April 15, 2024

Global spending on the Internet of Things is expected to surpass $1 trillion by 2026, according to new IDC spending guide

NEEDHAM, Massachusetts, June 20, 2023 – Global spending on the Internet of Things (IoT) is forecast to be $805.7 billion in 2023, an increase of 10.6% from 2022, according to a new Global Internet of Things Spending Guide from International Data Corporation (IDC). Investments in the IoT ecosystem are expected to cross $1 trillion by 2026 with a compound annual growth rate (CAGR) of 10.4% over the forecast period 2023-2027.

“Recent years have shown that connecting to a digital infrastructure is no longer a luxury, but a necessity,” said Carlos M. González, Internet of Things research manager at IDC. “For organizations to excel in data-driven operations, investing in IoT projects is essential. Connecting devices to data networks to collect information, expand operations and increase performance are the hallmarks of running an IoT ecosystem” .

Discrete and process manufacturing are the industries that will see the largest investment in IoT solutions in 2023 and throughout the forecast period, accounting for more than a third of all IoT spending worldwide. Professional services, utilities, and retail are the next largest industries in terms of overall IoT spending, accounting for approximately 25% of the global total. State/local government and telecommunications will generate the fastest spending growth over the five-year forecast with CAGRs of 12.0% and 11.7% respectively.

Investment in IoT is a key component to supporting an increasingly digital and distributed organizational footprint. Most of these investments seek solutions that can help organizations achieve a specific business objective or customer challenge, such as cost savings or supply chain efficiency. As such, use cases are the focus of most IoT investment plans.

The two IoT use cases that will receive the most investment in 2023 are closely linked to the manufacturing industries: manufacturing operations ($73 billion) and production asset management ($68.2 billion). The next largest use cases – Inventory Intelligence ($37.6 billion), Smart Grid (Electricity) ($36.9 billion) and Supply Chain Resilience ($31.6 billion) – will benefit from strong investments from the industries retail and utilities. The use cases that will see the fastest growth in spending represent the diverse applications of IoT technologies: electric vehicle charging (30.9% CAGR), next-generation loss prevention (14.5% % CAGR), agricultural field monitoring (13.9% CAGR) and connected sales and sales. Lockers (13.8% CAGR).

“The updates to the IoT use case taxonomy in this version of the IoT Spending Guide reflect the evolution of companies’ digital transformation investment objectives. Thematically, increased investment in goods production and supply chains of supply as a result of the COVID-19 pandemic and the global reactions that caused massive business “Social disruptions are evident in new use cases. These production and supply chain-related use cases can be seen in the discrete manufacturing, process manufacturing, retail, and transportation industries,” said Marcus Torchia, research vice president of IDC’s data and analytics group. ” Meanwhile, investments in digital businesses are increasing in other industries, such as resource industries. For example, IoT is helping to improve supply chain processes in agriculture, such as growing, harvesting, and delivering higher quality products to the market.”

This version of the IoT Spend Guide also includes a video analytics overlay forecast intended to provide high-level insights into a widely adopted use case (i.e., found in most or all business industries) . Video analytics refers to the use of artificial intelligence (AI) and other advanced algorithms to recognize, detect, and analyze live or stored video streams for a variety of uses, including business analytics, security surveillance, and other adaptations. this rapidly evolving technology. These uses are found in numerous environments (for example, business analytics in manufacturing and retail, in government for crowd management and traffic congestion management, and generally for security surveillance). Video analytics requires cameras with IP networking capabilities to support advanced software, whether built into the hardware or provided by third parties.

IDC expects spending on video analytics solutions across industries to exceed $23.5 billion this year. Future versions of the IoT Spending Guide will include additional widely adopted use cases, such as smart buildings.

From a technology perspective, IoT services will be the largest spending area in 2023 and through the end of the forecast, accounting for almost 40% of all IoT spending worldwide. Hardware spending is the second largest technology category, dominated by module/sensor purchases. Software will be the fastest growing technology category with a CAGR of 11.0% over five years and a focus on application and analytics software purchases.

Western Europe, the United States and China will account for more than half of all IoT spending throughout the forecast. Although Western Europe and the United States currently have similar spending levels, Western Europe will extend its lead with a CAGR of 11.0% over the 2023-2027 forecast, compared to a CAGR of 8.0% for the United States. China’s IoT spending is expected to surpass that of the United States by the end of the forecast due to its 13.2% CAGR.

The Global Internet of Things Spending Guide (V1 2023) forecasts IoT spending for 18 technology categories and 70 named use cases (87 including subuse cases) across 19 industries in nine regions and 53 countries. The spending guide also includes an IoT connectivity forecast for cellular, low-power wide area networks, and other connectivities (e.g., wired, satellite). This provides technology buyers and providers with a tool to understand how the vast number of IoT use cases require multiple types of connectivity, driven by different expectations in terms of latency, bandwidth, and data rate.

About IDC Spending Guides

IDC Spending Guides provide a granular view of key technology markets from a regional, industry vertical, use case, buyer and technology perspective. Spending guides are delivered via a pivot table format or a custom query tool, allowing the user to easily extract meaningful information about each market by viewing data trends and relationships.

For more information about IDC Spending Guides, please contact Marcus Torchia at mtorchia@idc.com.

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About IDC

International Data Corporation (IDC) is the world’s leading provider of market intelligence, advisory services and events for the information technology, telecommunications and consumer technology markets. With more than 1,300 analysts worldwide, IDC offers global, regional and local expertise in technology, IT benchmarking and sourcing, and industry opportunities and trends in more than 110 countries. IDC’s analysis and insights help IT professionals, business executives, and the investment community make fact-based technology decisions and achieve their key business objectives. Founded in 1964, IDC is a wholly owned subsidiary of International Data Group (IDG), the world’s leading technology media, data and marketing services company. For more information about IDC, visit www.idc.com. Follow IDC on Twitter at @IDC and LinkedIn. Subscribe to the IDC blog to receive industry news and insights.

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