How COVID-19 derailed edge computing

Just prior to the outbreak of COVID-19 in the US, a wide number of startups were planning to ramp up major investments into the edge computing industry. It was the very beginnings of a land grab – after all, the first company to build a mini data center for edge computing in, say, Socorro, New Mexico – a tiny town of around 8,000 an hour south of Albuquerque – would be the first to reap the eventual benefits of that deployment.

The reasoning for such deployments is relatively simple: Small, unmanned data centers in modest cities, such as Socorro, would be the only way to provide super low-latency services to residents in such locations. Otherwise, their Internet traffic would have to travel all the way to bigger data centers in Denver or Dallas, adding precious milliseconds to services like streaming virtual reality that basically need to be instantaneous.

Prior to the pandemic, some companies began investing into the physical construction of those far flung mini data centers, while others pursued investments into the software necessary to run them and tie them into broader cloud computing operations.

And then, in the early part of 2020, the coronavirus put all those hopes on hold.

“When COVID happened, we were in a fortunate spot,” explained Jason Hoffman, president and CEO of MobiledgeX, one of the many startups in the edge computing space. “We were always very well capitalized by Deutsche Telekom.”

Importantly, Hoffman said MobiledgeX closed a funding round in early 2020, just prior to the outbreak of the pandemic. “We were basically heading into the lockdown with years and years of capital in the bank,” he said.

Thanks to that funding, MobiledgeX is still working to design network application programming interfaces (APIs) for developers to use to design low-latency services, just as it was before the pandemic struck. However, the company is now mainly targeting the business market rather than consumer applications. Further, some top executives have moved on. Sunay Tripathi, the company’s former CTO, is now working on edge computing at Google. And Geoff Hollingworth, the company’s former CMO, recently joined Rakuten Symphony.

Redirecting edge spending into the core

According to a number of executives in the industry, the shifts in the edge computing market can be directly traced to pandemic-driven Internet traffic spikes. After all, stay-at-home orders during 2020 pushed huge numbers of workers and students online.

Indeed, according to a new, detailed study from Recon Analytics, US Internet traffic on fiber/copper networks peaked at 27.3% above normal levels during the pandemic, while mobile Internet traffic spiked 22.6% above pre-pandemic levels. Traffic on cable networks crested at 22.1% above pre-pandemic thresholds.

As a result, operators that had earmarked money for edge computing tests and deployments before the pandemic immediately redirected that spending into their core operations to handle the spikes. That left companies hoping to support operators’ edge computing services – whether it was cloud gaming or streaming virtual reality – high and dry.

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