HomeInternet of Things (IoT)Big four cities to blow $1bn each on smart tech – but hope is with sub-$1m spenders

Big four cities to blow $1bn each on smart tech – but hope is with sub-$1m spenders

Smart city spending will jump by almost a fifth in 2020, with the biggest city protagonists in the space set to spend at least $1 billion each. The big opportunity for vendors, however, is with cities with digital-change budgets of $1 million, not $1 billion, according to analyst house IDC.

IDC reckons global spending on smart cities will be around $124 billion in 2020, an 18.9 per cent jump on 2019. As in 2019, the lion’s share of spending will be concentrated in 100-odd well-established smart-city ventures, it said.

Singapore will be the top investor in 2020, followed by Tokyo, spurred by the Summer Olympics. New York City and London place third and fourth. These four cities will each see spending reach more than $1 billion in 2020. But IDC said vendors should instead focus on selling to an expanding range of medium and small-sized cities with annual budgets of less than $1 million.

Almost a third (29 per cent) of global spending on smart city initiatives in 2019 was in “the top 100 cities”, the company calculates, in a new smart cities spending guide. “Growth will be sustained among the top spenders in the short term,” it said of 2020, even as the market is “quite dispersed” across medium and small sized cities, investing in relatively small projects.

The guide considers spending data for more than 200 cities, and extrapolates a global total from there. It finds around 80 are investing over $100 million per year. At the same time, around 70 per cent of the projected $124 billion investment in 2020 will be in cities spending $1 million or less per year on digital innovation projects, it finds.

Serena Da Rold, program manager for customer insights and analysis at IDC, said: “There is a great opportunity for providers of smart city solutions who are able to leverage the experience gained from larger projects to offer affordable smart initiatives for small and medium sized cities.”

The United States, Western Europe, and China will account for more than 70 per cent of global smart cities spending in 2020. The first two regions will contribute around 25 per cent of the total investment, each; China will put in a little less (21.5 per cent). Latin America and Japan will experience the fastest growth in spending, it said.

The biggest use cases, spending-wise, in 2019 were related to resilient energy and infrastructure, driven mainly by smart grids (combining electricity and gas), which saw over a third of total investments; data-driven public safety and intelligent transportation represented around 18 per cent and 14 per cent of overall spending, respectively.

The pattern will continue in 2020, with smart grids attracting the largest share of investments. More than half of spending will go variously on visual surveillance, public transportation, traffic management, and connected back office systems. Vehicle-to-everything (V2X) connectivity, digital twins, and wearables will see the biggest growth in spending over the coming years, the report said.

Ruthbea Yesner, vice president of government insights at IDC, said: “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. Many are moving to incorporate smart city use cases into budgets, or financing efforts through more traditional means. This is helping to grow investments.”

(Image: Nokia)
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