According to IDC’s Worldwide IoT Spending Guide, global expenditure on the Internet of Things (IoT) is projected to hit $805.7 billion in 2023, reflecting a 10.6% rise compared to the preceding year. It is anticipated that investments in the IoT ecosystem will surpass the $1 trillion mark by 2026, with a CAGR of 10.4% from 2023 to 2027.
IDC emphasizes the necessity of connecting with digital infrastructure and highlights that IoT projects are essential for organizations to excel in data-driven operations. The manufacturing industries, particularly Discrete and Process Manufacturing, will lead IoT investment in 2023 and beyond, accounting for over one-third of global spending. Around a quarter of the total global IoT, spending is attributed to the Utilities, Professional Services, and Retail sectors, according to IDC’s analysis. State/Local Government and Telecommunications will experience the fastest spending growth, with CAGRs of 12.0% and 11.7% respectively.
IoT investment plays a crucial role in supporting digital transformation. Use cases, such as Manufacturing Operations and Production Asset Management, receive the most investment. Other significant use cases include Inventory Intelligence, Smart Grid (Electricity), and Supply Chain Resilience, benefiting from investments in Retail and Utilities.
The use cases with the highest spending growth rates encompass diverse applications of IoT technologies, including Electric Vehicle Charging, Next Generation Loss Prevention, Agriculture Field Monitoring, and Connected Vending and Lockers.
Updates to the IoT use case taxonomy reflect evolving investment objectives in Digital Transformation. The impact of the COVID-19 pandemic has led to increased investments in goods production, supply chains, and digital business processes across various industries.
The IoT Spending Guide also highlights the widespread adoption of Video Analytics, a use case found in most enterprise industries. Video analytics uses AI and advanced algorithms for purposes like business analytics and security surveillance. Spending on Video Analytics solutions is expected to exceed $23.5 billion this year.
IoT services will be the largest area of spending in 2023, representing nearly 40% of global IoT spending. Hardware spending, dominated by module/sensor purchases, is the second-largest category. Software is the fastest-growing category, with a focus on application and analytics software purchases. Western Europe, the United States, and China contribute to over half of global IoT spending, with Western Europe expected to have the highest CAGR. By the end of the forecast period, China is projected to exceed the United States in terms of IoT spending.