Worldwide IoT spending will reach $745 billion this year, a 15.4 percent increase over the $646 billion spent in 2018, and surpass the $1 trillion mark in 2022, according to IDC’s latest forecast.
The firm’s Worldwide Semiannual Internet of Things Spending Guide says IoT spending will maintain a double-digit annual growth rate throughout the 2017-2022 forecast period. The insurance industry will see the fastest compound annual growth rates (CAGR) over the five-years at 17.1 percent, followed by federal/central government (16.1 percent), and healthcare (15.4 percent).
In terms of technology, IoT services will be the largest category in 2019 with $258 billion going toward traditional IT and installation services as well as non-traditional device and operational services. Hardware spending will be close behind at $250 billion led by more than $200 billion in module/sensor purchases. Meanwhile IoT software spending will total $154 billion in 2019 and see the fastest growth over the five-year period with a CAGR of 16.6 percent. Services spending will also grow faster than overall IoT spending with a CAGR of 14.2 percent. IoT connectivity spending will total $83 billion in 2019.
The report also looks at IoT use cases and says the ones that will see the most investment in 2019 are driven by the industry spending leaders: manufacturing operations ($100 billion), production asset management ($44.2 billion), smart home ($44.1 billion), and freight monitoring ($41.7 billion). The IoT use cases that are expected to deliver the fastest spending growth also provide a picture of where other industries are making their IoT investments. These include airport facility automation (transportation), electric vehicle charging (utilities), agriculture field monitoring (resource), bedside telemetry (healthcare), and in-store contextualized marketing (retail).
The U.S. and China will be the global leaders for IoT spending in 2019 at $194 billion and $182 billion, respectively. They will be followed by Japan ($65.4 billion), Germany ($35.5 billion), Korea ($25.7 billion), France ($25.6 billion), and the U.K. ($25.5 billion). However, the countries that will see the fastest IoT spending growth over the forecast period are all located in Latin America: Mexico (28.3 percent CAGR), Colombia (24.9 percent CAGR), and Chile (23.3 percent CAGR).
Vendors Taking Note
Vendors are already taking note of this massive opportunity for IoT technologies, with companies including Alphabet, Microsoft, Hewlett Packard Enterprise (HPE), and Dell Technologies investing billions in IoT and edge products and services.
And last month GE said it will spin off its GE Digital business, including its Predix IoT platform, into a new, independent company owned by GE. The as-yet-unnamed company will start with $1.2 billion in annual software revenue from its existing customer base. The new IoT business will provide software for industries with a focus on utilities, renewables, aviation, oil and gas, food and beverage, chemicals, consumer packaged goods, and mining.
So who is the top IoT platform vendor? It’s Huawei, according to IHS Markit, which ranked it the No. 1 IoT platform vendor in its latest scorecard. Cisco, Microsoft, and PTC rounded out the top four positions.