Gaining a new edge

January 25, 2021

The Internet of Things (IoT) represents a network of modern-day technology that relies on sensors and software to communicate via the internet. Increased adoption of these devices has led to the birth of edge computing, an architecture that enables mass connectivity at new heights.

Edge computing essentially aims to accommodate the increased data needs of the latest technological devices (IoT devices). These include smart phones and self-driving cars—all the way to sensors and robotics used for factory automation.

Because these devices produce data of larger quantity and complexity, edge computing, or decentralization of data storage, increases storage computing capabilities by keeping it closer to the end user. It does this with local servers, which act as the conduit between the cloud (large centralized data centers) and the end user and 5G technology is invaluable to this shift.

For now, traditional “edge” devices, like smartphones, security cameras and laptops account for most of the growth in data storage and transmission. However, a new wave of devices calls for further innovation in how data is handled. Some of these devices include self-driving cars, collaborative robots and smart elevators.

Companies that play a role in the facilitation, protection, and transmission of data will be at the forefront of the transition. But the cloud is not enough to fulfil the vision of mass connectivity between a wide range of industries, hence the need for edge computing.

In practice, this means a dense network of cell towers, base stations, and microdata centers – all underpinned by 5G – which pushes storage computing and analytics functions away from the cloud and closer to the edge.

We believe the cloud, in turn, becomes a warehouse only for the most valuable types of data and a place where we will see artificial intelligence (AI) being deployed at scale. This may sound futuristic, but the transition is very real and will determine the fate of many technology companies.

Against this backdrop, we think the future is as exciting as ever. This next era of cloud computing not only has meaningful implications for business—but potentially for other areas, including geopolitics, as well as policy and regulation formation and even the environment.

Matthew Gerlach, investment manager at Walter Scott

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