NEEDHAM, Mass.—New data suggests that worldwide spending on the Internet of Things (IoT) is continuing to see rapid growth, with IoT spending set to jump by 10.6% in 2023 to $805.7 billion in 2023, according to a new International Data Corporation (IDC) Worldwide Internet of Things Spending Guide.
Investments in the IoT ecosystem are expected to surpass $1 trillion in 2026 with a compound annual growth rate (CAGR) of 10.4% over the 2023-2027 forecast period.
"The last few years have shown that connecting with a digital infrastructure is no longer a luxury, but a necessity," said Carlos M. González, 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 insight, expand operations, and increase performance are the hallmarks of executing an IoT ecosystem."
IoT investment is a key building block to supporting an increasingly digital and distributed organizational footprint and in recent years has been a focus of telco and cable operators seeking to offer smart home and security services to their broadband customers.
The IoT Spending Guide explores spending for Video Analytics, which involved the use of of artificial intelligence (AI) and other advanced algorithms to recognize, detect and analyze live or stored video feeds in a variety of uses, including business analytics, security surveillance, and other rapidly evolving adaptations of this technology.
Video analytics requires IP networked capable cameras to support the advanced software whether embedded in hardware or provided by third party vendors, the IDC said.
IDC expects spending on Video Analytics solutions across all industries to be more than $23.5 billion this year. Future releases of the IoT Spending Guide will include additional broadly adopted use cases, such as smart buildings.
The IDC report notes that the largest use cases, however, are for Manufacturing Operations ($73.0 billion), Production Asset Management ($68.2 billion), Inventory Intelligence ($37.6 billion), Smart Grid (Electricity) ($36.9 billion), and Supply Chain Resilience ($31.6 billion).
The IDC added that the use cases that will experience the fastest spending growth include: Electric Vehicle Charging (30.9% CAGR), Next Generation Loss Prevention (14.5% CAGR), Agriculture Field Monitoring (13.9% CAGR), and Connected Vending and Lockers (13.8% CAGR).
From a technology perspective, IoT services will be the largest area of spending in 2023 and through the end of the forecast, accounting for nearly 40% of all IoT spending worldwide, the researchers said.
Hardware spending 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 application and analytics software purchases.
Western Europe, the United States, and China will account for more than half of all IoT spending throughout the forecast. Although Western Europe and the United States currently have similar levels of spending, Western Europe will expand its lead with an 11.0% CAGR over the 2023-2027 forecast, compared to an 8.0% CAGR for the United States. China's IoT spending is forecast to surpass the United States by the end of the forecast due to its 13.2% CAGR.
