February 21, 2020
Spending on smart cities technology is expected to increase nearly 20 percent over the next year. The forecast from the International Data Corporation (IDC) is titled Worldwide Semiannual Smart Cities Spending Guide and shows global spending on smart cities initiatives will total nearly $124 billion this year, an increase of 18.9 percent compared to 2019.
Fixed visual surveillance, advanced public transportation, intelligent traffic management, and connected back office follow, and these five use cases together currently represent over half of the opportunity, said IDC. The use cases that will see the fastest spending growth over the five-year forecast are vehicle-to-everything (V2X) connectivity, digital twin, and officer wearables.
The top 100 cities investing in smart initiatives in 2019 represented around 29 percent of global spending, and while growth will be sustained among the top spenders in the short term, the market is quite dispersed across midsize and small cities investing in relatively small projects.
“The Spending Guide also provides spending data for more than 200 cities and shows that fewer than 80 cities are investing over $100 million per year. At the same time, around 70 percent of the opportunity lies within cities that are spending $1 million or less per year. There is a great opportunity for providers of smart-city solutions who are able to leverage the experience gained from larger projects to offer affordable smart initiatives for small- and medium-sized cities,” said Serena Da Rold, program manager in IDC’s Customer Insights & Analysis group.
In 2019, use cases related to resilient energy and infrastructure represented over one third of the opportunity, driven mainly by smart grids. Data-driven public safety and intelligent transportation represented around 18 percent and 14 percent of overall spending respectively.
Looking at the largest use cases, smart grids (electricity and gas combined) still attract the largest share of investments, although their relative importance will decrease over time as the market matures and other use cases become mainstream.