Japan’s Edge Infrastructure Market Soars with a 12.1% Year-on-Year Increase, Expected to Hit ¥2.4 Trillion Yen by 2027

JAPAN – According to IDC’s latest Worldwide Edge Spending Guide, IDC estimates that Japan’s edge infrastructure market in 2023 will be around ¥1.4 trillion yen, representing a 12.1% increase compared to 2022. Additionally, IDC predicts a Compound Annual Growth Rate (CAGR) of 13.3% for the five-year period from 2022 to 2027, with expenditure in 2027 expected to reach ¥2.4 trillion yen.

IDC defines edge as the technology-related actions that are performed outside of the centralized datacenter, where edge is the intermediary between the connected endpoints and the core IT environment. Characteristically, edge is distributed, software defined, and flexible. The value of edge is the movement of computing resources to the physical location where data is created, dramatically reducing time to value and the instant enablement of business processes, decisions, and intelligence outside of the core IT environment.

In 2023, Japan’s Edge Infrastructure Spending is dominated by Hardware, with an estimated expenditure of ¥648.8 billion yen, representing a 10.4% increase compared to 2022. It is forecasted that the expenditure in this category will expand to ¥1.3 trillion yen by 2027. IDC predicts a CAGR of 11.7% for the period from 2022 to 2027 in this category, and it is expected to account for nearly half of the entire edge infrastructure spending throughout the forecast period. The Service category, leads in terms of growth potential, estimated to reach ¥597.6 billion yen, reflecting a 16.1% increase compared to the previous year. IDC predicts a CAGR of 17.0% for the Service category, and an expenditure of ¥1.1 trillion yen by 2027.

IDC predicts a growing demand for advanced data analysis processing using Artificial Intelligence (AI) technology in the field of edge infrastructure. As the use of unstructured data, like videos and images, expands for data analysis processing, and varied data types become more extensive, the need for edge computing diversifies. Accordingly, IDC predicts significant growth in the edge infrastructure market to meet these evolving needs.

IDC conducts market forecasts in six technology domains: Artificial Intelligence (AI); Augmented Reality/Virtual Reality (AR/VR); Drones; Internet of Things (IoT); Robotics; and Service Provider. When looking at Japan’s Edge Infrastructure Market for 2023 by domain, IoT has the largest expenditure, with estimates reaching ¥636.2 billion yen, reflecting a 13.7% increase compared to 2022. It is forecasted that the expenditure in this domain will reach 1.7 trillion yen by 2027. IDC predicts a CAGR of 13.9% for the period from 2022 to 2027 in this category, and it is expected to account for nearly half of the entire edge infrastructure market throughout the forecast period. Service Provider and Drones technology domains are also expected to experience high growth, with the Service Provider domain having the highest CAGR at 24.1%. The expenditure in this domain is predicted to reach ¥404.1 billion yen by 2027.

The results of IDC’s user survey conducted in 2022 revealed that over 80% of respondents, including business professionals from organizations, as well as government officials, either stated that they had “never heard of” the term “edge computing” or knew the word but did not understand its meaning. Edge computing refers to computer processing at the location where it is needed, often in the field or at the edge of a network. The low awareness of “edge computing” among practitioners working in the field suggests that there may be significant unmet needs in those environments, according to IDC.

“The awareness of edge computing in the domestic market is quite low despite the numerous use cases for edge computing as a means to address everyday challenges with IT. The low awareness indicates potential for growth. IT vendors should focus not only on the cloud but also on the edge infrastructure business to bring to light the latent edge computing needs among many customers. Proposing use cases that integrate cloud and edge, providing the optimal computing environment, is crucial,” said Masayuki Shimokawabe, Research Manager, Enterprise Infrastructure, IDC Japan.

The IDC Worldwide Edge Spending Guide  quantifies the edge computing market by forecasting enterprise and service provider spending across 17 technology markets, six technology domains, 19 industries, and nine geographic regions. This version (V1 2023) of the Spending Guide also includes more than 400 use cases that were segmented across various industries and domains.

For media inquiries, please contact Michael de la Cruz at mdelacruz@idc.com or Miguel Carreon at mcarreon@idc.com.

Note: The revenue generated by IT buyers resulting from the implementation of edge computing is not included in the estimates. Additionally, expenditures for IT infrastructure in the core area and endpoint are also excluded from the analysis.