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The Edge

Edge computing refuses to mature

A wide range of industry analysts, computing executives and telecom professionals continue to tout edge computing as the next big revolution for the digital age.

After all, the technology promises to dramatically improve not only the speeds and performance of Internet connections but to also upend the very bones of the world's global Internet network by placing computing services geographically closer to users.

Thus, it's no surprise that telecom network operators continue to hype the technology. For example, Verizon CEO Hans Vestberg promised in 2019 that the carrier would generate "meaningful" revenues from edge computing within a year.

However, those broad hopes have yet to pan out. "Verizon, the largest US wireless provider and the second largest wireline provider, has invested more resources in this [edge computing] topic than any other carrier over the last seven years, yet still cannot articulate how it can make material money in this space over an investable timeframe," wrote the financial analysts at BofA Global Research in a lengthy October report on the topic. "Verizon is in year 2 of its beta test of 'edge compute' applications and has no material revenue to point to nor any conviction in where real demand may emerge."

(Source: Phil Harvey/Alamy Stock Photo)
(Source: Phil Harvey/Alamy Stock Photo)

Other analysts agree.

"Regarding the edge, carriers and infrastructure companies are still trying to define, size and time the opportunity," wrote the financial analysts at Raymond James in an August note to investors. "But as data demand (and specifically demand for low-latency applications) grows, it seems inevitable that compute power will continue to move toward the customer."

Managing expectations

The it-will-happen-eventually attitude toward edge computing shows no sign of slowing.

HPE CEO Antonio Neri recently told Yahoo Finance that edge computing is "the next big opportunity for us because we live in a much more distributed enterprise than ever before."

Indeed, research and consulting firm IDC believes spending on edge compute could reach $274 billion globally by 2025 – though that figure would be inclusive of a wide range of products and services. In terms of hardware infrastructure for edge computing, the analysts at BofA Global Research estimate that global spending could reach $8.4 billion in 2022 – and they expect the figure to grow at a 20.9% compound annual rate through 2026.

Further, the edge remains a hot topic for data center operators and other digital infrastructure providers.

For example, DigitalBridge CEO Marc Ganzi said his company continues to see growth in demand for edge computing capabilities, with site leasing rates up 10% to 12% in the company's most recent quarter. "So this notion of having highly interconnected data centers on the edge is where you want to be," he said, according to a Seeking Alpha transcript.

Similarly, Equinix CEO Charles Meyers said his company recently signed a "major design win" to provide edge computing services to an unnamed pediatric treatment and research operation across a number of major US cities. Equinix is one of the world's largest data center operators, and has recently begun touting its edge computing operations.

Separately, cell tower owners like American Tower and SBA Communications also continue to tout their own prowess in edge computing.

The telco question

For telecom network operators, the edge remains an opportunity to scrape out some desperately needed growth. And success in edge computing could also help them recover whatever moxy they lost after they withdrew from the market for data centers.

"In edge, telcos have a clear opportunity to become a central player due to tight interdependence between applications and connectivity features," wrote the financial analysts at BofA.

Along those lines, telecom operators ranging from Verizon to Cox to Lumen Technologies have invested heavily into edge computing. For example, Verizon today operates more than two dozen edge computing locations all over the US through its 2019 partnership with AWS.

But those early efforts haven't yet resulted in a clear payoff.

"Our report outlines the potential demand for edge compute, however, it is also fair to say that it is still unknown where it will be deployed or what it will effectively be, and without an application to drive it, it is very hard to describe what the target vertical will be," wrote the BofA analysts in their October report. "As such, we are cautious to make firm determinations on the potential users/verticals of edge compute."

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Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano

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