IDC forecasts nearly 20 percent growth in smart city spending for 2020
SMART CITIES are becoming a reality in every part of the world as governments make the budgets available.
According to a recent IDC forecast, global spending on smart cities initiatives will total nearly US$124 billion in 2020, an increase of 18.9 percent over last year’s figures.
Further, the analyst firm noted that the top 100 cities investing in smart initiatives in 2019 represented around 29 percent of global spending, and while growth will be sustained among the top spenders in the short term, the market is quite dispersed across midsize and small cities investing in relatively small projects.
What’s most interesting, however, is the fact that Singapore was found to be the biggest spender on smart city initiatives — ahead of Tokyo, New York, and London. The four cities are expected to shell out more than US$1 billion on smart city initiatives each.
On a regional basis, the United States, Western Europe, and China will account for more than 70 percent of global smart cities spending throughout the forecast. Latin America and Japan will experience the fastest growth in smart cities spending in 2020.
Overall, however, of all the 200 cities that IDC analyzed, fewer than 80 cities are investing over US$100 million per year.
Obviously, from a smart city solutions provider’s perspective, around 70 percent of the opportunity lies within cities that are spending US$1 million or less per year.
“There is a great opportunity for providers of smart city solutions who are able to leverage the experience gained from larger projects to offer affordable smart initiatives for small and medium-sized cities,” said IDC Program Manager Serena Da Rold.
What are smart city developers investing in?
In its Worldwide Smart Cities Spending Guide, IDC looked at what smart city developers spent on last year. Their review revealed that use cases related to resilient energy and infrastructure represented a third of the opportunity, whereas data-driven public safety and intelligent transportation represented around 18 percent and 14 percent respectively.
Looking at the largest use cases, smart grids (electricity and gas combined) still attract the largest share of investments, although their relative importance will decrease over time as the market matures and other use cases become mainstream.
Fixed visual surveillance, advanced public transportation, intelligent traffic management, and connected back-office follow, and these five use cases together currently represent over half of the opportunity.
In the future, the use cases that IDC expects to see the fastest spending growth in are vehicle-to-everything (V2X) connectivity, digital twin, and officer wearables.
Ultimately, the future of smart cities is bright — they’ll attract overseas investments, talent, as well as propel homegrown businesses forward.
It’s no wonder that Singapore is a big spender, then, given the lead that the country has accumulated through efforts over the past several years. Can competitors in Southeast Asia and other parts of the world catch up?