The way online content is consumed has changed radically these days. Over-the-top (OTT) platforms, such as Netflix, Amazon Prime, and Hotstar, have become increasingly popular among people and are being used as the primary source for streaming videos. In addition to this, the penetration of gaming applications has also increased rapidly among the younger generation.
This has led to the growth of OTT traffic. According to Cisco, worldwide internet protocol (IP) video, multimedia streaming, and gaming activities are predicted to account for over 81% of all the internet traffic by 2021, increasing from 75% in 2019.
But, how do such platforms make sure that the user is able to stream content without any problems? With the advent of the concept of ‘binge-watching’, it has become increasingly imperative for OTT platforms that their users are provided with an enhanced experience. In order to facilitate that, these platforms are making use of edge data centers.
What are Edge Data Centers and Why are They Needed?
Edge data centers are small facilities that deliver cached content and cloud computing resources to end-users. These facilities are located near users they provide such services to and generally connected to a larger central data center.
Since edge data centers are located close to the end-users, they allow organizations to decrease latency and enhance the customer experience. For example, if a user is able to stream content on Netflix in high definition without witnessing any lagging, an edge data center is very likely located close to them.
These days, a number of advanced technologies are being used, including big data, cloud and streaming services, and IoT. While the use of these technologies has proven advantageous to a large extent, latency has now become a major concern.
Moreover, since different types of devices are increasingly demanding access to internet services, applications, and data, regardless of the time and place, there is zero-tolerance for latency. Attributed to this, enterprises are establishing edge data centers for providing customers with enhanced functionality in a cost-effective way.
On account of the rising internet traffic, which is unmanageable the traditional way, the global edge data center market is expected to generate revenue of $53.1 billion by 2030, increasing from $5.3 billion in 2019, progressing at a 25.4% CAGR during the forecast period (2020–2030), according to a report by P&S Intelligence.
Edge Data Center Solutions Offered around the World
The demand for edge data center solutions has been on a rise since the past few years, owing to the growing internet traffic around the world. Plus, with the COVID-19 pandemic wreaking havoc, people have been forced to stay indoors. This has massively pushed up the usage of video streaming, video conferencing, social media, news, and gaming platforms, because of which the demand for edge data center solutions continues to increase. Below listed are the major solutions that are offered for these facilities.
- Datacenter infrastructure management services
- Storage servers
- Cooling apparatus
- Networking equipment
- IT racks & enclosures
- Power supply and UPS
Among all these, the demand for power & UPS solutions has been the highest till now, as the requirement for backup & prime power at data centers is ever-present. In addition to this, the rising investments in R&D for innovative UPS technologies and several benefits of such devices, including equipment protection against voltage fluctuations, reliable power backup, and high efficiency, are resulting in the growing demand for power & UPS solutions.
BFSI Industry To Rapidly Shift to Edge Computing in Future
A number of industries are making use of edge data centers, including IT & telecom, retail, BFSI, government, logistics & transportation, and healthcare. Among these, the BFSI sector is set to undergo the most-rapid shift toward edge computing in the next 5–10 years.
The focus on having an enhanced IT infrastructure is extremely high in financial institutions, along with which they need for processing and storing consumer data securely is increasing rapidly. It is majorly because of such factors that the need for deploying edge data centers in the BFSI industry is growing. Moreover, by using these facilities, financial institutions can also allow their customers to transact in a secure manner.
Why Is Demand for Edge Data Centers Growing in North America and Asia-Pacific?
At the present time, North America is making the largest use of edge data centers because of the surging data traffic, commercialization of 5G, and rising government initiatives for deploying such infrastructure in the region. It is in the U.S. that these facilities are being majorly deployed. The high financial incentives for establishing data centers from the government, as well as private firms, are a key reason for this.
While the adoption of these facilities has been comparatively low in Asia-Pacific (APAC), their deployment is predicted to rise considerably in the region in the years to come. The surging internet penetration in emerging economies, including Indonesia, China, and India, and the rapid shift toward digitization is driving the demand for edge data centers in the region. The growing adoption of OTT content and IoT devices is further projected to drive this technological revolution in APAC.
In conclusion, edge data centers are being established by organizations for providing enhanced customer experience and reducing latency. Moreover, increasing OTT traffic is making it important for enterprises to deploy edge data centers.
Source: P&S Intelligence
Abhishek has around 5+ years of experience in market research and consulting services for ICT & Semiconductor domain. He holds varied experience in market sizing and forecasting with varied models, competition landscape, consumer behavior analysis, opportunity analysis, product/company benchmarking, data mining, and others.
He has successfully delivered multiple projects on go-to-market strategies, pricing strategy, price point analysis, Business Expansion, market-entry, and exit, share analysis, and others. Prior to joining P&S Intelligence, he worked with different research companies, including Grand View Research Inc., Phronesis Partners: Research & Consulting, and Genpact. Some of the projects delivered by him include DevOps, IoT, automation technologies, Natural language processing, data warehousing, and gamification.