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Internet of Things Revenue will Reach $1.1 Trillion

Worldwide spending on the Internet of Things (IoT) is forecast to reach $772.5 billion in 2018 -- that's an increase of 14.6 percent over the $674 billion that will be spent in 2017, according to the latest global market study by International Data Corporation (IDC).

Moreover, overall worldwide IoT-related revenue will sustain a compound annual growth rate (CAGR) of 14.4 percent throughout the 2017-2021 forecast period, surpassing the $1 trillion mark in 2020 and reaching $1.1 trillion in 2021.

IoT Technology Market Development

IoT hardware will be the largest technology category in 2018 with $239 billion going largely toward modules and sensors, along with some spending on infrastructure and security. IDC reports that services will be the second largest technology category, followed by software and connectivity.

Software spending will be led by application software along with analytics software, IoT platforms, and security software. Software will also be the fastest growing technology segment with a five-year CAGR of 16.1 percent.

Furthermore, services spending will also grow at a faster rate than overall spending with a CAGR of 15.1 percent and will nearly equal hardware spending by the end of the forecast.

"By 2021, more than 55 percent of spending on IoT projects will be for software and services," said Carrie MacGillivray, vice president at IDC. "Software creates the foundation upon which IoT applications and use cases can be realized. However, it is the services that help bring all the technology elements together to create a comprehensive solution that will benefit organizations and help them achieve a quicker time to value."

The industries that are expected to spend the most on IoT solutions in 2018 are manufacturing ($189 billion), transportation ($85 billion), and utilities ($73 billion). IoT spending among manufacturers will be largely focused on solutions that support manufacturing operations and production asset management.

In transportation, two thirds of IoT spending will go toward freight monitoring, followed by fleet management. IoT spending in the utilities industry will be dominated by smart grids for electricity, gas, and water.

Cross-Industry IoT spending, which represent use cases common to all industries -- such as connected vehicles and smart buildings -- will be nearly $92 billion in 2018 and rank among the top areas of spending throughout the five-year forecast.

Outlook for Consumer IoT Apps

Consumer IoT spending will reach $62 billion in 2018, making it the fourth largest industry segment. The leading consumer use cases will be related to the smart home, including home automation, security, and smart appliances.

According to the IDC assessment, smart appliances will experience strong spending growth over the five-year forecast period and will help to make consumer the fastest growing industry segment with an overall CAGR of 21 percent.

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