Global spending on the Internet of Things (IoT) is expected to reach USD 772.5 billion next year, up 14.6 percent from the 674 billion seen for 2017, according to the latest study from IDC.
Global spending on the Internet of Things (IoT) is expected to reach USD 772.5 billion next year, up 14.6 percent from the 674 billion seen for 2017, according to the latest study from IDC. Spending will pass the USD 1 trillion in 2020 and hit USD 1.1 trillion in 2021. This means a compound annual growth rate (CAGR) of 14.4 percent through the 2017-2021 forecast.
By category, IoT hardware will be the largest in 2018 with USD 239 billion going largely toward modules and sensors along with some spending on infrastructure and security. Services will be the second largest category, followed by software and connectivity. Software spending will be led by application software along with analytics software, IoT platforms, and security software. Software will also be the fastest growing segment, with a five-year CAGR of 16.1 percent. Services spending will also grow at a faster rate than overall spending with a CAGR of 15.1 percent and will nearly equal hardware spending by the end of the forecast. Basically, by 2021, more than 55 percent of spending on IoT projects will be for software and services.
Industry is expected to spend the most on IoT systems next year, including manufacturing (USD 189 billion), transportation (USD 85 billion), and utilities (USD 73 billion). Cross-Industry IoT spending, which represent use cases common to all industries, such as connected vehicles and smart buildings, will be nearly USD 92 billion in 2018 and rank among the top areas of spending throughout the five-year forecast. For manufacturers, spend will focus on systems supporting operations and production asset management. For transportation, two thirds of spend will go toward freight monitoring, followed by fleet management, while for utilities, it will be dominated by smart grids for electricity, gas, and water.
Meanwhile, consumer IoT spending will reach USD 62 billion in 2018, making it the fourth largest industry segment. The leading consumer use cases will be related to the smart home, including home automation, security, and smart appliances. Smart appliances in particular will experience strong spending growth over the five-years period and will help to make consumer the fastest growing industry segment with an overall CAGR of 21.0 percent.
By geography, Asia/Pacific (excluding Japan) (APeJ) will spend the most next year at USD 312 billion, followed by North America at USD 203 billion, and Europe, the Middle East, and Africa (EMEA) at USD 171 billion.
China will be the country with the largest IoT spending total in 2018 (USD 209 billion), driven by investments from manufacturing, utilities, and government. IoT spending in the US will total USD 194 billion next year, led by manufacturing, transportation, and the consumer segment. Japan (USD 68 billion) and Korea (USD 29 billion) will be the third and fourth largest countries in 2018, with IoT spending largely driven by the manufacturing industry. Latin America will deliver the fastest overall growth in IoT spending with a five-year CAGR of 28.3 percent.