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Edge data center market to grow 22% CAGR to $57.8 billion by 2031

This comprehensive report projects a Compound Annual Growth Rate (CAGR) of 22% for the edge data center market during the forecast period from 2023 to 2031, according to Research and Markets.

Market Overview:

The edge data center market is set to experience rapid growth, driven by the increasing demand for low-latency data processing and storage solutions. Edge data centers, strategically located closer to end users, enable faster data processing and reduced network congestion.

They play a crucial role in supporting emerging technologies such as 5G, the Internet of Things (IoT), and artificial intelligence (AI), which require real-time data processing capabilities. As a result, the market revenue for edge data centers is expected to reach several billion dollars in the coming years, with a projected CAGR of 22%.

The growing adoption of edge computing solutions across industries, including healthcare, manufacturing, retail, and transportation, is fueling the market’s growth and contributing to the high CAGR.

Key Drivers:

  • Increasing Demand for Low-Latency Applications: The proliferation of data-intensive technologies like IoT, 5G, and AI has created a growing need for real-time data processing and analysis. Edge data centers, by bringing processing power closer to end-users, reduce latency and enable faster response times for applications requiring real-time analytics, such as autonomous vehicles and remote healthcare monitoring.
  • Surge in Data Generation: The exponential growth in data generation from connected devices, IoT sensors, and digitalization in various industries has driven the demand for edge data centers. These data centers process and analyze data closer to the source, facilitating real-time monitoring, predictive maintenance, and optimization of production processes, among other applications.
  • Growing Adoption of Edge Computing: Edge computing’s decentralized approach, bringing computation and data storage closer to edge devices, offers reduced network congestion, lower latency, improved security, and enhanced reliability. As organizations embrace edge computing for various use cases, the demand for edge data centers increases.

Challenges: Limited Infrastructure and Connectivity: A major challenge facing the edge data center market is the limited infrastructure and connectivity in certain regions. In remote or underdeveloped areas, the availability of adequate power supply, high-speed internet connectivity, and network infrastructure may be limited, hindering the effective deployment and operation of edge data centers.

Solution Segment Dominates by Components: The edge data center market’s components segment comprises solutions and services. The solutions segment held a significant share in the market revenue in 2022 due to the demand for hardware and software components enabling efficient edge computing. These components include servers, storage devices, networking equipment, and edge computing platforms. The services segment, including consulting, deployment, integration, and maintenance, is expected to witness the highest CAGR during the forecast period.

Hyperscale/Enterprise Data Center Dominates by Data Centre Size: Among various data center size segments, hyperscale/enterprise data centers held the highest revenue share in 2022. With the increasing adoption of cloud services, big data analytics, and AI applications, the demand for hyper-scale data centers continues to grow. Micro data centers are expected to witness the highest CAGR during the forecast period, fueled by the increasing demand for edge computing and low-latency applications.

North America Leads the Global Market: North America dominated the edge data center market in 2022, driven by established technology companies, increased data generation, and the need for low-latency computing infrastructure. Europe and the Asia-Pacific regions are also witnessing strong demand for edge computing solutions, driven by digital transformation, IoT applications, and smart city initiatives. Research and Markets

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