NEEDHAM, Mass., June 20, 2023–(BUSINESS WIRE)–Worldwide Internet of Things (IoT) spending is projected to be $805.7 billion in 2023, up 10.6 percent from 2022, according to new spending International Data Corporation’s (IDC) Global Internet of Things Guide. Investments in the IoT ecosystem are projected to exceed $1 trillion in 2026 with a compound annual growth rate (CAGR) of 10.4% over the forecast period 2023-2027.
“Recent years have shown that connecting with a digital infrastructure is no longer a luxury, but a necessity,” said Carlos M. Gonzlez, research manager for the Internet of Things at IDC. “For organizations to excel in data-driven operations, investing in IoT projects is essential. Connecting devices to data networks to gather intelligence, expand operations, and increase performance are the hallmarks of running an IoT ecosystem.”
Discrete and process manufacturing are the industries that will see the largest investment in IoT solutions in 2023 and throughout the forecast period, accounting for over a third of all IoT spending globally. Professional services, utilities, and retail are next in line for overall IoT spending, accounting for about 25% of the global total. State/Local Government and Telecom to Deliver Fastest Spending Growth vs. Five-Year Forecasts with CAGRs of 12.0% and 11.7%, respectively.
A chart illustrating worldwide IoT spending by the top 5 industries in 2023 is available by viewing this press release on IDC.com.
Investment in the IoT is a key element in supporting an increasingly digital and distributed organizational footprint. Most of these investments are looking for solutions that can help organizations achieve a specific business goal or customer challenge, such as cost savings or supply chain efficiency. Therefore, use cases are at the heart of most IoT investment plans.
The two IoT use cases that will receive the most investment in 2023 are both closely tied to manufacturing industries: Manufacturing Operations ($73.0B) and Production Asset Management ($68.2B). The next major use cases, Inventory Intelligence ($37.6B), Smart Grid (Electricity) ($36.9B) and Supply Chain Resilience ($31.6B) will benefit from heavy investments from the Retail and Utilities. The use cases that will record the fastest growth in spending represent the different applications of IoT technologies Electric Vehicle Charging (30.9% CAGR), Next Generation Loss Prevention (14.5% CAGR), Agriculture Field Monitoring (13.9 % CAGR) and Connected Vending and Lockers (CAGR of 13.8%).
“The updates to the IoT use case taxonomy in this release of the IoT Spend Guide reflect evolving investment goals for enterprise digital transformation. Thematically, higher investments in manufacturing goods and supply chains resulting from the COVID-19 pandemic and the global reactions that caused massive business and company disruptions are evident in the new use cases.These manufacturing and supply chain related use cases can be observed in the discrete manufacturing, process manufacturing, retail and transportation industries,” said Marcus Torchia, vice president of research at IDC’s Data & Analytics group. “Meanwhile, investments by digital businesses are increasing in other sectors such as Resource Industries. For example, the IoT is helping to improve upstream supply chain processes in agriculture, such as growing, harvesting and delivering products of superior quality to the market”.
This version of the IoT Spend Guide also includes a video analytics prediction overlay that is intended to provide high-level insight into a widely adopted (i.e., present in most or all business sectors) use case. Video analytics refers to the use of artificial intelligence (AI) and other advanced algorithms to recognize, detect, and analyze live or archived video feeds for a variety of uses, including business analytics, security surveillance, and other adaptations rapidly evolving technology. These uses are found in a number of contexts (for example, business analytics in manufacturing and retail, government for crowd and congestion management, and general security surveillance). Video analytics requires IP network capable cameras to support advanced software, either built into the hardware or provided by third-party vendors.
IDC expects spending on video analytics solutions across all industries to exceed $23.5 billion this year. Future versions of the IoT Spend Guide will include additional widely adopted use cases, such as smart buildings.
From a technology perspective, IoT services will be the largest area of spending in 2023 and through to the end of the forecast, accounting for nearly 40% of all IoT spending globally. Hardware spend is the second largest technology category, dominated by module/sensor purchases. Software will be the fastest growing technology category with a five-year CAGR of 11.0% and a focus on applications and analytics software purchases.
Western Europe, the US and China will account for more than half of all IoT spending during the forecast. While Western Europe and the US currently have similar spending levels, Western Europe will extend its lead at a CAGR of 11.0% over the 2023-2027 forecast, versus a CAGR of 8.0% for the United States. China’s IoT spending is expected to surpass the US by the end of the forecast thanks to its CAGR of 13.2%.
The Worldwide Internet of Things Spending Guide (V1 2023) forecasts IoT spend for 18 technology categories and 70 named use cases (87 including secondary use cases) across 19 industries in nine regions and 53 countries. The spending guide also includes an IoT connectivity forecast for cellular networks, low-power wide area networks, and other connectivity (e.g. wired, satellite). This provides technology buyers and vendors with a tool to understand how the plethora of IoT use cases require multiple types of connectivity, driven by differing expectations in terms of latency, bandwidth, and data rate.
Learn about IDC spending guides
IDC Spend Guides provide a granular view of key technology markets from regional industry, vertical, use case, buyer, and technology perspectives. Spending guides are delivered via pivot table format or custom query tool, allowing the user to easily extract meaningful insights into each market by viewing data trends and relationships.
For more information on IDC’s spend guides, contact Marcus Torchia at email@example.com.
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International Data Corporation (IDC) is the leading global provider of market intelligence, advisory services and events for the information technology, telecommunications and consumer technology markets. With more than 1,300 analysts worldwide, IDC provides global, regional and local expertise on IT technology, benchmarking and procurement, industry opportunities and trends in more than 110 countries. IDC’s insights and analytics help IT professionals, business executives, and the investment community make fact-based technology decisions and achieve their key business goals. Founded in 1964, IDC is a wholly owned subsidiary of International Data Group (IDG), the world’s leading technology media, data and marketing services company. For more information about IDC, visit www.idc.com. Follow IDC on Twitter at @IDC and LinkedIn. Subscribe to the IDC blog for industry news and insights.
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