AI is driving massive demand for edge computing infrastructure, as industrial and commercial users need to process more data locally to take advantage of AI's capabilities.

Why it matters: The shift follows years of big tech companies pushing organizations to migrate data to cloud computing services in remote data centers.

• Hardware and software providers alike are concluding that edge computing — moving processing power closer to where data is being generated — provides a bridge between 5G networks and cloud data centers. They're starting to package all three services.

Driving the news: Intel, AWS, Nokia and Ericsson announced collaborations Feb. 12 to deliver edge AI services for manufacturing plants, transportation hubs such as ports, and other complicated sites — such as the ancient Chichen Itza temple in Mexico.

• Labs are popping up — including one in St. Louis announced Feb. 15 by Intel, World Wide Technology and Federated Wireless — to help companies test and build customized private networks.
• "The whole industry is figuring out how to trim these [AI] models to fit at the edge without loss of accuracy," Sameer Vuyyuru, AWS head of worldwide telecommunications business development, tells Axios.
• Many of the world's biggest tech companies are preparing to launch new edge AI hardware and software at Mobile World Congress in Barcelona, Spain, starting Feb. 25.

Be smart: The growth of edge AI is evidence that bigger is not always better in AI.

• Edge computing can enable faster data processing for time-sensitive applications and compliance with high security and privacy standards — suiting it to sectors such as health and finance.

What's happening: "75% of data compute is moving to the edge," Kirk Skaugen, head of Lenovo's infrastructure business, tells Axios.

• "We're working with a large car company to get rid of 250,000 embedded PCs and replace them with probably 25,000 edge servers," he said.
• All the edge computing providers Axios spoke to said they're seeing high demand from organizations that operate in remote locations or have special security needs — from financial services to hospitals.

Details: Many new edge services are driven by customer demand.

• In the case of remote oil and gas rigs, owners found they were collecting massive amounts of data that became obsolete within seconds, so they needed ways to process that data quicker, Intel vice president Caroline Chan told Axios.
• Lenovo sees a huge market for edge AI to support smart city technologies — ranging from using computer vision to trigger responses to fires to helping vision-impaired people navigate streets.

By the numbers: The global market for edge computing is already worth over $200 billion a year.

Yes, but: To make better use of all the data they are producing, many large organizations will need to look for combinations of cloud computing, edge computing and private 5G networks to ensure their AI-enabled services run seamlessly.

What they're saying: "We've created a marketplace for private networks," AWS' Vuyyuru says.

• "Private networks are really thriving in four environments: Remote locations, rugged environments, places where resilience is needed — two networks at the same time — and restricted environments, in terms of who needs to have access to it," he says.
• Chan sees the most potential in "personalized private networks" — ones that customize edge computing servers and private 5G network hardware with AI application software to meet the specific needs of an organization.
• "Move AI to where the data is," Skaugen advises.