Edge computing is spreading like wildfire, but once the wind dies down and fuel runs out, this season of heightened activity and unmet opportunity will be contained. Hundreds of companies from various market segments have an edge computing offering or strategy, and yet relatively few have cracked the code and built a sustainable business.

Most of these companies are going to run out of cash, fail to hit targets, or otherwise realize the inherent limitations of their respective technologies. What’s on the other side of the edge? The abyss. 

Edge computing has already attracted many players, including traditional wireless networking vendors, colocation and data center providers, hyperscale cloud providers, server manufacturers, and software developers. That landscape applies to 5G mobile edge computing, but there are expansive opportunities outside of 5G networks too. Some providers blend it all together, while others carve out niche implementations for specific applications.

“Edge computing is the coming together of compute, networking, and security at the end of the cloud. Because of this, almost every vendor that plays in one or more of those markets has an edge computing offering,” said Zeus Kerravala, principal analyst at ZK Research.

“While I think the addressable market for edge computing is massive, maybe bigger than cloud itself, I do think there are too many suppliers and not enough demand, particularly at this early stage,” he said, adding that a wave of market consolidation is inevitable.

Others will simply abandon the opportunity, much like Ericsson did with its Edge Gravity division earlier this month less than two years after it was formed, as first reported by TelecomTV.

Survival in this budding market requires scale or offerings built around a unique advantage, Dave Bolan, research director at Dell’Oro Group, told SDxCentral. “Unfortunately for smaller players, the odds favor the larger vendors who already have scale and customer relationships,” he said. However, when a market transitions to a new technology, it opens up opportunities for smaller players with a competitive advantage to penetrate the market, he added.

“Consolidation in this space is inevitable, particularly as the edge computing market matures and defines itself,” said Philip Marshall, chief research officer at Tolaga Research. Key factors leading to that consolidation, according to Marshall, include: use cases that drive scalable edge deployments; a shakeout in the value chain; standardization efforts; and matters of cost or economics.

With respect to standards, there’s plenty of debate about the best guidelines for edge computing but that reckoning won’t occur until the technology and market matures, Marshall said. For example, “will Kubernetes dominate, or will edge embrace serverless architectures?” he said.

Moreover, some edge architectures are expensive to implement, particularly when based on highly distributed managed infrastructure, Marshall explained. “These architectures might support compelling use cases, but not see the light of day because the business case doesn’t offer sufficient scale and profitability.”

Market consolidation is inevitable, according to analysts like Marshall, Bolan, and Kerravala. That view is shared among those working in the weeds of edge computing as well. “The edge is not going to be built by 50 companies. The edge is going to be built by five companies, maybe give or take a few more, a few less than that number,” said Vapor IO CEO Cole Crawford.

“When you consider the potential edge market could reach every radio access network (RAN) site to serve billions of IoT sensors and millions of private enterprise or factory locations around the world over time, the opportunity is very large,” Bolan said. “Vendors have to have staying power, and the earlier you stake your claim, the better chance of being a long-term player, which is why we see so much interest and emphasis being placed on the edge right now as 5G standalone (SA) networks are about to begin deployment.” 

This includes “tremendous momentum coming from the startup community” and a broad array of businesses in infrastructure, real estate, communications, connectivity, data centers, and cloud providers, Marshall said. “We can expect these strategies to shift, such as the case with Ericsson, but I think you will be hard pressed to find any player in the digital services ecosystem that doesn’t have some kind of edge computing strategy today.”

The market position and expectations associated with each of these players is mixed. Hyperscale cloud providers, large mobile network operators, data centers, and colocation providers all have a play in this market, according to Bolan. “You could almost say they all have a symbiotic relationship,” he said.

“As you go deeper into the edge, as an example at every RAN site, a micro edge data center could host multiple telco service providers at the site because they are sharing the same tower, providing better economies of scale,” Bolan explained. “At these deep sites, the telco service provider could provide access to their 5G subscribers for the cloud service providers.”

While hyperscale cloud providers appear to be well positioned to take a dominant role in edge computing, “that is far from a foregone conclusion and will become less likely as more edge-native applications emerge,” Marshall said. Cloud providers also benefit from large installed bases, particularly where edge can compliment existing services, he added.

Kerravala said cloud providers are in the “best situation as they can position the edge as an extension of their cloud.” That’s reinforced by the massive number of businesses that have already planned their IT strategy around cloud computing platforms like Amazon Web Services (AWS), Microsoft Azure, Google Cloud, and others.

Data centers and colocation providers are straddling the edge around relationships with cloud providers and network operators, which enables these players to provide multi-cloud edge services, Kerravala said. Consolidation and partnership expansion in that market is already underway. During the last few months, interconnection giant Equinix acquired bare metal and edge computing startup Packet for $335 million and Digital Realty expanded its partnership with Vapor IO to make the latter's software-defined Kinetic Edge interconnection technology available at its colocation facilities.

To understand the opportunity for operators, it’s important to follow the data and where most distributed data resides, Kerravala said. As such, network operators should start with niche use cases in industries or environments where connectivity is scarce. Accessing new market entry points is another challenge for operators. 

“From a technical perspective, telcos are well positioned because they have key assets,” but network operators aren’t equipped to sell edge computing via direct market channels, Marshall said. “Edge computing solutions tend to require business-to-business-to-consumer type channels,” and “in general, telcos are commercially structured for mass market B2C channel strategies.”