Edge Data Center Market is Expected to Cross $95 Billion by 2033: BIS Research

10 Apr 2024

The market for edge data centers signifies a fundamental change in the management, storage, and distribution of data in today's digital era. With the surge in data creation from mobile devices, Internet of Things (IoT) applications, and broad digital transformation efforts, the conventional model of centralized data centers is facing a challenge. In response, edge data centers stand out as a key answer to this dilemma, adopting a decentralized strategy that brings computing resources nearer to the origin of the data or the end user.  

As per the BIS Research report, the global edge data center market, valued at $16.70 billion in 2023, is expected to reach $95.38 billion by 2033, exhibiting a robust CAGR of 19.03% during the forecast period 2023-2033.  

The growth of the edge data center market is primarily fueled by the rising demand for edge computing, which processes data near its source instead of in central warehouses. This trend is underscored by the expected significant increase in edge data center offerings from providers. The push for edge computing comes from the necessity for quicker data processing and reduced latency, especially in areas like IoT devices, smart cities, and mobile computing.  

Comparison between Traditional Data Center and Edge Data Center 

The key difference between edge data centers and traditional ones is their location and purpose. While traditional data centers, usually found in urban or suburban locales, act as centralized hubs for large-scale data storage, processing, and cloud and enterprise operations, edge data centers are located nearer to users or IoT devices. This proximity supports swift, low-latency processing crucial for real-time applications.  

Edge facilities are noted for their compact, modular, and scalable nature, designed to accommodate the shift towards decentralized computing and the expansion of IoT technology. Unlike their traditional counterparts, which focus on large-scale efficiency, edge data centers prioritize a distributed structure and edge computing to adapt to the demands of new technologies and digital transformation needs.  

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 
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 

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Edge Data Centers Market Opportunities 

Rising investments in edge data center projects underscore a significant market shift driven by the demand for local data processing, reduced latency, and advanced support for IoT, AI, and 5G technologies. This shift towards a more decentralized market aims to enhance connectivity, maintain data sovereignty, and improve the quality of digital services.  

For example, on February 7, 2024, Azora, together with Core Capital, announced their intention to invest over $530 million in building six edge data centers in Spain and Portugal, with a combined capacity of 60 MW. This plan underscores the pivotal role of edge data centers in the digital ecosystem. 

Furthermore, in May 2023, CTRLS Datacenters Ltd. revealed an $18.1 million investment for a new edge data center in Odisha, India, representing a significant move to leverage the edge data center market's potential. Planned to develop over ten years, this investment aims to build strategic alliances to bolster digital infrastructure, evolving into a hyperscale data center campus. This expansion reflects the growing need for localized data management and storage solutions to accommodate hyperscale operators, government agencies, and businesses.  

Key Players 

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: 

•    ATC TRS V LLC  
•    Cologix  
•    Vapor IO 
•    DartPoints 
•    Digital Realty 
•    Edge Centres 

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Analyst Note 

According to Debraj Chakraborty, Principal Analyst at BIS Research, “The edge data center market is poised for exponential growth, driven by the escalating demand for real-time data processing, IoT proliferation, and the advent of 5G technology. This sector is witnessing significant investments as businesses seek to reduce latency, enhance bandwidth efficiency, and secure data closer to its source.  

With strategic expansions in both urban and remote locations, edge data centers are becoming indispensable for enabling advanced digital services and applications. As industries continue to embrace digital transformation, the edge data center market is set to become a cornerstone of the next-generation digital infrastructure, offering lucrative opportunities for investors and operators alike.”