Edge Data Center Market - A Global and Regional Analysis: Focus on Product, Application, and Country Analysis - Analysis and Forecast, 2023-2033

Feb 2024| BIS950A| BIS Research

Report Highlights

The Global Edge Data Center Market Expected to Reach $95.38 Billion by 2033

Global Edge Data Center Market Overview

The global edge data center market, valued at $16,705.2 million in 2023, is expected to reach $95,386.3 million by 2033, exhibiting a robust CAGR of 19.03% during the forecast period 2023-2033. One of the primary drivers for the growth of the edge data center market is the increasing demand for edge computing. Edge computing involves processing data closer to where it is generated rather than relying on a centralized data-processing warehouse. This surge is particularly evident in the anticipated expansion of edge data center counts by suppliers, which is projected to grow significantly. The increase in edge computing is likely due to the need for faster processing and lower latency in data handling, particularly for applications such as Internet of Things (IoT) devices, smart cities, and mobile computing.

Introduction to Edge Data Center Market

The edge data center market represents a transformative shift in how data is processed, stored, and delivered in the digital age. As users generate an ever-increasing volume of data from mobile devices, Internet of Things applications, and widespread digital transformation initiatives, the traditional centralized data center model is being challenged. Edge data centers emerge as a pivotal solution to this challenge, offering a decentralized approach that places computing resources closer to the data source or end user.

The market is anticipated to see significant growth over the forecast period from 2023 to 2033. This market is driven by the need for lower latency, improved bandwidth, and enhanced data privacy and security. Edge data centers minimize the distance data needs to travel by processing it closer to its source, resulting in reduced response times and enhanced performance for digital applications and services.

The edge data center market is further propelled by the proliferation of 5G technology, which promises to unlock new possibilities for edge computing by offering faster speeds and higher capacity. This synergy between 5G and edge computing is expected to enable a new era of smart cities, augmented reality experiences, and other tech-driven innovations.

Comparison between Traditional Data Center and Edge Data Center

The fundamental distinction between edge data centers and traditional data centers lies in their geographical proximity and functional purpose. Traditional data centers are centralized facilities designed to store, process, and manage large volumes of data typically located in urban or suburban areas, serving as the backbone of cloud computing and enterprise operations. Conversely, edge data centers are strategically positioned closer to end-users or IoT devices, facilitating low-latency data processing and enabling real-time applications. Edge data centers are characterized by their smaller footprint, modular design, and scalability, catering to the growing demand for decentralized computing and the proliferation of IoT devices. Unlike traditional data centers that prioritize economies of scale, edge data centers emphasize distributed architecture and edge computing capabilities to meet the evolving needs of emerging technologies and applications in the era of digital transformation.

Edge Data Centers driving Innovation and Connectivity in the ICT Industry

The demand for Edge Data Centers is set to surge, driven by the need for services with lower latency across a widely distributed network. To support the increasing scale and complexity of these services, a substantial expansion of Edge Data Centers is essential. Ensuring these centers can meet the high availability requirements essential for critical services will necessitate a focus on automation, parallel architectures, and adherence to industry standards. Moreover, with the expected growth in Edge Data Centers deployments, prioritizing energy-efficient design and operations becomes crucial. The future landscape of the Information and Communications Technology (ICT) industry will be marked by a significant rollout of Edge Data Centers, creating a cohesive network that seamlessly integrates devices, core computing, and cloud services. This interconnected framework will be vital for enhancing both wireless and wired connectivity, providing a cornerstone for ICT service providers and data center managers to foster innovation at the edge. The emphasis on Edge Data Centers development underscores its pivotal role in advancing technology and service delivery in the digital age.

With a diverse landscape of players, including telecom companies, cloud service providers, and specialized edge data center operators, the market is poised for significant growth. As businesses and consumers demand faster and more reliable digital services, the edge data center market stands at the forefront of a major technological evolution, redefining the future of data processing and connectivity.

The surge in data use, IoT expansion, and cloud adoption is propelling the edge data center market beyond traditional architectures toward localized processing to cut latency, boost bandwidth, and maintain data sovereignty. This growth reaches from urban to rural areas, enhancing digital services everywhere. Accelerated by 5G, edge centers are crucial for real-time applications such as streaming, autonomous vehicles, and smart cities. As digital transformation accelerates, the demand for edge data centers offering proximity-based, swift, and secure data handling continues to soar.

Market Segmentation:

Segmentation 1: by End-Use Industry

  • IT and Telecom
  • Banking, Financial Services, and Insurance (BFSI)
  • Government and Public Sector
  • Healthcare
  • Manufacturing
  • Automotive
  • Retail
  • Others

IT and Telecommunications Industry to Dominate the Global Edge Data Center Market (by End-Use Industry)

During the forecast period 2023-2033, the Banking, Financial Services, and Insurance (BFSI) segment is expected to dominate the edge data center market. With the introduction of new technologies such as 5G, IoT, virtual and augmented reality, and artificial intelligence, the Banking, Financial Services, and Insurance (BFSI) industry is evolving to cater to huge data processing. As a result, BFSI data centers are also transforming to handle high data volume and low latency needs. The banking, financial services, and insurance (BFSI) segment is expected to anticipate the highest growth rate due to being digitized, which involves utilizing the most cutting-edge technology, which will boost the data center usage, thereby augmenting the edge data center market.

Segmentation 2: by Data Center Type

  • On-Premise Edge
  • Network Edge
  • Regional Edge

Segmentation 3: by Region

  • North America - U.S. and Canada
  • Europe - France, Germany, U.K., and Rest-of Europe
  • Asia-Pacific - China, Japan, Australia, and Rest-of-Asia-Pacific
  • Rest-of-the-World - Middle East and Africa and South America

During the forecast period, Europe, North America, and Asia-Pacific are projected to witness substantial demand for edge data centers. The increasing government regulations and the consequent expansion of the data center industry are expected to create favorable conditions for the adoption of edge data centers.

The edge data center market is experiencing significant growth across different regions, with North America leading the market. In North America, this growth is propelled by several factors, including the widespread adoption of cloud computing, the proliferation of IoT devices, and the rapid expansion of 5G networks. As businesses and consumers demand faster and more reliable digital services, the need for localized data processing and reduced latency becomes increasingly critical. Moreover, North America's robust digital infrastructure and thriving tech ecosystem create a fertile ground for edge data center investments. Similarly, in Europe, the market is witnessing substantial growth driven by stringent data privacy regulations, increasing IoT deployments, and the rising demand for real-time applications. Additionally, Europe's focus on sustainability and green initiatives is prompting investments in energy-efficient edge data center solutions, further fueling market growth in the region.

Recent Developments in the Global Edge Data Center Market

  • In October 2023, St. Louis, Missouri, U.S. Edge Centers, one of the frontrunners in the edge data center sector, celebrated the inauguration of its fifth cutting-edge facility. This achievement marks a significant industry milestone, also demonstrating edge center market infrastructural expansion in the U.S.
  • In February 2022, Equinix, Inc., a data center provider, expanded its network edge services in five new countries, including France, Finland, Italy, Ireland, and the Netherlands. Additionally, compliance with the EU's strict data protection laws, such as the General Data Protection Regulation, is driving the adoption of edge data centers to ensure data privacy and sovereignty, further accelerating market growth.
  • In November 2023, Rakuten Mobile, Inc. announced that its research and development (R&D) project into advanced edge cloud technologies for next-generation communications has been selected by Japan’s National Institute of Information and Communications Technology (NICT), which would decrease latency and improve bandwidth, supporting the edge data center market.

Demand – Drivers, Challenges, and Opportunities

Market Drivers: Minimizing Latency and Bandwidth Usage

Data centers located far from end users necessitate lengthy transmission lines for data exchange, resulting in increased latency due to extended distances. This latency is particularly problematic for businesses requiring quick transactions, such as electronic trading and video streaming, where delays can significantly affect operations. To counteract data latency and improve the efficiency of content delivery, organizations are adopting a strategic approach by deploying smaller, localized servers close to population hubs. Termed as edge caching facilities, these servers are designed to be placed near or directly within both commercial and residential areas, thereby minimizing distance and reducing latency. This strategic placement ensures faster access to data and smoother content delivery, enhancing user experience and operational efficiency for businesses reliant on rapid data transactions.

Market Challenges: Lack of Consideration of Security-by-Design

At the heart of edge computing lies the goal of creating a nimble and efficient computing infrastructure specially designed to support next-generation applications such as the Internet of Things (IoT) and smart city technologies. In pursuit of this, architects often focus more on optimizing performance than fortifying security in the initial design stages of edge computing solutions. This approach inadvertently widens the scope for potential security vulnerabilities, making edge computing systems more susceptible to cyber threats. This oversight in prioritizing security concerns becomes a substantial hurdle for the edge data center market as it grapples with the dual challenge of ensuring robust performance while safeguarding against an expanding landscape of cyber risks. Addressing this gap is crucial for maintaining the integrity and reliability of edge computing infrastructures in the face of increasingly sophisticated cyberattacks.

Market Opportunities: Surge in Investment by Data Center Providers

The increasing investments in edge data center development highlight a substantial market opportunity fueled by the need for localized data processing, minimized latency, and enhanced support for IoT, AI, and 5G innovations. This movement toward market decentralization seeks to improve connectivity, uphold data sovereignty, and elevate the digital service experience. For instance, on February 7, 2024, Azora, in partnership with Core Capital, disclosed plans to allocate over $530 million toward the creation of six edge data centers across Spain and Portugal, boasting a total capacity of 60 MW. This initiative vividly demonstrates the critical importance attributed to edge data centers within the digital realm.

Moreover, in May 2023, CTRLS Datacenters Ltd. committed $18.1 million to a new edge data center in Odisha, India, marking a significant step in tapping into the edge data center market potential. This investment, set to unfold over a decade, aims to foster strategic partnerships to expand digital infrastructure. The project's evolution into a hyperscale data center campus highlights the escalating demand for localized data handling and storage solutions, serving the needs of hyperscale operators, government bodies, and enterprise clients.

How Can This Report Add Value to an Organization?

Product/Innovation Strategy: The product segment helps the reader understand the different application and product segments of edge data centers and their global potential. Moreover, the study gives the reader a detailed understanding of the end-use industries and different products offered with different regulations, consortiums and associations, and government programs impacting the edge data center manufacturers for various purposes.

Growth/Marketing Strategy: The global edge data center market has seen major development by key players operating in the market, such as business expansion, partnership, collaboration, and joint venture. The favored strategy for the companies has been partnership, collaboration, and joint venture activities to strengthen their position in the global edge data center market.

Competitive Strategy: Key players in the global edge data center market analyzed and profiled in the study involve edge data center manufacturers, including market segments covered by distinct product kinds, applications served, and regional presence, as well as the influence of important market tactics employed. Moreover, a detailed competitive benchmarking of the players operating in the global edge data center market has been done to help the reader understand how players stack against each other, presenting a clear market landscape. Additionally, comprehensive competitive strategies such as partnerships, agreements, and collaborations will aid the reader in understanding the untapped revenue pockets in the market.

Report Synopsis

Report Metrics Details
Base year considered 2023
Forecast period considered 2023-2033
Base year market size $16.70 Billion in 2023
Market size forecast $95.38 Billion by 2033
Growth rate 19.03%
Units considered $ Billion
Segments covered By End-Use Industry, By Data Center Type, By Region
Industry covered Energy & Power
Regions covered North America, Europe, Asia-Pacific, The Middle East and Africa, South America
Countries covered U.S., Canada, Germany, U.K. France, Rest-of-Europe, China, Japan, Australia, Rest-of Asia-Pacific, Rest-of-the-World
Companies studied
  • Proximity Data Centres
  • Cologix
  • Vapor IO
  • DartPoints
  • Digital Realty
  • Edge Centres
  • EdgeConneX
  • Ubiquity Management, LLC
  • Leading Edge Data Centres
  • Vertiv Group Corp
  • Switch
  • Evoque Data Center Solutions
  • Flexential

Research Methodology

Primary Data Sources

The primary sources involve industry experts from the data center industry and various stakeholders such as raw material suppliers, equipment manufacturers, distributors, and end users. Respondents such as CEOs, vice presidents, marketing directors, and technology and innovation directors have been interviewed to obtain and verify both qualitative and quantitative aspects of this research study.

The key data points taken from primary sources Include:

  • validation and triangulation of all the numbers and graphs
  • validation of reports segmentation and key qualitative findings
  • understanding the competitive landscape
  • validation of the numbers of various markets for market type
  • percentage split of individual markets for regional analysis

Secondary Data Sources

This research study involves the usage of extensive secondary research, directories, company websites, and annual reports. It also makes use of databases, such as ITU, Hoovers, Bloomberg, Businessweek, and Factiva, to collect useful and effective information for an extensive, technical, market-oriented, and commercial study of the global edge data center market. In addition to the aforementioned data sources, the study has been undertaken with the help of other data sources and websites, such as Data Center Dynamics and Data Center Knowledge.

Secondary research was done in order to obtain crucial information about the industry’s value chain, revenue models, the market’s monetary chain, the total pool of key players, and the current and potential use cases and applications.

The key data points taken from secondary research include:

  • segmentations and percentage shares
  • data for market value
  • key industry trends of the top players of the market
  • qualitative insights into various aspects of the market, key trends, and emerging areas of innovation
  • quantitative data for mathematical and statistical calculations

Data Triangulation

This research study involves the usage of extensive secondary sources, such as certified publications, articles from recognized authors, This research study involves the usage of extensive secondary sources, such as certified publications, articles from recognized authors, white papers, annual reports of companies, directories, and major databases to collect useful and effective information for an extensive, technical, market-oriented, and commercial study of the global edge data center market.
The process of market engineering involves the calculation of the market statistics, market size estimation, market forecast, market crackdown, and data triangulation (the methodology for such quantitative data processes is explained in further sections). The primary research study has been undertaken to gather information and validate the market numbers for segmentation types and industry trends of the key players in the market.

Factors for Data Prediction and Modelling

  • The section exhibits the standard assumptions and limitations followed throughout the research study named global edge data center market:
  • The scope of this report has been focused on various end-use industries and product types.
  • The base currency considered for the market analysis is US$. Currencies other than the US$ have been converted to the US$ for all statistical calculations, considering the average conversion rate for that particular year.
  • The currency conversion rate has been taken from the historical exchange rate of the Oanda website.
  • Nearly all the recent developments from January 2021 to December 2023 have been considered in this research study.
  • The information rendered in the report is a result of in-depth primary interviews, surveys, and secondary analysis.
  • Where relevant information was not available, proxy indicators and extrapolation were employed.
  • Any economic downturn in the future has not been taken into consideration for the market estimation and forecast.
  • Technologies currently used are expected to persist through the forecast with no major breakthroughs in technology.

Key Market Players and Competition Synopsis

The companies that are profiled in the edge data center market have been selected based on inputs gathered from primary experts and analyzing company coverage, product portfolio, application, and market penetration. The global edge data center market is growing at a prominent rate, with many players competing for market share. The edge data center market is characterized by the presence of data center provider companies and new-age start-ups. The edge data center market is attracting significant investment, driven by its innovative approach and the burgeoning demand for data storage and processing capabilities. Despite the potential, large-scale deployments may face logistical challenges related to stability, power supply, and connectivity.

For instance, in June 2023, SBA Communications, a real estate investment trust company, launched a new edge data center at a tower location in the Dallas, Fort Worth area of Texas, U.S.

Major players in the edge data center market include ATLASEDGE DATA CENTRES, ATC TRS V LLC, Cologix, Vapor IO, and DartPoints.

Some prominent names established in the edge data center market are:

  • Cologix
  • Vapor IO
  • DartPoints
  • Digital Realty
  • Edge Centres

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