This article introduces the basics of edge computing technology and dives deeper into the Chinese edge computing market to provide an overview of the development background, industry chain, applications, enterprise analysis and insights from the industry expert.
Background
Edge computing is an open platform that integrates network, computing, storage, and application core capabilities on the side close to the source of objects or data and provides the nearest end services. Its applications are launched on the edge side to generate faster network service responses and meet the basic needs of the industry in terms of real-time business, application intelligence, security and privacy protection. Edge computing sits between the physical entity and the industrial connection or on top of the physical entity.
Why is edge computing gaining popularity and wide acceptance among major enterprises? In essence, it shared the following four traits that help organizations improve safety and performance while automating processes and improving user experience: (1) Increase speed / reduce latency. By its technology infrastructure design, edge computing eliminates the need to move data from endpoints to the cloud and back again, which reduces latency and improves the overall data process time; (2)Improved security and privacy protection. Edge computing can provide enhanced security and privacy protections as it moves data closer to the edge and away from centralized servers; (3)Reduce cost. Sending large amounts of data from a source to a centralized data center is expensive as the operation requires more bandwidth. An edge computing model can reduce the data sent from the site to the data center because end users only need to send critical data. Depending on the amount of data an enterprise sends and processes, adopting this model can result in significant savings in operational costs; (4)Reliability. All edge data centers and IoT devices are located near users, significantly reducing operational downtime due to network or connection outages. If the edge center is malfunctioning, the IoT device will handle the request automatically.
Market Size & Industry Chain
According to the China Academy of Information and Communications Technology, the Chinese edge computing market reached CNY 43.64 billion in 2021, of which the scale of the edge hardware market was CNY 29.02 billion, and the edge software and service market reached CNY 14.62 billion. The average annual growth rate is expected to be more than 50% in the future, and the overall size of the edge computing market is expected to reach CNY 180.37 billion in 2024, with broad room for growth.
The domestic edge computing industry has three components: upstream, midstream and downstream. The upstream includes cloud service providers and hardware equipment manufacturers, the midstream mainly includes telecom operators, edge computing operation and management service providers, and the downstream includes over-the-top (OTT) manufacturers and some smart terminal and application developers.
The upstream of the edge computing industry chain mainly includes cloud service providers and hardware equipment manufacturers, among which cloud service providers provide edge computing platforms and application software, examples of which include Ali and Tencent. Hardware equipment manufacturer providers provide edge servers, edge gateways, edge controllers, edge AI chips, etc.
The middle stream of the edge computing industry chain mainly includes telecom operators, edge computing operation and management service providers, etc. Among them, telecom operators are at the core, including China Telecom, China Mobile and China Unicom. Access methods, space coverage, and network guarantees limit the edge hardware capabilities of equipment manufacturers. They urgently need better connection methods through 5G and other large-bandwidth, low-latency pipelines, and telecom operators need an all-round layout. Therefore, new requirements are put forward for operators in integrated delivery, infrastructure capability integration, and edge computer room adaptation. Service providers engaged in edge computing operation and management mainly provide services such as community cloud construction and edge cloud hosting.
The downstream of the edge computing industry chain includes OTT manufacturers and some smart terminal and application developers. OTT leading companies expect to realize the ecological sinking from the central to the edge cloud. For example, HBO, Netflix, and CNBC can use edge computing to cache content on edge without relying on any content delivery network (CDN) provider and start their custom micro-caching at the network's edge.
Smart terminal and application developers are located downstream of the edge computing industry chain, providing end users with software and hardware services based on telecom operators' Multi-access Edge Computing (MEC) service platform. Some enterprises can cooperate with operators to build and operate edge computing platforms jointly. The downstream edge computing applications continue to expand, giving application providers broad development potential. Representative companies of smart application developers include Tencent and Hikvision.
Application Scenarios of Edge Computing
According to GSMA research, the top 10 application scenarios with a tremendous demand for edge computing mostly come from the automotive and manufacturing industries like smart parks, games and e-sports, remote surgery guidance, and smart city applications.
Self-driving cars: Level 4 or 5 autonomous vehicles rely on onboard computers to continuously process large amounts of data and make autonomous driving decisions, such as sub-seconds. Cloud-based solutions do not support real-time processing in emergencies, so onboard computers will be enhanced with edge computing and C-V2X technology to provide the capabilities required for autonomous driving, enabling interaction with the broader ecosystem.
Large-scale commercial deployment of Level 4 and Level 5 autonomous vehicles (robo-taxis, self-buses, and self-delivery vans) will face many challenges, including legislation and public perception. The traffic environment in China is relatively complex and might delay the application time. In addition to autonomous driving, edge computing is being explored in the Internet of Vehicles, such as in-vehicle entertainment content caching (including in-vehicle AR/VR services) and real-time traffic monitoring and analysis in smart cities.
Smart Manufacturing: Industry 4.0 provides a series of edge application scenarios with development potential. The Chinese economy is highly dependent on the industrial sector, so improving productivity is critical. The success of high-level automation depends on low-latency network connections that can meet high-precision thresholds and real-time analysis. Achieving this will require a combination of 5G, slicing, and edge computing infrastructure deployed close to (and ideally within) the factory. At present, smart factories and smart ports have begun to show momentum.
Gaming: Gaming and e-sports based on edge and AR/VR technologies are expected to thrive, but this will require the broader deployment of edge computing infrastructure. Considering the real-time nature of games, corresponding 5G technology and edge computing capabilities are required to ensure the latency required for a fixed user experience. The cloud may be too far away for applications requiring a more immersive experience. On the other hand, building some of the computing power into the device is only feasible from the perspective of space and design. Storing content at the edge node also improves the utilization efficiency of the backhaul network, given the content involved. Live event broadcasting (such as smart stadiums) and live TV production and broadcasting can also benefit from 5G and edge computing and do not require extensive edge-side deployment.
Technology Innovation & Development
According to Tech Monitor, innovation in China's edge computing industry exploded in 2022, as seven of the top 10 organizations that filed the most patent applications for edge computing belonged to China.
China shares a unique prospect for edge computing development as it grows to take leading positions in 5G and IoT.
5G: China has made 5G a national priority as 5G networks will boost the broader economy's digital transformation. According to GSMA research, by 2025, China will have the world's largest 5G consumer user market, and 5G users will be close to 800 million, accounting for 50% of the country's mobile connections. To meet the network demand for 5G services, from 2018 to 2025, Chinese operators will invest USD 250 billion in mobile network capital expenditures, of which USD 180 billion will be used for 5G networks. China will account for nearly 20% of global 5G network investment.
The three significant operators also made it clear that they will launch 5G Standalone (SA) networks to support a series of industry applications, which will promote China to become a leader in the SA deployment and commercial market and promote the ecological construction of global devices and terminals compatible with SA. 5G is the key to edge computing. It will become the primary access technology for edge deployment and a powerful driving force for exploring application scenarios.
IoT: China is currently the world's most extensive and most developed Internet of Things (IoT) market. China has over 1 billion (2019) authorized cellular IoT connections. In addition, three-quarters of Chinese companies have deployed IoT, the highest proportion in the world. China is also a significant supplier of the technologies needed to drive the development and growth of the global IoT market, including sensors, microchips and other components. China's leading position in the field of IoT provides a favorable environment for deploying edge technologies, especially for IoT scenarios requiring large amounts of data to be stored, processed, and analyzed closer to users to speed up analysis and response.
Enterprise Analysis & Insights
According to the International Data Corporation (IDC), the overall market size of China's edge computing servers reached USD 1.68 billion in the first half of 2022. It is expected to reach USD 4.27 billion for the year, suggesting an increase of 25.6% year-on-year. IDC also predicts that the compound annual growth rate of China's overall edge computing server market will reach 23.1% from 2021 to 2026, higher than the global growth rate of 22.2%. Numerous domestic edge computing companies contribute to steady market growth, and one of them is ExceedData.
Founded in 2017, ExceedData is a leading company of edge computing platforms designed for automotive manufacturers. The company's edge-cloud computing solutions could achieve multiple functions, including flexible data acquisition, autonomous driving data engine, intelligent diagnosis, etc. The company aims to establish a data infrastructure for every smart car based through efficient edge computing technology. Besides the Beijing headquarter, ExceedData has branches in the United States, Shanghai and Changchun.
According to Huyong, the Partner of ExceedData, the growing complexity of smart cars' software, hardware, and services bring enormous challenges for car development cycles and creates many unknown problems and failures. The traditional way of fixing these problems goes like this: the company needs to send engineers equipped with expensive data acquisition hardware (Datalogger) to find the problem. The engineer must wait until the problem occurs again to get relevant data. Next, the R&D department discusses the methods of solving the problems and tackling them step by step. Such redundant processes could lead to bad user experiences, negative impacts on the company brand, high labor costs and potential safety problems. Additionally, car companies have yet to be able to tap the value of these data.
On the other hand, ExceedData could solve the problem with flexible high-precision signal acquisition technology. Through this highly flexible technology, problematic data collection will be triggered by the slightest abnormal car behavior. Then the engineers could retrieve the data in the cloud and get their hands on them. Most importantly, the car company would be able to identify and solve problems before the users even perceive them, contributing to better user experiences, lower maintenance costs, and higher efficiency.
Huyong believes that edge computing technology will become the new trend with the higher demand for car capabilities and ever-growing data scale. ExceedData has expanded its international markets through various measures and established strategic cooperation with several foreign car companies. It is expected that the company will receive foreign orders in 2023. After the Convid-19 pandemic, China is committed to opening up to the international markets with a cooperative attitude, allowing companies to explore foreign markets. Despite the uncertainties and challenges in the global market, more Chinese companies should actively promote globalization strategies, just like ExceedData.