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Global Smart City Tech Spending to Reach $124 Billion

When governments invest in new infrastructure, information technology (IT) is now a key component of their development plan. Very large municipal governments, in particular, are spending more on Smart City projects that provide their citizens with many unique advantages.

Furthermore, the IT infrastructure advancement trend is gaining momentum across the globe, as established and emerging technology applications are adopted by the forward-thinking leaders.

Global spending on smart cities initiatives are forecast to total nearly $124 billion this year -- that's an increase of 18.9 percent over 2019, according to the latest worldwide market study by International Data Corporation (IDC).

Smart City Initiative Market Development

The top 100 cities investing in smart initiatives in 2019 represented around 29 percent of global spending, and while growth will be sustained among the top spenders in the short term, the market is quite dispersed across midsize and small cities investing in relatively small projects.

In 2019, use cases related to resilient energy aIDCnd infrastructure represented over one-third of the opportunity, driven mainly by smart grids. Data-driven public safety and intelligent transportation represented around 18 percent and 14 percent of overall spending respectively.

Looking at the largest use cases, smart grids (electricity and gas combined) still attract the largest share of investments, although their relative importance will decrease over time as the market matures and other use cases become mainstream.

Fixed visual surveillance, advanced public transportation, intelligent traffic management, and connected back-office follow, and these five use cases together currently represent over half of the opportunity.

According to the IDC assessment, the use cases that will see the fastest spending growth over the five-year forecast are vehicle-to-everything (V2X) connectivity, digital twin, and officer wearables.

Singapore will remain the top investor in smart city initiatives. Tokyo will be the second-largest spender in 2020, driven by investments for the Summer Olympics, followed by New York City and London. These four cities will each see smart city spending of more than $1 billion in 2020.

On a regional basis, the United States, Western Europe, and China will account for more than 70 percent of global smart cities spending throughout the forecast. Latin America and Japan will experience the fastest growth in smart cities spending in 2020.

Outlook for Smart City Applications Growth

"Regional and municipal governments are working hard to keep pace with technology advances and take advantage of new opportunities in the context of risk management, public expectations, and funding needs to scale initiatives," said Ruthbea Yesner, vice president at IDC.

IDC analysts now believe that many government leaders are moving to incorporate Smart City use cases into budgets, or financing efforts through more traditional means. This is helping to grow further investments.

Looking to the future, more IT infrastructure investment will likely focus on new technology applications such as artificial intelligence (AI) combined with the internet of things (IoT) and 5G wireless communications.

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