The update to the International Data Corporation (IDC) Worldwide Semiannual Internet of Things Spending Guide forecasts that worldwide IoT spending will sustain a compound annual growth rate (CAGR) of 14.4 percent 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 primarily toward modules and sensors. Services will be the second largest technology category, followed by software and connectivity.
Software will be the fastest growing technology segment with a five-year CAGR of 16.1 percent, while services spending will also grow at a faster rate than overall spending with a CAGR of 15.1 percent.
“By 2021, more than 55 percent 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,” said Carrie MacGillivray, vice president of 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.”
The industries expected to spend the most on IoT solutions in 2018 are manufacturing ($189 billion), transportation ($85 billion) and utilities ($73 billion). Asia/Pacific (excluding Japan) 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 at $171 billion. China will be the country with the largest total IoT spending in 2018 ($209 billion), while Latin America will deliver the fastest overall growth in IoT spending, with a five-year CAGR of 28.3 percent.
“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 percent.”