The onset of COVID-19 has accelerated nearly every facet of digital transformation, and this in turn resulted in the growth of Edge computing.
Government lockdowns, social distancing and fragile supply chains had both consumers and enterprises using digital solutions which will permanently change the use cases across the spectrum. Expertise in legacy data centers could be obsolete in the next few years as the pandemic has forced the development of tools for remote monitoring, provisioning, repair and management, which will reduce the cost of Edge computing.
There are many definitions of Edge when it comes to data centres. So, how does the industry define Edge? Shalini Lagrutta, CEO, DXN Solutions said:
“In recent years, there has been lots of activity and growth in what the Hyperscalers call Mega Campuses which are large MW data centres but in specific ‘availability zones’. These are not to be confused with Edge data centres.”
Edge data centres are smaller facilities, anything between tens of KW in power to tens of MW, located in regions where there are populations in need of data. It can be about extending cloud computing resources or cached content, enabling delivery of content to businesses that need it quicker such as financial services, gaming or for that matter a myriad of future application cases we have yet to see.
Equally importantly, Edge data centres will absolutely need to offer connected networking infrastructure for localised needs and adequate processing – or “compute” power -localised close to the user. Essentially, Edge data centres enables businesses to offer significantly reduced latency at the edge, thereby improving customer experience.
Trends in Edge Computing
Tolaga Research has predicted that between 2019 and 2028, cumulative capital expenditures of up to $800 billion USD will be spent on new and replacement IT server equipment and edge computing facilities. These expenditures will be relatively evenly split between equipment for the device and infrastructure edges.
According to Gartner, by 2025, around 75% of data will be processed or analysed at network edges. In 2018, only 10% of data was created and processed outside of traditional centralised data centres. All this will eventually lead to heightened mergers and acquisitions-related activities, say industry watchers.
“I believe that heightened M&A activity is typically a precursor of growth in an industry. We have seen a lot of such activity in the Edge computing sector in recent months,” pointed out Lagrutta.
Beyond Network’s Edge
Companies must follow people beyond the network’s edge to deliver products and services to a wider dispersed client base reliably and with minimal latency. Fortunately, edge computing allows service providers to address gaps outside of their centralised data centres, allowing them to continue to provide clients with novel apps and services.
“In Australia, we have seen significant Edge data centre-related investment. One of the world’s largest digital infrastructure investors, DigitalBridge Group, recently invested $30 million in Leading Edge DC to support its business plan of regional edge DC expansion in Australia,” stated Lagrutta. DigitalBridge also owns EdgePoint Infrastructure who develop, acquire, and operate telecommunications towers in Southeast Asia -essentially sites that constitute edge infrastructure and computing.
To date, edge computing applications have been segmented and hence opportunistic – for example, automation needs on mining sites, where latency and connection on site are the primary drivers – but more and more content is now being generated at the Edge, thereby driving the need for primary edge data centres that are highly connected, standardized, quick to deploy and commercially viable.
Lagrutta is of the view that while most Edge data centres in the APAC region have historically been owner-operated I do think the world will eventually follow the US model where data centre companies will either be OpCos or Property Owners. In our part of the world, data centre operators prefer to own the land, the buildings, and the operations.
However, as the sector continues to mature, market drivers and funding models will move it towards more innovative commercial constructs and funding models, she said. As in most business scenarios, the ultimate winners in this sector will be the ones with the first mover advantage and risk takers who work with measured investments – learning from what has happened in other markets.
To date DXN has been designing, manufacturing, building, and operating edge data centres in the modular form factor for ourselves and for our regional and global customers for several years. “We have seen growth in revenue and the scale of opportunities in various market segments and in the process built the know-how, relationships and upskilled our teams. While the demand for modular, standardized, quick-to-deploy edge data centres has grown strongly in the past couple of years, I believe we really are only skimming the surface in 2022 when it comes to edge opportunities,” said Lagrutta.
As DXN’s reputation grows in APAC, the company will evolve its business model from ‘selling’ modular data centres to our regional customers to offering a white-space-as-a-service model. This involves the same modular data centre solutions, with all the benefits of quick-to-market standardisation, while enabling end-users to focus on opex-based, customer-focused growth.