Spending on technologies that enable smart city initiatives is expected to reach $28.3 billion this year in Asia-Pacific (excluding Japan), according to IDC’s first ever global semiannual smart cities spending guide.
As these initiatives gain traction, IDC expects spending to accelerate over the 2016-2021 forecast period to reach $45.3 billion in 2021.
“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 prioritization across first-, second- and third-tier cities in the region,” said Gerald Wang, head of Public Sector at IDC Asia Pacific.
Services accounts for the highest spending in 2017, accounting for 32.5% of overall spending, and the trend is likely to observe a linear growth with a five-year CAGR of 21.2%, reaching reach $16.7 billion by 2021.
Hardware is the second largest technology group with $31.7 billion spending, followed by software (18%) 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.
Fixed visual surveillance will be the leading use case in China, accounting for 21.1% of spending with the ongoing popularity of cloud services in the telecom sector. China plans to transform 500 cities into smart cities – 290 have already started pilot smart city projects backed by agreements signed with IT companies and other major Chinese companies such as Ant Financial and Tencent.
“With the fast influx of population to urban areas in APeJ, it will be a challenge for governments 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 at 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.”