Adoption Will Drive Worldwide Spending on IoT to $1.1 Trillion in 2023
Worldwide spending on IoT is forecast to pass the $1.0 trillion mark in 2022, reaching $1.1 trillion in 2023, according to IDC. The compound annual growth rate (CAGR) for IoT spending over the 2019-2023 forecast period will be 12.6%.
"Spending on IoT deployments continues with good momentum and is expected to be $726 billion worldwide this year," said Carrie MacGillivray, group vice president, Internet of Things, 5G, and Mobility at IDC. "While organizations are investing in hardware, software, and services to support their IoT initiatives, their next challenge is finding solutions that help them to manage, process, and analyze the data being generated from all these connected things."
The three commercial industries that will spend the most on IoT solutions throughout the forecast are discrete manufacturing, process manufacturing, and transportation. Together, these three industries will account for nearly a third of worldwide spend total in 2023. The primary IoT use case for the two manufacturing industries will be manufacturing operations while transportation industry spending will largely go toward freight monitoring.
The consumer market will be the second largest source of IoT spending in 2019, led by smart home and connected vehicle use cases. With the fastest five-year growth rate across all industries (16.8% CAGR), the consumer market is forecast to overtake discrete manufacturing to become the largest source of IoT spending by 2023.
IoT services will be the largest technology category through the end of the forecast after overtaking hardware spending this year. Together, these two categories account for roughly two thirds of all IoT spending. Hardware spending is dominated by module/sensor purchases. Software will be the fastest growing technology category with a five-year CAGR of 15.3% with a focus on application and analytics software purchases.
Two additional trends within the IoT software category include the dominance of vertical industry IoT platforms and the rise of cloud deployments for IoT software. More than three quarters of all spending on IoT platform software will go toward software packages that integrate and support devices, applications, data schemas, and standards of a single industry.
The United States and China will account for roughly half of all IoT spending throughout the forecast, followed by Western Europe and Asia/Pacific (excluding Japan and China). The regions that will see the fastest IoT spending growth are Latin America and the Middle East and Africa with CAGRs of 23.1% and 19.5% respectively.