How edge computing has become a $250 billion 'perfect complement' to cloud computing

• Edge computing places processing power closer to where data is being created in the physical world.
• It has received increased investment thanks to connected devices like factory robots or autonomous vehicles.
• It complement's cloud computing by solving issues of latency, bandwidth, autonomy, or compliance.

As technologies like autonomous vehicles, factory robots, and remote monitoring systems become more commonplace, a concept called edge computing is receiving increased attention and investment.

Edge computing refers to a model in which processing power is placed closer to where data is being created in the physical world: While cloud computing platforms like Amazon Web Services are hosted from the retailer's own massive data centers scattered across the world, edge computing focuses on smartening up the car, robot, or other systems right on the device or placing a processor in closer proximity.

It's a concept that's only become more popular as a surge in connected devices - like Tesla's semi-autonomous cars or camera-laden robots in Amazon's factories - collides with the rise of cloud computing, presenting an opportunity for both.

"Edge computing is actually a counterbalance to the cloud," Gartner analyst Bob Gill told Insider. "It's a perfect complement to the cloud that solves for the weakness of the cloud."

As the flexibility, efficiency, and pricing of cloud computing have led firms to abandon their in-house data centers, it's created a new set of technical challenges. While the cloud offers immense raw computing power, relying on it comes with trade-offs, too.

"People realized that not all the things that they want to do in the cloud worked well in the cloud," IDC analyst Dave McCarthy told Insider.

Specifically, edge computing can help solve issues of latency (where systems need to be able to process data incredibly fast), bandwidth (where machines are generating vast amounts of data that would be inefficient to send to a distant data center), autonomy (where systems need to be able to function without network connection), or compliance (like when information needs to remain within a specific country to adhere with local regulations).

Gartner expects that by 2022 more than 50% of enterprise-generated data will be created and processed outside the traditional data center or cloud.

Why edge computing is on the rise

One of the big reasons for the move towards edge computing is the explosion of the so-called Internet of Things, where connected devices often collect vast amounts of data that can then be analyzed, like smart factory equipment that can flag machines that may break down or restaurant point-of-sale systems that can make predictions about what ingredients will run out first.

"Edge computing and IoT devices go together like peanut butter and jelly," Forrester's Glenn O'Donnell said.

But the amount of data these devices collect can be so vast that sometimes it doesn't make sense financially to store it all, or the process of moving it to the cloud for processing takes too long.

"You see this in connected cars, in smart factories, even in retail environments where a piece of data is generated, and you want to take action on that data, but you need to do it really fast," said IDC's McCarthy. "The whole round trip - like the time it takes to send it to the cloud, have the cloud make a decision, and then send the answer back so you can do something - is too long."

Startups and major public firms alike are focused on different sides of the problem, from services that automatically route workloads through the closest possible data centers, to making chips more capable of performing machine learning-related processes on-device. Intel, for example, expects the silicon-related side of edge computing to be a $65 billion market by 2024, and analyst firm IDC predicts that the global market for edge computing-related products and services will reach $250 billion by 2024.

And while edge computing provides a counterbalance to cloud computing, the hyperscale cloud firms like Amazon Web Services, Microsoft Azure, and Google Cloud are all making big investments too, especially by partnering with telecom companies to extend their networks - with a major push towards helping the carriers adopt 5G, which would allow their respective platforms to reach devices far afield from a traditional WiFi connection.

"The cloud companies are making huge bets on edge technology, which almost seems like an oxymoron, but they recognize that there are a lot of scenarios that don't work in the cloud," said IDC's McCarthy. "They realized that they had two choices: They could ignore that business or they could find a way of extending their cloud technology to these edge locations. And they've chosen to do the latter."