Global spending on IoT in 2018 looks set to be up 15% on 2017’s performance, say IDC analysts.
Global spending on IoT is set to reach $772.5 billion in 2018, an increase of almost 15% on this year, according to a new forecast released by analyst company IDC.
Analysts at the research firm reckon the upward trajectory will continue, with IoT spend growing at a CAGR [compound annual growth rate] of 14% between 2017 and 2021, hitting the $1 trillion mark in 2020 and reaching $1.1 trillion in 2021. That’s a slight downgrade from an earlier IDC forecast that estimated a 2021 total of $1.4 trillion.
2018 IoT spending by tech category
When it comes to sales by technology category, hardware will account for the largest proportion in 2018, totalling some $239 billion. Modules and sensors will account for the bulk of this, says IDC, although this category also includes infrastructure.
The next biggest product sector will be services, followed by software and connectivity (networking). Software spending will be led by application and analytics software, IoT platforms and security software. It will also be the fastest-growing technology segment, with a five year CAGR of just over 16%. The global bill for IoT services will grow at just over 15% and will nearly equal the bill for hardware by the end of the forecast period.
According to IDC analyst Carrie MacGillivray, by 2021, more than 55 percent – in other words, the majority – of spending on IoT projects will go towards paying for software and services. “Software creates the foundation upon which IoT applications and use cases can be realized,” she said. “However, it is the services that help bring all the technology elements together to create a comprehensive solution that will benefit organizations and help them achieve a quicker time to value.”
A sector-by-sector look at spend
When it comes to the industries paying out the most to become IoT-enabled, IDC’s picks tally with most other industry estimates. The usual suspects are all here: manufacturing (with an outlay of $189 billion in 2018), transportation ($85 billion) and utilities ($73 billion).
In manufacturing, the company’s analysts said, IoT spend will be largely focused on manufacturing operations themselves and production asset management – in other words, the upkeep and use of plant-floor machinery. In transportation, two-thirds of spending will go towards freight monitoring, followed by fleet management. In the utility industry, spending will be dominated on the development of smart grids for electricity, gas and water.
And then there’s cross-industry spending to consider – those IoT projects and initiatives that see companies from different sectors come together to work on connected vehicles, for example, or smart buildings. Spend here is forecast to be almost $92 billion in 2018 and will rank among the top areas throughout the five-year forecast.
Finally, in terms of geography,Asia/Pacific (excluding Japan) will be the geographic region with the most IoT spend in 2018, racking up a bill of $312 billion. North America (the United States and Canada) will follow closely behind with $203 billion. Europe, the Middle East and Africa (EMEA)’s IoT bill will amount to $171 billion.
The individual country set to spend the most, meanwhile, is China, where $209 billion will be spent in 2018, driven by investment from manufacturing, utilities and government.
Read more: IBM’s Harriet Green: The ABC of IoT in 2018