To navigate through the intricacies of entering the Indian market for this project, the company has selected the services of the Global Forum for Policy and Strategy (GFPS) Advisory.

Furthermore, the South America and the Middle East & Africa regions have been witnessing slower product adoption than other regions in the market. However, key players targeting these regions to develop data centers and technological advancements across the regions contribute to the factors that are expected to accelerate their regional progressions in the market at a steady pace.  

List of Key Companies in Edge Data Center Market

Companies Engage in Expanding their Edge Data Center Locations to Ace their Position in the Global Market

Key players operating in the market have been complementing their product portfolio with several components of the edge data center ecosystem. As the market is witnessing a huge wave of investments and technological advancements, companies are continuously gearing up to expand their data center locations. Besides, with the aim of expanding their expertise in the market, leading players have been strategically partnering with relevant partners and firms. Moreover, these leading players have been continuously engaged in acquiring established firms to expand their global and customer reach.

List of Key Companies Profiled:

• Acromove Inc. (U.S.)


• American Tower Corporation (U.S.)


• AtlasEdge Data Centres (Netherlands)


• DartPoints (U.S.)


• DXN (Australia)


• Open Access Data Centres (WIOCC Group) (Nigeria)


• Proximity Data Centres (nLighten) (U.K.)


• Vertiv Holdings Co (U.S.)


• Zenlayer Inc. (U.S.)


• EdgeConneX Inc. (Netherlands)

KEY INDUSTRY DEVELOPMENTS:

• July 2023: Ubiquity acquired a data center solutions company, EdgePresence, and expanded its product portfolio. This acquisition would help the company to speed up its commitment to focus on ownership of critical last-mile network infrastructure assets.


• July 2023: American Tower announced its plans to build a new edge data center in San Antonio, Texas. The company has filed to build what is listed as the ‘American Tower Data Center - Highway 90’ with the Texas Department of Licensing and Regulation.


• June 2023: Edge Centres completed the acquisition of a facility in Reston, Virginia. In addition, the company intends to develop 20 facilities in the U.S. in the coming three years. In an attempt to achieve this, the company has been exploring potential additions to its product portfolio in New Jersey.


• February 2023: Varanium Cloud introduced a containerized data center in Maharashtra with the aim of catering to tier-two cities with technology, internet, and digital services. The newly launched edge data center is based in the town of Kudal in the Sindhudurg district under the company’s Hydra Web Services unit.


• February 2023: AtlasEdge acquired Datacenter One with the objective of expanding its geographical footprint and customer base. The acquired company has over 140+ end users, four state-of-the-art data centers in Leverkusen and Dusseldorf, and two in Stuttgart.

REPORT COVERAGE

The market report offers a detailed analysis of the market with a complete focus on the key aspects such as leading solution/service providers, the different component/solution/service types they provide, and the investments that these players have been engaged in relation to the market. In addition, the report also provides a detailed overview of the market’s response to the ongoing trends and a highlight of the major industry developments. Moreover, in addition to the factors mentioned earlier, several other aspects, such as governmental investments that contribute to the growth of the market, have been provided as well.

Report Scope & Segmentation