If there’s one safe technology bet over the next few years, it’s the Internet of Things (IoT).
A forecast in IDC’s updated Worldwide Semiannual Internet of Things Spending Guide predicts that IoT hardware spending will approach $400 billion by 2020. Combined with software, services and connectivity solutions, the analyst group expects IoT investments to total $1.29 trillion in 2020 after notching compound annual growth rate (CAGR) gains of 15.6 percent between 2015 and 2020.
For comparison’s sake, IDC forecast that IoT spending would reach $737 billion in 2016, led by the manufacturers ($178 billion), transportation companies ($78 billion) and utilities ($69 billion). The fast-growing consumer IoT market follows in fourth place, but by 2020, IDC predicts that it will slide into third place. Consumers are largely expected to flock to smart home solutions, to the tune of $63 billion by 2020.
“A fairly close relationship exists between high growth IoT use cases in consumer product and service oriented verticals like retail, insurance, and healthcare,” commented IDC research manager Marcus Torchia, in a statement. “In some cases, these are green field opportunities with tremendous room to run.”
Today’s big spenders will settle into more calmer investment patterns over the next few years, added Torchia.
“In other verticals, like manufacturing and transportation, large market size and more moderate growth rate use cases characterize these verticals,” he said. “As a whole, the IoT opportunity is a diverse developing market place for vendors and end users alike.”
Asia-Pacific, excluding Japan, will lead the world in investments, due in part to the region’s appetite for IoT technologies used in manufacturing. Likewise, factories will drive demand in second-place U.S. Western Europe and Japan occupy the third and fourth spots in IDC’s forecast.
Combined, China and the U.S. will be responsible for the majority of all IoT investments in 2020.
“It is great to see that the Internet of Things will continue to fuel both business transformation and innovation acceleration markets such as robotics, cognitive computing, and virtual reality,” stated Vernon Turner, IoT research fellow and senior vice president at IDC. “The investments by China and the United States in IoT solutions is driving these two countries to account for double-digit annual growth rates and over half of the IoT spending.”
Pedro Hernandez is a contributing editor at Datamation. Follow him on Twitter @ecoINSITE.