Traditional markets are declining, while third-party platform technologies are driving growth.

New technological advancements, including IoT, robotics, and AR/VR, are driving the next generation of growth in the information and communication technology (ICT) industry.

According to recent research by IT market analysis and consulting firm IDC (www.idc.com), global ICT spending is expected to expand to $5.5 trillion in 2020 when market opportunities arising from these innovative technologies are included. This forecast reflects the extent to which the ICT industry will rely on new technological innovations over the next few years, as traditional revenue begins to decline in the face of self-cannibalization, substitution, and a shift toward cloud-based solutions.

The six innovative technologies referred to as 'Innovation Accelerators' include IoT, robotics, AR/VR, next-generation security, cognitive/artificial intelligence, and 3D printing. These technologies are expected to generate a total of $7.4 trillion in industry revenue from 2015 to 2020.

A visitor is experiencing a VR game at an exhibition. (Reference image)

Accordingly, the new revenue added to the existing ICT industry (approximately $3.7 trillion) is projected to reach $1.8 trillion in 2020. While a significant portion of this spending is expected to come from the IoT market, which is projected to generate approximately $1.3 trillion in revenue in 2020, more than $1 trillion of that is expected to originate from new opportunity markets outside of traditional technology market categories (devices, infrastructure, software, services, and telecom). Robotics, AR/VR, next-generation security, cognitive/artificial intelligence, and 3D printing sectors are also expected to contribute to the growth of the ICT market.

Stephen Minton, Vice President of IDC’s Customer Insights and Analytics Research Group, stated, “Traditional ICT markets such as data center infrastructure, client devices, software, services, and telecommunications are not currently growing faster than real GDP and are becoming increasingly similar to mature sectors in terms of the overall economy.” He explained that, in fact, growth in traditional technologies and services is occurring in the areas of cloud, mobility, big data/analytics, and social business, which IDC calls “The 3rd Platform.” Minton added, “In fact, the remaining areas are already declining, which poses a significant challenge to vendors relying on legacy markets and technologies.”

The largest market in the innovation accelerator sector is the Asia-Pacific region.

During the forecast period (2015-2020), existing ICT spending excluding innovative technologies is expected to stagnate in terms of growth, with an average annual growth rate of 1% (based on constant exchange rates). However, when Innovation Accelerators are included, ICT spending is expected to grow at an average annual rate of 5% during the same period. Looking solely at the Innovation Accelerator sector, it is projected to show a high growth rate of 18% annually. The Asia-Pacific region (excluding Japan) is expected to become the largest market for the Innovation Accelerator sector, surpassing $600 billion in 2020, with the United States likely to follow. The regions expected to experience the fastest growth rates during the same period are Latin America, Central and Eastern Europe, and the Middle East and Africa.

"Vice President Minton stated, 'Device sales are currently driven by mobile devices, demand from cloud service providers accounts for the majority of the growth in all infrastructure hardware and software sales, the big data/analytics sector is at the core of the fastest-growing opportunities, and the growth of the telecommunications market is already entirely dependent on mobile.'"

As public cloud services continue to grow at double-digit rates, the cloud is expected to continue eroding traditional spending on infrastructure, software, and IT services. Big data and analytics are also projected to grow at an average annual rate of 12% from 2015 to 2020, maintaining double-digit growth as well. Meanwhile, with the explosive increase in smartphone sales and the continued growth of mobile data services over the past few years, annual revenue in the mobility sector has already exceeded $1.5 trillion.