IoT spending to exceed $1tn by 2020

According to a new report from the International Data Corporation (IDC), global spending within the internet of things (IoT) market is expected to reach $772.5bn by the end of 2018.

This represents a yearly growth of 14.6%, up from the $674bn that is expected to be spent throughout the course of 2017.

The report, named “IDC worldwide semiannual IoT spending guide”, further predicts that these levels of growth will be maintained, forecasting a compound annual growth rate (CAGR) of 14.4% between 2017-2021.

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If the forecasts from the IDC are correct, the IoT market will surpass $1tn in 2020.

IoT hardware is expected to be a key driver in 2018, alongside infrastructure and security spending. However, the IoT software market is expected to be the fastest growing technology segment, with a predicted five-year CAGR of 16.1%.

“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,” said Carrie MacGillivray, Vice President, 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.”

Industries where IoT is expected to become a key component include manufacturing ($189bn), transportation ($85bn), and utilities ($73bn). These will be followed by consumer spending, largely driven by an increasing demand for smart home technologies.

“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%.”