IoT Spending Growing Fast From Relatively Low Bases
Global spending on internet of things (IoT) is forecast by IDC to grow 16.7 percent year over year in 2017, reaching just over $800 billion in revenue. By 2021, global IoT spending is expected to total nearly $1.4 trillion in spending on hardware, software, services, and connectivity, IDC forecasts.
The IoT use cases that are expected to attract the largest investments in 2017 include manufacturing operations ($105 billion), freight monitoring ($50 billion), and production asset management ($45 billion), according to IDC researchers.
Smart grid technologies for electricity, gas and water and smart building technologies are also forecast to see significant investments this year ($56 billion and $40 billion, respectively).
Smart home technologies are forecast to see 19.8 percent compound annual growth rates (CAGR) between 2017 and 2021.
The use cases that will see the fastest spending growth are airport facilities automation (33.4 percent CAGR), electric vehicle charging (21.1 percent CAGR), and in-store contextual marketing (20.2 percent CAGR).
The industries making the largest IoT investments in 2017 are manufacturing ($183 billion), transportation ($85 billion) and utilities ($66 billion).
Horizontal investments such as connected vehicles and smart buildings will generate $86 billion in 2017 spending and rank among the top segments throughout the five-year forecast.
Consumer IoT purchases will be the fourth largest market segment in 2017 at $62 billion, but will grow to become the third largest segment in 2021.
Industries that will see the fastest spending growth are Insurance (20.2 percent CAGR), Consumer (19.4 percent), and Cross-Industry (17.6 percent).
From a technology perspective, hardware will be the largest spending category until the last year of the forecast when it will be overtaken by the faster growing services category, IDC argues.
Hardware spending will be dominated by modules and sensors that connect end points to networks, while software spending will be dominated by applications software.
Services spending will be about evenly split between ongoing and content services and IT and installation services.
The fastest growing areas of technology spending are in the software category, where horizontal software and analytics software will have five-year CAGRs of 29.0 percent and 20.5 percent, respectively.
Security hardware and software will also see increased investment, growing at 15.1 percent and 16.6 percent CAGRs, respectively.
At this point, any forecasts of global “smart city” or “connected car” markets out some decades (annual revenue, for example) necessarily are speculative. We simply have no way of making accurate predictions that far out.
Estimates of smart cities spending (as opposed to citizen or societal benefits) likewise are difficult to quantify.