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Edge Computing Investments in Japan to Reach $12 Billion (¥1.6 Trillion) in 2024

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Japan spending on edge computing is expected to reach $12 billion (¥1.6 trillion) in 2024, an increase of 12.3% over 2023. The combined enterprise and service provider buyer segment spending across hardware, software, professional services, and provisioned services for edge solutions is forecasting a strong sustained growth through 2027 when spending will reach nearly $17 billion (¥2.3 trillion).

IDC defines edge as the information and communications technology (ICT) related actions that are performed outside of the centralized datacenter, where edge is the intermediary between the connected endpoints and the core IT environment. Characteristically, edge is distributed, software defined, and flexible. The value of edge is the movement of computing resources to the physical location where data is created, transacted, or stored, thereby increasing enablement of business processes, decisions, and intelligence outside of the core IT environment.

Mr. Masayuki Shimokawabe, Research Manager, Enterprise Infrastructure, IDC Japan.
Mr. Masayuki Shimokawabe, Research Manager, Enterprise Infrastructure, IDC Japan.

“Edge computing is a means of leveraging digital technology to solve technological challenges outside the core IT environment. However, in Japan, most enterprise buyers do not know or understand the term ‘edge computing,” said Mr. Masayuki Shimokawabe, Research Manager, Enterprise Infrastructure, IDC Japan. “Edge computing does not accomplish its goal by simply performing computing at the Edge. It must be fused with the core data centers (whether cloud or on-premise). A key activity for IT vendors and service providers to uncover the potential computing needs of society and their customers is to create a computing environment that integrates the Edge and the Core into seamless infrastructure.”

Across 19 enterprise industries, IDC segments edge ICT spending for 500+ named enterprise use cases in six domains*. In the service provider industry, investments for edge services delivery is built on infrastructure spending for multi-access edge computing (MEC), content delivery networks, and virtual network functions. Combined, these three use cases will account for nearly 13% of all edge spending this year.

For enterprise adopters, including the public sector, examples of edge named use cases with large investments and rapid growth through 2027 include Smart Warehousing, Augmented Maintenance, Training AR/VR (multiple industries), Traffic Management and Real-Time Inventory Management. Examples of emerging edge use cases that are forecast to have the fastest spending growth over the 2022-2027 period include Collaboration AR/VR (multiple industries), Project Management (Construction), Inventory Management (multiple industries), Pipeline Inspection (Process Manufacturing) and Digital assistance (multiple industries).

“Enterprise investments have continued to shift the past 24 months toward infrastructure expansion and greenfield deployments. Companies are acting on plans to build more robust local computing infrastructure capabilities. And through it all, customer-facing new services and products and enabling new business processes are top enterprise drivers,” said Mr. Marcus Torchia, Vice President Research, Data & Analytics group at IDC. “Over the next two years, the share of planned investments moderately favor MEC offerings. Yet in the balance, enterprises are looking to rationalize total service provider outlays. This sets up a dynamic market of capex and opex based edge offerings competing for investment dollars through 2027.”

Across enterprise end user industries, the sheer size of discrete and process manufacturing accounts for the largest portion of investments in edge solutions this year, followed by the retail and utilities industries. IDC expects almost all 19 enterprise industries profiled in the Edge SG will touch around 10% spending growth over the forecast period. The service provider segment will see the greatest five-year compound annual growth rate (CAGR) of 23.2%.

The largest investment share will continue to be led by hardware, at 45% of total, to build out edge capabilities especially driven by service provider infrastructure. Over the forecast period, adoption of provisioned services* by enterprises will surge, approaching hardware toward 2027. Within provisioned services, connectivity and IaaS will represent the greatest share and fastest growth categories, respectively. Hardware spending will be driven by investments in edge gateways, servers, and network equipment. On-premise software will be a critical component of edge infrastructure but remain the smallest share category over the forecast period. (Figure)

The IDC Worldwide Edge Spending Guide quantifies the edge computing market by forecasting enterprise and service provider spending across 22 technology markets, six technology domains, 19 enterprise industries, and nine geographic regions. This version (2024 v1) of the Edge SG also includes more than 500 use cases that were segmented across various industries and domains.

Covered By: NCN MAGAZINE / IDC

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