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According to a new report by IDC, worldwide spending on the Internet of Things (IoT) is forecast to reach $772.5 billion in 2018, an increase of 14.6 percent over the $674 billion that will be spent in 2017.
By 2021, more than 55 percent 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," said Carrie MacGillivray, vice president, Internet of Things and Mobility at IDC.
"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, " MacGillivray said.
The report forecasts that worldwide IoT spending to sustain a compound annual growth rate (CAGR) of 14.4 percent through the 2017-2021 forecast period surpassing the $1 trillion mark in 2020 and reaching $1.1 trillion in 2021.
The industries that are expected to spend the most on IoT solutions in 2018 are manufacturing ($189 billion), transportation ($85 billion), and utilities ($73 billion). IoT spending among manufacturers will be largely focused on solutions that support manufacturing operations and production asset management, IDC said.
"Consumer IoT spending will reach $62 billion in 2018, making it 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, Customer Insights & 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 percent."
The report also pointed out that Asia/Pacific (excluding Japan) (APeJ) will be the geographic region with the most IoT spending in 2018 - $312 billion - followed by North America (the United States and Canada) at $203 billion and Europe, the Middle East, and Africa (EMEA) at $171 billion.
China will be the country with the largest IoT spending total in 2018 ($209 billion), driven by investments from manufacturing, utilities, and government. IoT spending in the United States will total $194 billion in 2018, led by manufacturing, transportation, and the consumer segment. Japan ($68 billion) and Korea ($29 billion) will be the third and fourth largest countries in 2018, with IoT spending largely driven by the manufacturing industry. Latin America will deliver the fastest overall growth in IoT spending with a five-year CAGR of 28.3 percent.