Size of the Prize: How Will Edge Computing in Space Drive Value Creation?
This is the first of a two-part series analyzing the value of edge computing in space by the Boston Consulting Group. Read Part Two: Size of the Prize: Assessing the Market for Edge Computing in Space
In 2023, the expression “democratize space” has become ubiquitous, practically resetting the baseline for what to expect from space industry growth. But what does it really mean? The expression suggests that access to launch, manufacturing of satellites, and/or leveraging Low-Earth Orbit (LEO) connectivity to deliver data transmission capability to remote locations is widely available because these services are commoditized and affordable, enabling them to be equitably distributed to diverse user groups, rich and poor alike.
The reality, however, is that space is not yet democratized. The delivery of space-based value-added services to remote locations around the world will require additional technical solutions – powered by groundbreaking innovation to truly serve the distant and the economically disadvantaged. These applications will need to run computing processes at the edge in orbit to deliver services to these locations without the need of terrestrial data centers. The groundbreaking technical innovation that can power these apps is space-based edge computing.
Fundamentally, edge computing enables us to process greater speeds and volumes of data, closer to the source of the data itself, leading to greater action-led results in real-time where those decisions matter. Research conducted by Boston Consulting Group, centered on models of potential growth and uptake across different industries, indicates that space-based edge computing can drive value creation in industrial segments. This is because it eliminates risks of cloud data transfers by processing data locally; saves time and money through shorter download times to Earth and improved efficiency of space infrastructure; and reduces emissions from cloud computing by replacing terrestrial data storage centers.
What is Edge in Space?
Edge computing, simply put, is when the networks or devices that enable connectivity are located near or at the user. Edge is about processing data closer to where it’s being generated, enabling processing at greater speeds and volumes, leading to greater action-led results in real time.
Consider potential use cases in communities that lack the level of connectivity that we might in a major western city like Chicago or London. Imagine the user as the hospital technician in a remote town in Egypt. A high school teacher trying to teach kids how to run Excel in a small town in Ethiopia. A first responder in the Ladakh region of India trying to send vital medical information on fallen hikers in need of immediate care. A fire and rescue team in Patagonia monitoring fire movement imagery. In all these instances, data is being captured and processed in real time in remote settings where cellular networks and 5G have either not yet reached or not yet demonstrated the capability to provide the low latency required to process data.
Edge computing capability can generate meaningful value when computing power is available in remote locations lacking an on-premise data center. By placing computing power at the edge in space, some of these more remote use cases can be served, as the cloud model faces limitations like more data needs, limited bandwidth, and increasing costs.
Edge computing also powers capabilities for more urban and developed environments, such as when companies improve how they manage and use physical assets and create new interactive, human experiences. Some examples of edge use cases include self-driving agricultural equipment, autonomous robots, smart equipment data, and automated retail.
Edge computing capability can sometimes be challenging to discern from IoT, because IoT can be employed as edge computing devices. The biggest difference in performance between IoT and non-IoT device edge computing is the efficacy of processing the data in real time, while syncing that data to a centralized server at a time when it is more technically executable and cybersecure.
While the cloud model is dominating, it also faces limitations, like more data needs, limited bandwidth, and increasing costs, that can disrupt operations. A study published by the Institute of Electrical and Electronics Engineers found that 58% of end users can reach a nearby edge server in less than 10 ms, but just 29% of end users had similar latency with a nearby cloud location. Distance compounds the problem – global technology firm Connectria estimates that every 100 kilometers of distance between a data center and the public cloud adds approximately 1 ms of latency. The impact of latency can add up significant business losses – Amazon has estimated that every 100ms of latency cost 1% in sales.
How Will Edge in Space Drive Value Creation?
Edge computing in space providers are evaluating several criteria as they shape the market offering. For example, suppliers are calculating non-recurring engineering costs required to deliver in-orbit edge compute capability; carefully refining how to land end users, especially government customers; designing their go to market approach against who can best maximize the margin — hyperscalers, app developers, or satellite integrators; assessing how the ground infrastructure asset base will evolve; and carefully choosing which use cases to target for design investment. These choices can help make or break where edge compute in space is adopted, and how suppliers will focus their strategies.
The demand side of this market is also evolving in parallel. For example, government customers value the potential cybersecurity benefits of the edge compute in space technology and are establishing success metrics against this requirement. Concurrently, national security and civil customers are evaluating how to incentivize diverse solution development, as well as integrating the solutions into agencies’ ESG strategies.
Space-based capabilities, particularly in LEO, are already creating unprecedented value for customers and companies. Satellite connectivity is opening different ways for industry-spanning companies to offer new products and services that drive growth and create value. Leading companies in industries like agriculture and transportation are rolling out new satellite-enabled services.
To cite an example from our November 2022 piece “Satellites Are the Next Frontier for Industrial Companies,” agricultural machines will communicate with one another and send data back for analysis — all to help the farmer increase crop yields, minimize the use of fertilizers and pesticides, and improve overall performance. The speed and reliability of this communication will be greatly enhanced by edge computing. By capitalizing on constant connectivity from space, companies enable solutions such as autonomous operations, continuous data transfer and processing, and machine-to-machine communications.
BCG developed a model to project where and how value will be created from edge computing in space capabilities from analysis of industry drivers, forecasted demand, and trends in technological development. This model suggests the use cases of agriculture and defense would likely derive the greatest benefit. Examples of additional use cases that could unlock value through satellite-based computing capability are outlined across key industries in Table 1, below:
These use cases all require real-time operational decision-making, where a few seconds’ delay can correspond to an oil operator analyzing critical warning data from a pressure sensor on a remote platform, the results of which can either protect up to millions of dollars of potential loss or predict conditions for future critical warnings. When such data needs to be processed in cloud data centers, it requires high degrees of latency, or network slowness, so by the time a result is sent back to the platform, it could be too late to make an operational decision.
Edge computing in space enables efficiencies for the above use cases through synchronization, batching or filtering data, which will enable the best use of shared bandwidth during peak periods or through obstructed fields of view. As a result, smarter data processing is enabled in obstructed view environments only through in-space edge computing, and the edge processor in space decides what to route and what not to route for those active decisions to be made.
This paper is the first of a two-part series analyzing the value of edge computing in space by the Boston Consulting Group. The second installment, Size of the Prize: Assessing the Market for Edge Computing in Space, identifies drivers for adoption, and ultimately sizes the prize for edge computing in space.
S. Sita Sonty leads Boston Consulting Group’s Commercial Space team. John Wenstrup is a senior leader in BCG’s Technology, Media & Telecommunications practice. Cameron Scott is Global Sector Lead for Defense and Security. And Dr. Hillary Child is a Project Leader from BCG’s Chicago office.
Additional research by Avril Prakash, Sarvani Yellayi, Ansh Prasad, and John Kim