IoT spending in 2021 is projected to reach approximately $1.4 trillion.

According to a recent research report from IDC (www.idc.com), global Internet of Things (IoT) spending this year is expected to exceed $800 billion, representing a 16.7% increase compared to the previous year. Over the next five years, enterprises' investments in IoT-related hardware, software, services, and connectivity are expected to continue increasing, leading to higher overall spending.

Carrie MacGillivray, Vice President of IDC's IoT Research Group, stated, "The discussion around IoT is rapidly evolving and changing beyond the stage of simply asking how many devices are connected," and added, "The true value of IoT can be realized when software and services are combined for capturing, interpreting, and utilizing data generated at IoT endpoints." She explained that this IDC report (Worldwide IoT Spending Guide) provides insights into the key use cases where IoT investments are being made and the business value and transformation they aim to achieve.

Use cases expected to lead IoT investment in 2017 include manufacturing operations ($105 billion), cargo monitoring ($50 billion), and production asset management ($45 billion). Significant investments are also expected this year in smart grid technology for electricity, gas, and water sectors, as well as smart building technology ($56 billion and $40 billion, respectively). These use cases are expected to continue leading IoT spending through 2021, while smart home technology is projected to show strong growth (19.8% CAGR) during the five-year forecast period. Use cases expected to experience the fastest spending growth over the next five years include airport facility automation (33.4% CAGR), electric vehicle charging (21.1% CAGR), and in-store contextual marketing (20.2% CAGR).

IoT investment rankings by industry in 2017 are projected to be manufacturing ($183 billion), transportation ($85 billion), and utilities ($66 billion) in order. Cross-Industry IoT investment, corresponding to common use cases across industries such as connected cars and smart buildings, is expected to reach $86 billion in 2017 and is projected to belong to the leading group during the five-year forecast period. Consumer IoT investment is expected to reach $62 billion this year, making it the fourth largest market, but it is projected to grow into the third largest market by 2021. Meanwhile, the fastest spending growth rates are expected in the insurance sector (20.2% CAGR), followed by consumer (19.4%), and cross-industry (17.6%).

"The Asia-Pacific region is emerging as the world's largest IoT investment region based on various use cases such as smart factories and smart cities, and in Korea, more mature IoT adoption is progressing based on concrete examples in manufacturing, public, and other sectors."

By technology type, hardware is expected to remain the largest spending category during the forecast period, but services are expected to surpass it by 2021. Hardware spending will be driven by modules and sensors connecting endpoints and networks, while software spending is expected to be led by application software. Meanwhile, the services sector is expected to allocate spending relatively evenly between continuous content services and traditional IT-related expenditures. The technology sector expected to show the fastest growth is software, with analytics software projected to grow at an annual average rate of 20.5%. Security hardware and software are also expected to increase at annual average growth rates of 15.1% and 16.6%, respectively.

By region, Asia-Pacific (excluding Japan) spending is projected to reach $455 billion by 2021, positioning it as the world's largest IoT investment region. It is expected to be followed by the United States ($421 billion in 2021) and Western Europe ($274 billion). Regions expected to experience the fastest IoT spending growth are Latin America (21.7% CAGR), Middle East and Africa (21.6% CAGR), and Central and Eastern Europe (21.2% CAGR).

Kim Kyung-min, Principal Research Manager at Korea IDC responsible for IoT research, stated, "Whether the IoT market has development potential is no longer a matter of debate," explaining that concrete success cases of IoT continue to emerge with sufficient market consensus. He added, "The Asia-Pacific region is emerging as the world's largest IoT investment region based on various use cases such as smart factories and smart cities, and in Korea, more mature IoT adoption is progressing based on concrete examples in manufacturing, public, and other sectors."