IDC: Worldwide spending on IoT to surpass $772 billion in 2018

Worldwide spending on IoT to top $ 772 billion in 2018

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.

Read more: IoT projects driving IT budget decisions, 451 Research finds

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.”

Read more: Business leaders find IoT economics “increasingly compelling”, says Verizon

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

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Global IoT spending to hit $772 billion in 2018, says IDC

A new update released by the International Data Corporation (IDC) projected that spending on IoT globally will increase 14.6% year over year to $ 772.5 billion in 2018.

IDC’s “Worldwide Semiannual Internet of Things Spending Guide” has projected that IoT spending globally will increase at a CAGR of 14.4% through the 2017-2021, crossing the $ 1 trillion mark set for 2020 and touching the $ 1.1 trillion mark in 2021.

For 2018, IoT hardware will emerge as the biggest technology category followed by services, software and connectivity, IDC said. In the technology category, an amount of $ 239 billion will be dedicated largely toward modules and sensors in addition to infrastructure and security expenditure. In terms of software expenditure, application software will take the lead along with analytics software, IoT platforms, and security software. It is projected that software will be the fastest growing technology segment with a five-year CAGR of 16.1%.

Carrie MacGillivray, vice president, Internet of Things and mobility at IDC, said: "By 2021, more than 55% of spending on IoT projects will be for software and services. This is directly in line with results from IDC’s 2017 Global IoT Decision Maker Survey where organisations indicate that software and services are the key areas of focused investment for their IoT projects.

“Software creates the foundation upon which IoT applications and use cases can be realised. However, it is the services that help bring all the technology elements together to create a comprehensive solution that will benefit organisations and help them achieve a quicker time to value,” MacGillivray added.

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Worldwide IoT spending will reach $772 billion in 2018

Worldwide IoT spending will reach $ 772 billion in 2018

Worldwide IoT spending will reach $ 772 billion in 2018

Worldwide spending on the Internet of Things (IoT) is forecast to reach $ 772.5 billion in 2018, an increase of 14.6% over the $ 674 billion that will be spent in 2017.

A new update to the International Data Corporation (IDC) Worldwide Semiannual Internet of Things Spending Guide forecasts worldwide IoT spending to sustain a compound annual growth rate (CAGR) of 14.4% through the 2017-2021 forecast period surpassing the $ 1 trillion mark in 2020 and reaching $ 1.1 trillion in 2021.

IoT hardware will be the largest technology category in 2018 with $ 239 billion going largely toward modules and sensors along with some spending on infrastructure and security. IoT services will be the second largest technology 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 technology segment with a five-year CAGR of 16.1%. Services spending will also 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.

Carrie MacGillivray, vice president, Internet of Things and Mobility at IDC, said:

“By 2021, more than 55% of spending on IoT projects will be for software and services. This is directly in line with results from IDC’s 2017 Global IoT Decision Maker Survey where organizations indicate that software and services are the key areas of focused investment for their IoT projects.”

“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.”

The industries that are expected to spend the most on IoT solutions in 2018 are manufacturing ($ 189 billion), transportation ($ 85 billion), and utilities ($ 73 billion). 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. IoT spending in the utilities industry will be dominated by smart grids for electricity, gas, and water. Cross-Industry IoT spending, which represent 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.

Consumer IoT spending will reach $ 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,” said Marcus Torchia, research director, Customer Insights & Analysis. “Smart appliances will experience strong spending growth over the five-year forecast period and will help to make consumer the fastest growing industry segment with an overall CAGR of 21.0%.”

Asia/Pacific (excluding Japan) (APeJ) will be the geographic region with the most IoT spending in 2018 – $ 312 billion – followed by North America (the United States and Canada) at $ 203 billion and Europe, the Middle East, and Africa (EMEA) at $ 171 billion. China will be the country with the largest IoT spending total in 2018 ($ 209 billion), driven by investments from manufacturing, utilities, and government. IoT spending in the United States will total $ 194 billion in 2018, led by manufacturing, transportation, and the consumer segment. Japan ($ 68 billion) and Korea ($ 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%.

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