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Don Alusha, ABI Research: Cloud-Edge AI Chipset CAGR Forecast at 36%

June 30, 2020

More than ever, cloud compute and intelligence platforms should be as close to the source of data at the outer ‘edges’ as possible. The importance of cloud-edges is further highlighted in their relationship with 5G, which forms a symbiotic association with cloud-edge as a technological evolution of the cloud. Cloud-edge implementations promise new growth for the telecom industry. Revenue from cloud-edge AI chipset sales is set to grow from US$2.6 billion in 2020 to US$12 billion in 2025, at a compound annual growth rate (CAGR) of 36%, finds global tech market advisory firm ABI Research.

The synthesis of cloud-edge and 5G presents an opportunity for communications service providers (CSPs) to provide complete end to end solutions for enterprise verticals. For example, with their robust connectivity and 5G assets, the likes of AT&T, Telefonica, Verizon, and Vodafone could move up the value chain to service enablement layer for IoT, analytics, and other horizontal capabilities. “A combination of cloud-edge compute and 5G ultra-reliable low latency connectivity is going to be the bedrock to propel post-COVID-19 growth. This growth is not just for telecoms, but also for a multitude of asset-heavy industries as they embrace digital-first processes and operations,” says Don Alusha, Senior Analyst at ABI Research.

At present, there is no “right” business model for cloud-edge deployments. A key strategy for vendors like MobiledgeX, Ericsson, and Nokia is to target their products at the circumstances in which enterprises find themselves, rather than to enterprises themselves. In other words, the critical unit of analysis must be existing operations and associated commercial circumstances, not the customer. There is a mass of enterprise requirements that must be satisfied with cloud-edge implementations that do not fit the ‘one-size-fits-all’ profile. The ability to deploy edge-clouds across dispersed sites and supply chains in a uniform fashion is bound to be the defining feature to accelerate edge-cloud diffusion. This is particularly significant in a post-COVID-19 world where local compute, 5G, and fiber will continue to be the foundation for continued innovation and value creation.

As telecoms look closely at current market dynamics for cloud-edge opportunities, the key is to understand where it stands in terms of existing assets and complementary control points. The market for cloud-edge deployments promises growth, but it is composed of a plethora of players and technologies which must be intimately understood. At present, the industry does not have all the answers but should realize the choke points in the near term to obtain growth in the long run. For example, CSPs need a clear sense of the industry or industries) they currently serve and what additional opportunity falls within the boundary of cloud-edge as they take the lead to rejuvenate the global economy post-COVID-19.

“Lastly, hyper scale providers like Amazon and Microsoft are taking advantage of their lean operations to launch their cloud-edge offering. They have the vision to build capabilities close to the edge, but they do not necessarily have the penetration and distribution of network capabilities that CSPs have. Clearly, there is an opportunity to be addressed by somebody, but the jury is still out on who captures what parts of the emerging cloud-edge and 5G ecosystem,” Alusha concludes.

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