How smart city investments will reach $135 billion in 2021
Around the globe, metropolitan and suburban municipalities continue to explore digital transformation projects. Emerging technology spending for smart city applications is forecast to reach $80 billion in 2018, according to the latest worldwide market study by International Data Corporation (IDC).
IDC has provided a detailed look at the technology investments associated with a range of smart city priorities and use cases. As these initiatives gain traction, IDC expects spending to accelerate over the 2016-2021 forecast period, growing to $135 billion in 2021.
Smart city market development
"Smart cities have recently evolved from a collection of discrete flagship projects to a sizeable market opportunity that will drive significant technology investments in 2018 and beyond," said Serena Da Rold, program manager at IDC.
IDC believes that strategic priorities will drive digital transformation across cities of all sizes, but the analyst's research demonstrates there can be significant differences in the focus of investments across regions.
Smart cities attain digital transformation in an urban ecosystem to meet environmental, financial, and social outcomes. A smart city is developed when multiple initiatives are coordinated to leverage investments, use common IT platforms to decrease service time or costs and share data across systems.
Smart city programs enabled by emerging technologies are accelerated in the city ecosystem to deliver innovative solutions. The strategic priorities that will see the most investment in 2018 are intelligent transportation, data-driven public safety, and resilient energy.
Intelligent traffic and transit and fixed visual surveillance are the two significant use cases, in terms of worldwide spending, followed by smart outdoor lighting and environmental monitoring.
While these use cases attract considerable investments in most geographies, the focus shifts across different regions. Intelligent traffic and transit will be the top priority in investment terms in the United States, Japan, and Western Europe.
Fixed visual surveillance will be the leading use case in China and the second largest in the United States, while environmental monitoring will be relatively more important in Japan.
Outlook for smart city regional growth
On a geographic basis, the United States will be the largest market for smart city technologies with spending forecast to reach $22 billion in 2018. China will be a close second with 2018 spending expected to be nearly $21 billion.
The two countries will share a similar growth trajectory with five-year compound annual growth rates (CAGRs) of 19 percent and 19.3 percent, respectively. The regions that will see the fastest spending growth are Latin America (28.7 percent CAGR) and Canada (22.5 percent CAGR).
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