Worldwide spending on Internet of Things products is expected to hit the $1 trillion mark by 2020. An International Data Corporation (IDC) study says IoT spending will total $674 billion in 2017 and will reach $772.5 billion in 2018.
These predictions are part of an update to the latest IDC Wordlwide Semiannual Internet of Things Spending Guide forecast.
IoT Spending by Category
The forecast further posits that IoT hardware will be the largest technology category in 2018, with $239 billion going largerly toward modules and sensors, along with some spending on infrastructure and security.
Services will be the second largest technology category, followed by software and connectivity.
Software will also be the fastest growing technology segment, with a five-year CAGR of 16.1%.
The study further suggests that services spending will grow at a faster rate than overall spending, with a CAGR of 15.1%, and will nearly equal hardware spending by the end of the forecast.
“By 2021, more than 55% of spending on IoT projects will be for software and services,” said Carrie MacGillivray, VP, Internet of Things and Mobility at IDC.
“Software creates the foundation upon which IoT applications and use cases can be realized. 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.”
Spending on Internet of Things by Industry
Here are the industries the IDC study says will spend the most on IoT solutions in 2018:
- Manufacturing ($189 billion)
- Transportation ($85 billion)
- Utilities ($73 billion)
Meanwhile, the study predicts IoT spending among manufacturers will be largely focused on solutions that support manufacturing operations and production asset management.
in transportation, two thirds of IoT spending will go toward freight monitoring, followed by fleet management, according to IDC.
IoT spending in the utilities industry will be dominated by smart grids for electricity, gas, and water.
Cross-Industry IoT spending, which represents use cases common to all industries, such as connected vehicles and smart buildings, will be nearly $92 billion in 2018 and rank among the top areas of spending throughout the five-year forecast.
IoT Spending by Region
The report says Asia/Pacific (excluding Japan) (APeJ) will be the geographic region with the most spending in 2018, totaling $312 billion.
North America (the United States and Canada) follows at $203 billion, and Europe, the Middle East, and Africa (EMEA) at $171 billion.
The largest amount of spending in 2018 will be conducted in China ($209 billion), which IDC says will be the result of investments from manufacturing, utilities and government.
In the United States, Internet of Things spending will total $194 billion in 2018. The report says manufacturing, transportation and the consumer segment will invest the most.