The IDC Worldwide Semiannual Smart Cities Spending Guide reports that as much as $30 billion will be spent on tech in support of smart cities initiatives in 2018.
The analyst also predicts an accelerate rate of investment over the forecast period, 2017-22, with investments peaking at $54.4 billion in 2022.
IDC noted that fixed usual surveillance, advanced public transit, intelligent traffic management and smart outdoor lighting use cases are at the top of the priority list, accounting for over 35% share ($25.86 billion) of overall spending in 2018.
However, IDC said the fastest growing areas will be in vehicle to everything (V2X) connectivity and officer wearables (Fitbit/smart glasses) use cases, with five-year CAGR of 44.4% and 36.9% respectively.
Gerald Wang, head of public sector at IDC Asia/Pacific, noted that there is mounting pressure among city administrators to deliver smart, livable, and sustainable urban ecosystems. Part of the hurdle stems from the need for clarity around implementation policies that are focused on the building and financing of city infrastructures as well as new city digital services in the long-term.
"City governments need to continually analyze the impact of rapid advances in technologies on city transformation goals and create outcome-based metrics for future smart city investments. This approach requires a rethink of the way governments traditionally procure for technologies and innovative solutions," added Wang.
Hardware continue to account for the highest spending with 38.1% share of the overall spending in 2018 but the trend is likely to observe a linear growth of 14.4% over a five-year CAGR, thus reaching $19.4 billion by 2022.
Services is the second largest technology spend at $8.9 billion, followed by Software and Connectivity in 2018. Over the forecast period (2017-22), Services is expected to grow the fastest at a five-year CAGR of 18.4%.
The growth in services and hardware will be mostly driven by the state/local government segment, with the maximum usage of fixed visual surveillance and smart outdoor lighting use cases.
According to Malini Swamy, market analyst at IDC Asia/Pacific : “Data-driven public safety and intelligent transportation are the two priority investments centered around the region in response to growing urban population. However, we are also finding significant spending and growth in platform related and smart lighting related use cases, which are less often publicized but increasingly happening in cities around the region.”