In its latest update about the fast-growing market, the International Data Corporation (IDC) forecast that worldwide IoT spending will maintain a compound annual growth rate (CAGR) of 14.4% from 2017 to 2021.
Global spending this year is expected to amount to $674bn before growing 14.6% to reach $772.5bn in 2018, when IoT hardware will be the largest technology category with a valuation of $239bn, followed by services, software and connectivity.
Looking beyond 2018, IDC said software will be the fastest growing technology segment over its five-year forecast, with an overall CAGR of 16.1%.
Spending on services will also grow at a faster rate than total spending, with a CAGR of 15.1%, and will nearly equal spending on hardware by the end of the forecast period.
However, of particular note for marketers, IDC also forecast that consumer IoT spending will reach $62bn in 2018, making it the fourth largest industry segment, and that it will be the fastest growing industry segment over the next five years.
“Consumer IoT spending will reach $62bn 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, IDC’s 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%,” he added.
In terms of IoT spending by region, IDC forecast that Asia-Pacific (excluding Japan) will account for $312bn in 2018, followed by the US and Canada ($203bn) and then Europe, the Middle East and Africa ($171bn).
China alone is forecast to spend $209bn in 2018, driven mostly by investment from manufacturing, utilities and government, while IoT spending in the US is expected to reach $194bn, led by manufacturing, transportation and the consumer segment.
Sourced from IDC; additional content by WARC staff