Investments into the internet of things (IoT) ecosystem is expected to surpass $1 trillion by 2026 as discrete and processing manufacturing will grow to account for more than one-third of all IoT spending globally, according to new research from International Data Corp (IDC).
The growth over the next five years will manage a compound annual growth rate (CAGR) of 10.4% from 2023 to 2027, growing up from $805.7 billion in spending this year.
"The last few years have shown that connecting with a digital infrastructure is no longer a luxury, but a necessity," said Carlos M. González, research manager for the IoT at IDC. "For organizations to excel in data-driven operations, investing in IoT projects is essential. Connecting devices to data networks to gather insight, expand operations, and increase performance are the hallmarks of executing an IoT ecosystem."
While discrete and processing manufacturing will be the fastest growing sector. Professional services, utilities and retail are the next largest sectors in terms of overall IoT spending with about 25% of the global total, IDC said. Government and telecom will also grow respectively in the next few years with CAGRs of 12.0% and 11.7%, respectively.
Key building block
The investment in IoT is a key building block to support digital and distributed organizational footprints. These investments help with specific goals such as cost savings or supply chain efficiency.
According to IDC, the two IoT use cases that will receive the most investment in 2023 are manufacturing operations and production asset management.
This will be followed by
- Inventory intelligence
- Smart grid and supply chain resilience
- Electric vehicle charging
- Next generation loss prevention
- Agriculture field monitoring
- Connected vending and lockers
“Thematically, greater investment in goods production and supply chains resulting from the COVID-19 pandemic and global reactions that caused massive business and societal disruptions are evident in the new use cases,” said Marcus Torchia, research VP of IDC’s Data & Analytics Group. “These production and supply chain related use cases can be seen in the discrete manufacturing, process manufacturing, retail, and transportation industries.”
