NEW YORK, Feb. 12, 2019 (GLOBE NEWSWIRE) -- The drive towards the use of 5G networks and the increasing dependency on IoT devices is set to significantly change how organisations structure their computing workloads with edge computing.

Over the past few years, on-premises data centres have been migrated to the cloud. Now we’re increasingly seeing cloud data centres moving to ‘edge’ locations nearer to where the data is processed, both reducing the distance the data has to travel and improving the performance of applications to alleviate bandwidth and latency issues, which in turn, reduces the operational cost of running them.

With the growing pressure for space on cloud infrastructure and the need for faster processing, analysts MarketsandMarkets, have stated that the market will be worth $6.72 billion by 2022, up from an estimated $1.47bn in 2017, a Compound Annual Growth Rate (CAGR) of 35.4%. Gartner’s 2018 research report also supports this theory outlining that 80% of enterprises will have shut down their traditional data centre by 2025, versus 10% in 2018, with organisations building a more agile, scalable digital infrastructure based on business need and not constrained by physical location is of increasing importance.

The new era of edge computing
Mike Hagan, CEO of EdgeMicro believes that “deployment to the edge will lead to the third wave of the internet,” with organisations recognising that improving latency will enhance customer experience, resulting in a competitive advantage for their businesses as well as “a more robust, decentralized Internet.”

Marcus Bergstrom, CEO, Unified Delivery Network, Ericsson agrees. “What’s happening is that the lines are being blurred between the Internet and network infrastructure, so you see the Internet being extended into networks of service providers. The paradigm of the edge is opening up a new tier to global internet infrastructure that has been inaccessible up until now.”

New market entrants?
Chris Crosby, CEO of Compass Datacenters also acknowledges that the edge offers a degree of opportunity for new market entrants that we haven't seen since the mass migration to the cloud began.

“If you look at the competitive landscape for data centers, you find a high concentration of companies that have traditionally positioned themselves as providing space and power for enterprise companies looking to outsource their data center operations.

In edge computing, geographic flexibility doesn't fit their business models. Their efficiencies are a product of scale regarding size. For an edge provider, scale is a function of volume. In the short term, this disparity in business models provides an opportunity for new companies with edge solutions to enter the market. Over time it's likely that the organizations that can gain market share in the next 3-5 years may become attractive targets for the large wholesale data center and cloud providers to acquire to extend their capabilities to support more latency sensitive applications and the new markets that will characterize the edge.”

Changing investment strategies
Whilst the shift to edge computing from cloud computing is emerging, the investment opportunities are likely to be driven by the challenges of organisations operational requirements, scheduling computing workloads, adding new tiers to infrastructure, as well as moving from single to multiple geographic locations.

Bergstrom also believes that heterogeneity will be a key investment for edge computing platforms. “The challenge as you are pushing the edge deeper inside of the networks is of heterogenous environments. Most networks looks different and built on different hardware with proprietary software. To solve this will be crucial.”

Crosby added, ‘I think you can expect to see investment initially in companies that provide edge data centers on a wholesale end user agnostic basis to enable them to increase their production capacities to keep up with demand. Additional investment in acquiring the organizations that prove themselves to be market leaders in providing these edge solutions can then be expected to follow accordingly.”

He also believes that network infrastructure itself will be the prime beneficiary and recipient of funding in the next five years.

“I think the critical thing to note is that IoT applications will require the processing of amounts of data that are unfathomable today. Indeed, we can expect a good deal of investment in the companies that will provide all of these capabilities, but the important thing to consider is that none of these happen without the physical infrastructure to support them. 5G promises to provide the bandwidth and low latencies that things like driverless cars will depend on. That doesn’t exist today.”

Bergstrom, Hagan and Crosby are speakers at the upcoming TMT M&A Forum USA 2019 (April 11, New York). The event, sponsored by Santander and Tillman Infrastructure, offers more than 200 M&A professionals the opportunity to engage with leading figureheads and discuss edge computing and infrastructure, 5G investment, M&A strategy and changing trends within the telecommunications M&A landscape.

Leading investors
Whilst web giants and hardware manufacturers like Google and HPE have already invested in their portfolios ready to capitalise on the trend, tower companies like Crown Castle are driving some part of the investment to have more hardware equipment at their sites.

Bergstrom outlines that technology providers like Ericsson, Nokia and Huawei are investing in technology to enable network service providers to find new revenue streams for their network infrastructure. He also believes that “network service providers are driving the investment of edge computing by virtualizing their networks and building in 3rd party provider exposure in the networks to help finance the CAPEX investment for 5G.”

Whilst both technology, and infrastructure are ready to take advantage of the demand, it might be too early in the game for individual investors, with some placing early bets while others wait for clarity on which investment strategies prove successful.

Crosby, believes that ‘the level of “edge” investment seems to be lagging behind the hype. “I think right now a lot of firms are electing to keep their powder dry until some definitive trends, and actual paying customers, begin to emerge. There are a large number of people who follow the industry who think that “the edge” is synonymous with cell tower colocation, and in the end they may be right, but I think investors want to see more definitive proof that this path, or its potential alternatives, is real before committing themselves. I think the importance of events like TMT M&A Forum is to help provide attendees with a much clearer picture of things as they stand on the ground.”

For more information about the TMT M&A Forum USA 2019, including tickets, please visit TMT M&A Forum USA 2019 or contact enquiries@tmtfinance.com for speaker and sponsor opportunities.

A photo accompanying this announcement is available at http://www.globenewswire.com/NewsRoom/AttachmentNg/29663451-f998-425d-b2c5-636b105b7d97

Contact
Katrina Hopewell
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