Smart City Spending to Reach $28 Billion in AP 2018: Report

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According to a recent IDC report, the spending on technologies that will enable Smart-City initiatives is expected to reach US$28.3 billion this year in Asia Pacific region (excluding Japan)


The report, entitled ‘Worldwide Smart Cities Spending Guide’ provides a comprehensive outlook at the technology investments associated with a range of Smart Cities priorities and use cases. As these initiatives gain traction, IDC expects spending to accelerate over the 2016-2021 forecast period, reaching to $45.3 billion in 2021.


“This research spans an exhaustive compilation of worldwide Smart City projects across 41 categories of use cases,” said Gerald Wang, Head of Public Sector at IDC Asia Pacific. “This is expected to aid both technology buyers as well as market suppliers to have a greater grasp of the broad trends, niche opportunities, as well as best-practices in both regional and global Smart City programs.


“Key investments for Asia Pacific Smart Cities are notably in intelligent transportation, data-driven public safety, and resilient energy and infrastructure, although a deeper dive suggests different prioritisation across first, second and third tier cities in the region.”

Intelligent traffic transit and fixed visual surveillance are seeing maximum impetus from the government sector for stream lining the traffic and towards more secured cities, the two use cases, representing more than 36% share of the overall spending throughout the forecast period (2017-21). However, over the forecast period (2017-21), Vehicle to Everything (V2X) Connectivity and Officer Wearables (Fitbit/smart glasses) use cases will grow exceptionally at a five-year CAGR of 45% and 43.3% respectively.


Services accounts for the highest spending with 32.5% share of the overall spending in 2017, and the trend is likely to observe a linear growth with a five-year CAGR (2017-21) of 21.2% and reach $16.7 billion by 2021. Hardware is the second largest technology group with $31.7 billion spending followed by Software (18.0%) and Connectivity (17.8%) for 2017. Throughout the forecast period, software is expected to grow fastest at a five-year CAGR of 17.7% and reach $8.3 billion by 2021. State/Local Government and Transportation are the two leading industries with the maximum usage of Fixed Visual Surveillance and intelligent transportation use cases. These use cases attract considerable investments in all the countries of APeJ.


Fixed Visual Surveillance will be the leading use case in China, accounting for 21.1% share with the ongoing popularity of cloud services in the telecom sector. China has planned to transform its 500 cities to smart city, of which 290 cities have started the smart-city pilot projects backed by the agreements signed with IT companies and other major Chinese telecommunication companies.


“With the fast influx of population to urban areas in APeJ, It would be a challenge for all the government to supply Sufficient fresh water; universal access to cleaner energy; the ability to travel efficiently from one point to another and a sense of safety and security,” said Ashutosh Bisht, Research Manager, IDC Asia Pacific. “These are the kinds of promises smart cities must fulfil if they are to stay competitive and provide a decent quality of life to their citizens.