Internet of Things (IoT) spending will grow 16.7 percent to just over $800 billion in 2017, and nearly $1.4 trillion by 2021.
“The true value of IoT is being realized when the software and services come together to enable the capture, interpretation, and action on data produced by IoT endpoints,” said Carrie MacGillivray, vice president, Internet of Things and Mobility at IDC.
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).
Smart grid technologies for electricity, gas and water and smart building technologies are forecast to see significant investments this year ($56 billion and $40 billion, respectively).
Smart home technologies are forecast to experience growth of 19.8 percent CAGR over the five-year forecast.
The IoT 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).
Cross-Industry IoT investments, which represent use cases common to all industries, such as connected vehicles and smart buildings, will be $86 billion in 2017 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. Meanwhile, industries that will see the fastest spending growth are Insurance (20.2 percent CAGR), Consumer (19.4 percent), and Cross-Industry (17.6 percent).
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 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.
“As enterprises are adopting to new and innovative services provided by different vendors a lot of new threats are introduced, so it’s very important to upgrade existing security systems to ensure that an optimal business outcome can be reached and ROI can be justified,” said Ashutosh Bisht, research manager for IT Spending across APeJ.
Asia Pacific (excluding Japan) will be the IoT investment leader with spending expected to reach $455 billion in 2021.
The second and third largest regions will be the United States ($421 billion in 2021) and Western Europe ($274 billion).
Manufacturing will be the leading industry for IoT investments in all three regions, followed by Utilities and Transportation in APeJ and Western Europe, and Transportation and Consumer in the United States.
The regions that will experience the fastest growth in IoT spending are Latin America (21.7 percent CAGR), the Middle East and Africa (21.6 percent CAGR), and Central and Eastern Europe (21.2 percent CAGR).
