Will Edge IaaS become the new growth business for CSPs?

CSPs missed the transition to become hyperscale web providers in the public cloud—they were beaten by more innovative and cloud-aware vendors. However, there are new opportunities on the horizon.

Amazon, Microsoft, Alibaba and Google have more advanced cloud offerings with significant, if not insurmountable, data center efficiency and usability differentiation. CSPs have an inherent value, given their proximity to customers at the edge of the network (base stations; central offices; customer premises). Today, this fringe benefit is limited to network connectivity with the public cloud. However, by offering computing and storage capabilities along with network connectivity at the edge of the network, CSPs can provide an edge cloud that can support low-latency applications that cannot be provided by today's centralized cloud architectures. This will help CSPs stand out from cloud providers.

What is Edge Computing Architecture?

While it can be difficult to very specifically define edge computing, its meaning in a broad sense is clear enough. Edge computing refers to an architecture where data is stored and/or processed on hardware that is geographically close to the devices that consume that data.

 In other words, data in an edge computing architecture spends most of its life at the edge of the cloud rather than in the middle, so to speak.

An edge is a computer case / space / facility that is geographically distributed to be physically closer to the starting point or a user base.” —Infrastructure Masons

The big idea behind edge computing architecture is that when data is brought close to the user—rather than being stored and processed on central servers thousands of miles away—performance and reliability increase. In theory at least, edge computing saves precious milliseconds from the time it takes to move data to an end user's device. It also reduces the risk of failure by shortening data transfer paths and reducing the number of places where something could go wrong. It can even provide data security benefits.

The emergence of the edge

As the number of connected devices increases and the technology advances, the need for real-time processing and storage closer to the customer increases as well. This allows users to avoid transit latency to existing cloud platforms. Edge's advancement is powered by three main forces that address the limitations of existing architectures, namely:

The appearance of advanced use cases that require one or more enablers, including:

• Ultra-low latency with ultra-high reliability;
• Extreme density of connected devices;
• Significant processing power at a reasonable cost;
• Storage and processing of data close to the origin.

The needs of global cloud providers, including:

• Expansion of cloud capabilities to device, controller and aggregator levels, minimizing dependence on the main limiting factor, connectivity;
• Improving the Quality of Service (QoS) of existing cloud solutions to address new use cases and secure market leadership.

The needs of telecom operators, including:

• Additional mechanisms to monetize assets by addressing emerging Edge use cases;
• Network economy optimization, especially for 5G implementations;
• Significantly increasing density of the radio access subsystem by moving network functions from existing mobile sites;
• Reducing the need to reach the core of a network by reducing the number of Single Point of Failure (SPOF) and increasing the density of connected devices;
• Ensure real-time access to the RAN, enabling context and location awareness;
• Enabling advanced use cases through the introduction of radio QoS, security, multi-tenancy and low latency.

These three drivers are rapidly changing the established architecture by increasing the role of devices and aggregation, as well as simultaneously introducing a new layer of telco network Edge as an important part of Edge computing.

Edge computing empowers (Cloud) Service Providers to avoid shortcomings with low latency across the network portion between the user and the computing functions. It also significantly lowers impact on considerations such as battery and device design. It also means that they can provide higher-quality services, which in turn can be priced accordingly based on that added value.

Use cases for edge computing

Gaming – Studies have shown that even the smallest amount of latency in VR gaming not only shatters the illusion created by the game, but also gives users a ”seasick” motion sickness feeling. Edge computing will drive the latency down to millisecond times, thus enabling a more realistic experience.

Streaming video – MEC (Multi-access Edge Computing) will not directly help with transmitting content, but it can be put to use in immediately identifying security threats and triggering a response. That's a high-value benefit for businesses.

Industry 4.0 - One of the possible actions for (Cloud) Service Providers in the industrial IoT are Augmented Reality (AR) headsets for field engineers. Placing the data they need on-site, on the network edge, creates a seamless experience when accessing complex technical instructions to complete their tasks. Accelerating data access in this use case can counteract any shortcomings in RAN connectivity that may be inherent in environments filled with electromagnetic interference and leakage.

Fixed perimeter venues – Stadium experiences, corporate campuses, theme parks, universities, festivals all have a fixed physical space served by a fixed number of radio cells, often with a shared demographic of users within that area. Supplying all devices within that perimeter with common functionality, security and user experience has clear advantages, but lessening the backhaul from these scenarios is a huge benefit for MNOs (Mobile Network Operators). Placing the compute function on site would tackle many of the age-old capacity challenges of large groups of people in one place, all using mobile data-thirsty applications.

Edge computing for (Cloud) Service Providers (CSPs)

It is important for Cloud Service Providers and IaaS providers to develop a clear boundary value proposition by extending an infrastructure that supports digital touchpoint solutions.

67% of companies strive to digitize their products and services as part of their digital business initiatives. In addition, 60% support these initiatives by managing Internet of Things (IoT) integration projects. These companies are increasingly moving to the edge to serve customers at digital contact points. However, they find it difficult to connect the physical and digital worlds together, so they turn to suppliers for expertise and solutions to bridge the centralized cloud and edge computing environments. This creates a great revenue opportunity for technical CEOs and product managers of IaaS providers.

By 2023, 40% of global infrastructure as a service revenue will come from edge-related services, up from less than 10% today - Gartner Research

Gartner states that IaaS providers are still missing out on significant incremental business opportunities by not addressing the full scope of enterprise customers' digital business initiatives, especially on the edge. Connecting the physical world to the digital world on the periphery is a driving factor that helps companies improve their customer experience through digital contact points. However, it is highly dependent on the availability of relevant connectivity based on peripheral components of infrastructure service providers.

Digital business initiatives require companies to interact in real-time with their customers to help reduce customer costs and efforts as well as improve the customer experience. To support these initiatives, technical CEOs and product managers of IaaS providers must help their customers create business moments for their customers' customers at the digital touchpoint. This offers tech CEOs and product managers new revenue opportunities, differentiation and customer stickiness, among other benefits.

Despite the need for robust edge and near-edge capabilities and for various edge solutions, centralized infrastructure (e.g. cloud) still plays an important role in most IoT markets. Both consumer and business IoT require cloud infrastructure to deliver, manage and update software and services on edge and near-edge devices. In addition, it plays a key role in coordinating operations on highly distributed edge devices, and in aggregating and archiving data from the edge or intermediate gateways and servers. Centralized infrastructure also makes it possible to offer significantly more robust and scalable machine learning and advanced processing capabilities, as well as links to traditional back office processing. In the case of industrial IoT, which is not a cloud-first environment, on-premise solutions dominate. In this case, the combination of on-site data centers (including private cloud) and edge is the likely solution.

To support digital business initiatives, technical CEOs and product managers of IaaS providers must be proactive.

Published by Jochem Steman.