IDC said the overall investment in the IoT ecosystem is expected to surpass $1 trillion in 2026
Global Internet of Things (IoT) spending is forecast to reach $805.7 billion in 2023, an increase of 10.6% compared to 2022, according to a new report by International Data Corporation (IDC).
The report revealed that the overall investment in the IoT ecosystem is 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 González, research manager for the IoT 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.”
According to the IDC report, discrete and process manufacturing are the industries that will experience the largest volume of investment in IoT solutions this year and throughout the forecast period, accounting for more than one third of all IoT spending worldwide. Professional services, utilities and retail are the next largest industries in terms of overall IoT spending with approximately 25% of the worldwide total. Meanwhile, government and telecommunications will deliver the fastest spending growth over the five-year forecast with CAGRs of 12.0% and 11.7% respectively.
IDC also said that the two IoT use cases that will receive the most investment this year are manufacturing operations ($73 billion) and production asset management ($68.2 billion). Other key use cases in terms of investments are inventory intelligence, smart grid and supply chain resilience. Some of the use cases that will experience the fastest spending growth are electric vehicle charging, next generation loss prevention, agriculture field monitoring and connected vending and lockers.
“Thematically, greater investment in goods production and supply chains resulting from the COVID-19 pandemic and global reactions that caused massive business and societal disruptions are evident in the new use cases. These production and supply chain related use cases can be seen in the discrete manufacturing, process manufacturing, retail, and transportation industries,” said Marcus Torchia, research vice president with IDC’s Data & Analytics Group. “Meanwhile, digital business investments are ramping up in other industries such as the resource industries. For example, IoT is helping to improve upstream supply chain processes in Agriculture, such as growing, harvesting, and delivering higher quality produce to market,” he added.
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. Meanwhile, hardware spending will be the second largest technology category, dominated by module/sensor purchases.
IDC also revealed that Western Europe, the United States and China will account for more than half of all IoT spending throughout the forecast period. IoT spending in Western Europe will expand at a 11.0% CAGR over the 2023-2027 forecast, compared to an 8% CAGR for the United States. China’s IoT spending is forecast to surpass the United States by the end of the forecast period, IDC added.
