Worldwide spending on the IoT will reach $772.5 billion next year, marking a 14.6% jump over 2017 revenues, according to a new forecast from IDC. And manufacturing companies will lead the way.
The market research firm said the IoT will enjoy a compound annual growth rate (CAGR) of 14.4% over five years, becoming a $1.1 trillion market in 2021. Hardware will be “the largest technology category” in 2018, IDC said, with $239 billion going primarily toward modules and sensors and some lesser investments in infrastructure and security.
Services will be the second-largest technology category, and software will be the fastest-growing technology segment, with a 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,” Carrie MacGillivray, vice president of IoT and mobility at IDC, said in a press release. “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.”
Manufacturing is expected to be the leading industry in terms of IoT spending in 2018, IDC said, investing $189 billion in connected solutions, followed by transportation ($85 billion) and utilities ($73 billion). Manufacturers’ investments will focus primarily on offerings that support manufacturing operations and product asset management, while two-thirds of transportation spending will be in freight monitoring.
Cross-industry IoT spending—referring to common use cases such as connected vehicles and smart buildings—will ring up $92 billion next year, while consumer investments in the IoT will total $62 billion in 2018, marking 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 of customer insights and 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%.”