AI Drives Demand for Next-Gen Compute Architecture

The world of high-performance computing (HPC) will continue to evolve, as enterprise CIOs and CTOs anticipate the future demands for IT Infrastructure capable of supporting new workloads. That said, there isn't enough computing capability today to process the amount of data being created and stored, according to the latest market study by International Data Corporation (IDC).

The processing power required to convert the flood of structured and unstructured data into useful and valuable insights, for a new class of digital business workloads, must now scale faster than Moore's law ever predicted.

HPC Platform Market Development

To address this gap, the computing industry is taking a new path that leverages alternative computing architectures like DSPs, GPUs, FPGAs for acceleration and offloading of computing tasks in order to limit the tax on the general-purpose compute architecture in the system.

IDC believes these architectures are key to the enablement of artificial intelligence (AI), including deep learning models. At the edge; DSPs, FPGAs, and optimized architecture blocks in System on Chips (SoCs) have been more suitable in initial inference applications for robotics, drones, wearables, and other consumer devices like voice-assisted speakers.

The ongoing IDC market study sizes and forecasts data creation, capture, and replication across 70 categories of content-creating things -- including IoT devices. The content is categorized into the types of data being created to understand various trends in usage, consumption, and storage.

The study builds on over twenty years of extensive work in the embedded and computing areas of research at IDC, including leveraging an embedded market model covering about 300 system markets and the key underlying technologies that enable the value of a system.

The study analyzes the shift in the computing paradigm as AI moves from the data center to the edge and endpoint, expanding the choices of computing architectures for each system market as features and optimizations are mapped closer to workloads.

For decades, advancements in process technology, silicon design, and the industry's dedication to Moore's Law predicted the performance gains of microprocessors and transistor functionality and integration in SoCs. These advancements have been instrumental in establishing the cadence of growth and scale of client computing, smartphones, and cloud infrastructure.

To date, microprocessors have been at the very core of computing. However, the story does not end there. IDC believes we are at the beginning of a large market force, as AI becomes more ubiquitous across a broad base of industries and drives intelligence and Inferencing to the edge.

"AI technology will continue to play a critical role in redefining how computing must be implemented in order to meet the growing diversity of devices and applications," said Mario Morales, vice president at IDC.

Outlook for HPC Architecture Transformation

According to the IDC assessment, IT vendors are at the start of their business transformation and what they need from their partners is no longer just products and technology. As an example, to address the IoT and endpoint opportunity, performance must always find a balance with power and efficiency.

Moving forward, IT vendor partners and IT infrastructure buyers will seek open platform ecosystem roadmaps -- not just new semiconductor chips. IDC says this is a fundamental change for technology suppliers in the computing market and only those who adapt will remain relevant. High-performance computing innovations and open hardware architectures will gain new momentum in the market.

Secure Digital Identity in a Global Networked Economy

In the Global Networked Economy, your digital identity is very important. Every organization wants to know, from retailers to banks. There are two issues: fraudsters can exploit the system when an email address or password is all that's required. When the burden of proof is higher, this can be problematic for users.

According to the latest worldwide study by Juniper Research, the applications of unique mobile identifier services, which provide secure digital identity verification through SIMs, will generate over $7 billion for mobile network operators in 2024. This estimate is up from an expected $859 million in 2019 -- a growth rate of over 800 percent.

Digital Identity Market Development

The new research findings noted that, particularly in emerging economies with limited government identity provision, mobile phones will become the primary source of digital identity for over 3 billion people by 2024.

These will be used heavily because they are simpler to scale than card-based identity, particularly in areas of Southeast Asia and Africa, where pre-existing government-issued identities are less common.

The analyst anticipated that other digital players will provide software applications on top of this framework, with over 600 million discrete third-party identity apps using the mobile network operator-provided functions.

These third-parties will typically monetize API calls from identity requestors; cutting network operators out of this space, but the latter could potentially leverage their position in the future to gain further revenue.

Smartphone vendors will also capitalize on digital identity via the production of new devices with advanced functionality -- including biometric identity capabilities.

Juniper Research expects over 5 billion smartphones globally to have some form of biometric in 2024 -- that's nearly 90 percent of all smartphones.

Outlook for Digital Identity Applications Growth

However, the researchers also warned that several services will still need traditional documentation to onboard users initially. As a result, Juniper analysts forecast that traditional forms of identification will not be entirely displaced by mobile forms in the near future.

"Service onboarding is still an opportunity for fraud, despite advances in biometric technology," said  James Moar, senior analyst at Juniper Research. "Many services require a tie back to an existing form of ID, which typically means analog identification. As a result, facial recognition will become key as it can bridge the digital-physical gap more easily than other biometrics."

How Customer Experience Skill Drives Digital Business

Why are more organizations creating Chief Digital Officer (CDO) roles? Why are CMOs and CIOs more likely to collaborate on new digital transformation projects? Digital business growth is driven by the development and deployment of superior online experiences.

Three-quarters of the organizations surveyed by Gartner increased customer experience (CX) technology investments in 2018. Customer analytics continues to be one of the biggest investments, with 52 percent intending to increase funding in 2019, focusing on customer journey analysis, customer needs analysis, voice of the customer (VoC) and digital marketing.

Customer Experience Market Development

Gartner's 2019 survey gathered data from respondents in seven countries within North America, Western Europe and Asia-Pacific regions, across a wide range of industries. The objective of the study was to understand the priorities, technology investments and high-stakes situations faced by organizations in the planning of their CX initiatives.

The survey reveals that when organizations grow in CX maturity, a greater focus of technology investment is placed on increasing customer understanding and delivering accurate actions by analyzing data. Big data analytics can become essential components of a CX strategy.

Furthermore, CX programs often expand from a core team to a wider group of employees and business partners. The requirement for 'change management' makes employee training tools and associated vendor professional services the most important investment.

According to the survey, the top five CX project priorities in 2019 are metrics (64 percent); VoC (50 percent); increasing speed of product and service launches (45 percent); product proliferation and personalization (45 percent); prioritization of CX investments (44 percent); and customer journey automation (44 percent).

"Knowing where your strengths and challenges lie and the next steps needed to improve maturity will help with project prioritization and planning," said Olive Huang, research vice president at Gartner. "Also, extend your spending to different technologies as your CX maturity increases, paying particular attention to customer analytics investments."

According to the survey, the top three emerging technologies expected to have the biggest impact on CX projects in the next three years include artificial intelligence (53 percent), virtual customer assistants and chatbots (39 percent) and omnichannel engagement solutions (37 percent).

The survey reveals that many organizations have faced crisis situations in their CX program within the last three years. Economic or financial pressure has impacted the highest proportion of respondents (53 percent).

For those with lower maturity levels, 60 percent had CX initiative launches stalled due to lack of executive support, and 59 percent found it difficult to demonstrate value or ROI, which leads the CFO to question all future investments.

Outlook for Customer Experience Talent Demand

According to the Gartner assessment, high-stakes situations impacting CX programs can result in the removal of funding for a CX initiative or its cancellation, or even employees losing their jobs. This may lead to a decline in the quality of the customer experience, the weakened financial performance of an organization and erosion of its competitive position.

"Pay special attention to building recruitment, retention and succession plans for key technology leadership roles related to CX," Ms. Huang said. "Candidates for these roles are often hard to find and highly valued in the job market."

Smart Meters Drive IoT Applications in North America

The Internet of Things (IoT) has numerous applications within the energy and utility sector. As an example, smart meter penetration in North America is forecast to reach 81 percent by 2024.

A smart meter is a new kind of gas and electricity meter that can digitally send meter readings to the energy supplier for more accurate consumption readings. Smart meters can also provide in-home displays that enable the consumer to better monitor and manage their energy usage.

According to the latest worldwide market study by Berg Insight, the installed base of smart electricity meters in North America will grow at a compound annual growth rate of 8 percent between 2018 and 2024 to reach 142.8 million units at the end of the forecast period.

Smart Meter Market Development

Over the next five years, smart meter penetration among electricity customers in the U.S. and Canada is projected to increase from around 60 percent in 2018 to more than 80 percent by the end of 2024.

"North America has long been at the forefront of smart grid technology adoption and a large share of the major utilities in the region are now either fully deployed or in the implementation or planning stages of full-scale rollouts," said Levi Östling, IoT analyst at Berg Insight.

The market is however highly heterogeneous in terms of penetration. Some states or provinces remain skeptical towards the business case for advanced metering investments whereas others are soon to begin the second wave of deployments.

Canada has reached a high penetration of smart meters through ambitious initiatives in its most populous provinces. Continued growth in North America the next few years will largely be driven by the large investor-owned utilities in the U.S. market that are yet to roll out smart meters for their customers.

In addition, the large number of smaller cooperative and municipal utilities will also be playing an increasingly central role for penetration growth.

According to the Berg assessment, yearly shipments of smart electricity meters in North America will grow from 8.8 million units in 2018 to 19.9 million units in 2024.

Over the next few years, first-wave deployments of smart meters by utilities -- such as Consolidated Edison, Duke Energy, Ameren, Entergy, PSEG, National Grid and Xcel Energy -- will boost shipments.

Outlook for Smart Meter Deployment Growth

Second wave deployments of smart meters will gradually make their way into the shipment numbers at the end of the forecast period.

"While increasingly powerful meters with edge intelligence capabilities coupled with advanced data analytics software will drive second wave deployments, the utilities are now also looking to leverage their existing RF mesh networks for a wider array of applications beyond metering, bringing an increasingly diverse set of devices onto their networking platforms," concluded Mr. Östling.

Cloud IT Infrastructure Spend will Reach $66.9 Billion

Most enterprise CIOs and CTOs now operate in a 'coexistence environment' where traditional data center (non-cloud), private cloud and public cloud all are an essential part of their IT infrastructure. This technology mix will continue in the foreseeable future. Furthermore, this mix will change slowly.

According to the latest worldwide market study by International Data Corporation (IDC), vendor revenue from sales of IT infrastructure products for cloud environments -- including public and private cloud -- grew 11.4 percent year-over-year in the first quarter of 2019 (1Q19), reaching $14.5 billion.

IDC also lowered its forecast for total spending on cloud IT infrastructure in 2019 to $66.9 billion – that's down 4.5 percent from last quarter's forecast – with slower year-over-year growth of 1.6 percent.

Cloud Infrastructure Market Development

Vendor revenue from hardware infrastructure sales to public cloud environments in 1Q19 was down 13.4 percent compared to the previous quarter (4Q18) but increased 8.9 percent year-over-year to $9.8 billion.

This segment of the market continues to be highly impacted by demand from a small group of hyperscale public cloud service providers, whose spending on IT infrastructure tends to have visible up and down movement.

After a strong performance in 2018, IDC now expects the public cloud IT infrastructure segment to cool down in 2019 with vendor revenue dropping to $44.5 billion -- that's a 2.2 percent decrease from 2018. Although it will continue to account for the majority of spending on cloud IT environments, its share will decrease from 69.1 percent in 2018 to 66.5 percent in 2019.

In contrast, spending on private cloud IT infrastructure has shown more stable growth since IDC started tracking sales of IT infrastructure products in various deployment environments.

In the first quarter of 2019, vendor revenues from private cloud environments increased 16.9 percent year-over-year reaching $4.7 billion. IDC expects spending in this segment to grow 10.1 percent year-over-year in 2019.

Overall, the IT infrastructure industry is at a crossroads in terms of product sales to cloud vs. traditional IT environments. In 3Q18, vendor revenues from cloud IT environments climbed over the 50 percent mark for the first time but have since fallen below this important threshold.

In 1Q19, cloud IT environments accounted for 48.8 percent of vendor revenues.

According to the IDC assessment, for the full year 2019, spending on cloud IT infrastructure will remain just below the 50 percent mark at 49.4 percent. Over the long-term, however, IDC expects that spending on cloud IT infrastructure will grow steadily and will sustainably exceed the level of spending on traditional IT infrastructure in 2020 and beyond.

Spending on the three technology segments in cloud IT environments is forecast to deliver growth for Ethernet switches and storage platforms while compute platforms are expected to decline in 2019.

Ethernet switches will be the fastest-growing at 20.9 percent, while spending on storage platforms will grow slightly at 1.9 percent. Meanwhile, compute platforms will decline by 2.8 percent in 2019 but will remain the largest category of spending on cloud IT infrastructure at $34.2 billion.

Sales of IT infrastructure products into traditional (non-cloud) IT environments remained flat compared to 1Q18. For the full year 2019, worldwide spending on traditional non-cloud IT infrastructure is expected to decline by 3.5 percent, as the technology refresh cycle that drove market growth in 2018 is winding down.

By 2023, IDC expects that traditional non-cloud IT infrastructure will only represent 42.4 percent of total worldwide IT infrastructure spending (down from 51.9 percent in 2018). This share loss and the growing share of cloud environments in overall spending on IT infrastructure is common across all regions.

"As the overall IT infrastructure goes through a period of slowdown after an outstanding 2018, the important trends might look somewhat distorted in the short term," said Natalya Yezhkova, research vice president at IDC.

Outlook for Cloud Infrastructure Investment Growth

Most regions grew their cloud IT Infrastructure revenues in 1Q19. Middle East & Africa was fastest-growing at 35.3 percent year over year, followed by Western Europe at 25.4 percent year-over-year growth.

Other growing regions 1Q19 included Central & Eastern Europe (18.3 percent), Canada and Japan (both at 14.6 percent), the United States (10.7 percent), and China (5.4 percent). Cloud IT Infrastructure revenues were down slightly year over year in Asia-Pacific (excluding Japan) by 1.2 percent and in Latin America by 0.2 percent.

Long term, IDC expects spending on cloud IT infrastructure to grow at a five-year compound annual growth rate (CAGR) of 7.5 percent, reaching $94.5 billion in 2023 and accounting for 57.6 percent of total IT infrastructure spend. Public cloud infrastructure will account for 66.2 percent of this amount, growing at a 6.6 percent CAGR. Spending on private cloud infrastructure will grow at a CAGR of 9.4 percent.

Digital Wallet Spending Surges in Europe and America

The advantage of a digital wallet is that -- for both online and offline transactions -- it affords the user an opportunity to make secure, quick payments, obviating the need for a physical card or to enter bank details for every purchase.

For the unbanked, it goes further, providing a means of economic inclusion, both as an alternative to cash payments and as a way of accessing financial services such as loans and savings accounts.

For the wallet provider, service evolution from the early days of online payments and person-to-person remittance has enabled several fintech vendors to achieve a strong presence across the payments and retail ecosystems.

This now extends both to offering offline and online goods payments on their own and third-party storefronts, together with loyalty programs, bill payments and digital banking services.

Digital Wallet Market Development

Spending via digital wallets across Europe and North America will increase by 40 percent this year to nearly $790 billion, according to the latest worldwide market study by Juniper Research. The largest growth in 2019 will come from in-store payments, with mobile contactless payments more than doubling across these regions.

The study found that while eRetail through wallets would remain the largest contributor to consumer spending, continued migration from cash would see a surge in wallet use at the point-of-sale (POS). This was the case amongst younger digital wallet users and in the U.S. market, where a third of Apple iPhones are now used for contactless payments.

The study findings highlighted the importance of digital wallet providers establishing partnerships with leading banks to maximize reach amongst wallet users. Juniper Research’s analysis found that Apple far outstripped its rivals -- achieving the largest addressable share of banking consumers in 7 of the 10 national markets assessed.

In the online space, the study found that wallets -- including Apple Pay, Amazon Pay and Visa Checkout -- had also significantly expanded their availability at merchant sites, although all lagged well behind PayPal in this regard.

Meanwhile, social payments through wallets will grow strongly both this year and beyond. It's a trend expected to be accelerated in 2020 by the emergence of Facebook’s Calibra wallet and its attendant Libra cryptocurrency.

Outlook for Digital Wallet Applications Growth

However, the study results were less optimistic about prospects for Wearable-Pay wallets -- indicating that their limited addressable bases and functional constraints meant they would struggle against converged wallets, providing an extensive portfolio of online and offline payment offerings.

"Wearable-Pay solutions are still completely dependent on the smartphone and are ultimately limited to a single use case. They are thus likely to remain, at best, a niche offering," said Nick Maynard, lead analyst at Juniper Research.

Internet of Things Connectivity Solutions via Satellite

New satellite constellations are being launched to improve the connectivity options for the Internet of Things (IoT) market. Many application segments will benefit from these new constellations due to the larger range of coverage they offer when compared to terrestrial communication networks.

Different IoT application segments require different types of communication connectivity. Some IoT apps will require real-time connectivity to have a constant flow of data and information, yet some will only require near real-time.

IoT App Connectivity Market Development

By 2024, there will be 24 million IoT connections made via satellite, according to the latest worldwide market study by ABI Research. Their analysis unveils the long-term opportunity within the satellite space for the growth of IoT deployments, particularly in application verticals, such as agriculture and asset tracking.

"Terrestrial cellular networks only cover 20 percent of the Earth’s surface, while satellite networks can cover the entire surface of the globe, from pole to pole," said Harriet Sumnall, research analyst at ABI Research.

The application segments that are expected to see significant growth include agriculture, asset tracking, maritime tracking, and aviation tracking. Maritime and aviation tracking are two important markets for the satellite space due to the lack of terrestrial infrastructures available within their location.

Vendors such as Aerial & Maritime (A&M) provide cost-effective aircraft ADS-B surveillance and ship AIS tracking from constellations of nano-satellites. This technology is a game-changer in this industry space, and recent initiatives demonstrate the high-end tracking capabilities from large satellites in multi-constellations.

According to the ABI assessment, though this is yet to be considered a cost-efficient process, it is expected to become more so with upcoming Software Defined Radio technology, as it is possible to use nano-satellites for these actions.

The larger and more traditional satellite providers are facing new competition from many new start-up constellations from vendors like Amazon and SpaceX, which are launching Low Earth Orbit (LEO) satellites.

LEO satellites, though, are costly in the set-up of the constellations as many satellites are required to give the coverage that vendors are offering.

Outlook for Satellite Communication Growth

LEO satellites are more cost-effective than the larger traditional satellites for these IoT applications. The conventional satellite providers will not only have to consider driving their prices down to become more competitive than the newcomers but also be sure they stay relevant within the market.

"Once the market becomes more successful and has matured, the pricing strategies will drop overall, allowing the satellite IoT connectivity options to compete against terrestrial connectivity options," Sumnall concludes.

Insurtech AI will Advance Robotic Process Automation

The legacy insurance sector has experienced disruptive pressures from new technologies, start-up Insurtech competitors and changing customer demands. Within this environment, organic growth hasn't provided business transformation.

Thus, insurance companies have relied on mergers and acquisitions (M&A) to leapfrog traditional competitors. That said, the number of M&As in the industry has grown by 1,096 percent since 1985, and 128 percent in the past 10 years.

However, business technology innovation and IT-enabled automation will likely drive the majority of new growth via digital transformation strategies.

Insurtech Automation Market Development 

Robotic Process Automation (RPA) is a software solution which is designed to complete activities originally performed by humans. RPA is the future of most repetitive tasks that do not require cognitive capabilities, allowing employees to focus on things that deliver greater value.

Moreover, RPA has proved to be much more accurate and efficient than humans and, when combined with artificial intelligence (AI), it can learn how to handle exceptions and even perform complex non-rules-based tasks.

RPA can lower costs, raise productivity and improve customer experience -- essentially remodeling the way businesses operate. In addition, the high penalties associated with regulatory non-compliance have forced insurers to adopt RPA solutions to streamline manual tasks and improve accuracy.

According to the latest worldwide market study by Juniper Research, insurers will spend $634 million on RPA solutions by 2024, rising from $184 million in 2019 -- that's a 245 percent increase over the next 5 years.

The new study found that previous growth strategies using M&A in the highly-saturated insurance market have resulted in disparate policies, practices and software applications. Adopting RPA solutions will appeal to insurers by enabling substantial cost and time savings, created by mitigating these disparities.

Juniper Research has forecast that North America and Europe will lead RPA adoption over the next 5 years, with more than 65 percent of insurance providers adopting the solutions by 2024. These regions have experienced flat insurance premium revenue growth, therefore insurers want to reduce their costs.

The research also found that RPA will become a crucial enabler in the quest for operational efficiency gains. That's why Juniper has urged IT vendors to ensure effective AI integration so that RPA can perform valuable tasks in a highly reliable way.

Advances in RPA solutions will drive the growth of spending on RPA per insurer. Juniper has forecast that RPA would leverage advances in AI to offer sophisticated services in insurance underwriting, claims management and data handling -- driving the average spend per company by 30 percent over the next 5 years.

Outlook for RPA Applications Growth

"Although automation can bring results in a few weeks, scalability can only be achieved when bots learn how to operate outside simulated environments. Bots must be continuously trained to understand exceptions and non-linear processes, or companies risk being left with limited return on their RPA investment," said Maite Bezerra, research analyst at Juniper Research.

Note, the United States market has the highest forecast platform revenue, estimated at $283.3 million in 2024. This can be attributed to a large number of insurance companies operating in the country. In 2019 the U.S. has 6,838 business operating in the insurance industry, while Western Europe has 5,395.

Data and Analytics Benefits are Driven by Culture Change

Managing big data apps is a challenge for many IT organizations. Moreover, chief data officers (CDOs) and their data and analytics (DA) teams are not achieving the best balance required to deliver superior performance, according to the latest market study by Gartner.

"CDOs are generally focused upon the right things, but they do not have the right mix of activities," said Debra Logan, vice president at Gartner.

Data and Analytics Market Development

The Gartner survey found that while the creation of a data-driven culture was ranked the number one critical factor to the DA team, there were conflicting rankings for technical and nontechnical activities (data integration and data skills training), and strategic and tactical activities (enterprise information management [EIM] program and architecting a DA platform).

While the implementation of a DA strategy was ranked the number three most-critical success factor by 28 percent of CDOs, another strategic activity – creating a data literacy program – was ranked only 12th.

This was despite the fact that, in the same survey, ‘poor data literacy’ was rated the number one roadblock to creating a data-driven culture and realizing its business benefits.

"The low ranking of strategic activities can be explained because the majority of organizations are at maturity level 3 or higher for EIM and business intelligence and analytics," said Ms. Logan.

While the survey shows that information governance is important, especially master data management (MDM), CDOs should never lose sight of the business outcomes they are trying to achieve. Focusing exclusively on governance, even MDM, is not enough to succeed as a CDO.

A majority of CDO respondents rated machine learning (ML) and artificial intelligence (AI) as critical at 76 percent and 67 percent, respectively. Sixty-five percent of respondents were using or piloting ML, while 53 percent were using or piloting AI.

However, a relatively small percentage of CDOs that were surveyed are already using or piloting smart contracts (18 percent) or blockchain (16 percent).

In terms of measuring the value of their organization’s information and data assets, only 8 percent of CDOs were measuring the financial value of DA.

Forty-five percent of CDOs reported they produce some data quality metrics – such as accuracy, completeness, scale and usage – while 29 percent said they measure the impact of key information and data assets on business processes, such as KPIs.

The Gartner survey also found that the majority of CDOs generated value from information assets to improve internal processes (60 percent) and increase the value of products and services (57 percent), with a focus on efficiency.

Outlook for DA Applications Innovation

Fifty percent of CDOs reported a focus on enhancing new offerings by innovating with information. Other means to realize value from information assets also lagged. Nineteen percent of CDO respondents were selling or licensing information via data brokers or online marketplaces and only 17 percent were selling or licensing to others for cash.

Overall, respondents using information and data assets to generate indirect economic benefits were more likely to report superior organizational performance when engaged in improving or developing new offerings, in increasing the value of their products or services, and in exchanging information with business partners for goods, services or favorable contract terms.

IoT Deployment Revenue will Reach $1 Trillion in 2022

Worldwide spending on the Internet of Things (IoT) is forecast to pass the $1 trillion mark in 2022, reaching $1.1 trillion in 2023. The compound annual growth rate (CAGR) for IoT spending over the 2019-2023 forecast period will be 12.6 percent, according to the latest worldwide market study by International Data Corporation (IDC).

"Spending on IoT deployments continues with good momentum and is expected to be $726 billion worldwide this year," said Carrie MacGillivray, group vice president at IDC.

Internet of Things Market Development

While organizations are investing in hardware, software, and services to support their IoT initiatives, their next challenge is finding solutions that help them to manage, process, and analyze the huge amounts of data being generated from all these connected things.

The three commercial industries that will spend the most on IoT solutions throughout the forecast period are discrete manufacturing, process manufacturing, and transportation.

Together, these three industries will account for nearly a third of worldwide spend total in 2023. The primary IoT use case for the two manufacturing industries will be manufacturing operations while transportation industry spending will largely go toward freight monitoring.

The consumer market will be the second-largest source of IoT spending in 2019, led by smart home and connected vehicle use cases. With the fastest five-year growth rate across all industries (16.8 percent CAGR), the consumer market is forecast to overtake discrete manufacturing to become the largest source of IoT spending by 2023.

IoT services will be the largest technology category through the end of the forecast after overtaking hardware spending this year. Together, these two categories account for roughly two-thirds of all IoT applications spending.

Services spending goes toward traditional IT and installation services as well as ongoing services such as content as a service. Hardware spending is dominated by module or sensor purchases. Software will be the fastest growing technology category with a five-year CAGR of 15.3 percent with a focus on application and analytics software purchases.

According to the IDC assessment, two additional trends within the IoT software category include the dominance of vertical industry IoT platforms and the rise of cloud computing deployments for IoT software.

More than three-quarters of all spending on IoT platform software -- middleware that provides the device management, connectivity management, data management, visualization, and applications enablement for connecting IoT endpoints -- will go toward software packages that integrate and support devices, applications, data schemas, and standards of a single industry.

Outlook for IoT Applications Growth

And, organizations are increasingly deploying their IoT software, including applications, analytics software, and IoT platforms, to the public cloud. By the end of the forecast, nearly one-third of IoT software spending will go toward public cloud deployments, compared to less than 20 percent spent on cloud deployments in 2018.

The United States and China will account for roughly half of all IoT applications spending throughout the forecast, followed by Western Europe and Asia-Pacific (excluding Japan and China). The regions that will see the fastest IoT application spending growth are Latin America and the Middle East and Africa with CAGRs of 23.1 percent and 19.5 percent respectively.