| The hardware market accounts for 40% of related spending
Korea Creates Diverse IoT-Centric Citizen Experience Services

In its Global Smart City Spending Guide report, IDC Korea forecasts that spending on smart city initiatives in the Asia Pacific region (excluding Japan) will reach $35.4 billion by 2022, a 16.8% increase from the 2018 forecast. Furthermore, IDC projects that spending on smart city programs in Singapore, Beijing, Shanghai, and Seoul will exceed $4 billion this year.

“Prior to 2018, cloud solutions were a must-have for driving smart cities through digital transformation,” said Gerald Wang, head of public sector research at IDC Asia Pacific. “As governments shift their strategies from digitizing siloed, cloud-first transformation efforts to implementing integrated, cross-agency hubs, interconnected ecosystems such as transportation and public safety are increasingly required.”

He also said, “The intelligent edge will be the next stage in the development of mature smart cities,” adding, “As edge-based smart solutions acquire more powerful computing capabilities, cloud platforms can be utilized as grid computing architectures to coordinate and optimize different computing power across cities, facilitating automation within cities.”

By sector, hardware accounted for 40% of smart city spending in 2019, the largest category. Services, software, and connectivity followed. The spending sector with the highest five-year compound annual growth rate (CAGR) is services, which is expected to surpass hardware spending by 2022, reaching a CAGR of 17.9%.

Strategic priorities related to data-driven public safety, renewable energy and infrastructure, and intelligent transportation are expected to account for the largest portion of smart city services spending in 2019.

The top five strategic priorities driving smart city investment are fixed visual surveillance, improved public transportation, intelligent traffic management, non-revenue water (NRW) management, and smart outdoor lighting.

These use cases are projected to account for 40.7% of total investment in 2019. Connected offices and smart kiosks are also expected to see significant investment, as key use cases in economic development, citizen engagement, sustainable planning, and administration.

China is projected to account for the majority of smart city technology investment spending in the Asia-Pacific region. Most of this spending in 2019 is expected to come from fixed visual surveillance. This is because there is a growing demand for video information sources to track and monitor citizen activity.

A real-world example from the IDC report reveals that Singapore is building its own digital twin, and South Korea ranks among the countries with the highest IoT implementation rates. Other countries, such as China, India, Australia, and Indonesia, are also taking steps to adopt IoT. India is also expected to see increased demand for technology investment due to its growing urban population.

Kim Kyung-min, a senior researcher in charge of smart city research at IDC Korea, said, “Domestic smart cities are evolving from being network and hardware infrastructure-centered to service-centered, accelerating the adoption of various next-generation technologies such as IoT, AI, and blockchain.” He added, “In particular, as stable connectivity between various endpoints in the city is secured based on mature network infrastructure, an environment conducive to IoT adoption is being created, and various citizen-experience or administrative services centered on IoT are being created.”

He continued, "If collaboration between siloed organizations and the participation of private companies are added to this, domestic smart cities will develop into a more mature model and contribute to solving various social problems."