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The global IoT in smart cities market size was USD 110.56 billion in 2020 and is projected to grow from USD 134.47 billion in 2021 to USD 582.38 billion by 2028, exhibiting a CAGR of 23.3% during the forecast period. The rise in CAGR is attributable to this market’s demand and growth, returning to pre-pandemic levels once the pandemic is over. The global impact of COVID-19 has been unprecedented and staggering, with IoT in smart cities witnessing a negative impact on demand across all regions amid the pandemic. The global market will exhibit a significant growth of 21.3% in 2020 as compared to the average year-on-year growth during 2017-2019.
IoT in smart cities is the application of smart technology and connected devices to gain real-time data of the external environment across the smart city. The growing urbanization and increasing demand for efficient infrastructure in metropolitan cities are expected to boost market growth. In addition, the growing need for energy-efficient resources, waste management, traffic management, public safety, and security is likely to surge the demand for IoT in smart type of cities. For instance, in 2017, with the implementation of a smart waste management solution, Seoul city in South Korea reduced its garbage collection cost by 83%. Moreover, increasing penetration of the internet, rapid adoption of smartphones, and growing 5G infrastructure are supporting the implementation of IoT in the smart cities. Similarly, increasing government initiatives and spending on creating connected cities are expected to boost the IoT in smart cities market.
COVID-19 Pandemic to Surge Demand for IoT in Smart Cities in Long-run Period
The COVID-19 pandemic has severely impacted the ongoing smart city projects. Lockdowns across the globe have highly affected the manpower, supply chain, logistics, low production, and high cost of hardware, impacting the growth of the market. However, in the long run, to deal with the challenges of overcrowding and maintaining social distancing in public places in highly populated metropolitan cities, governments, in partnership with private companies, are focusing on smart solutions. Thus, the 2019 pandemic crisis has surged the demand for this technology in smart cities to increase real-time connectivity. As per the report of Capgemini Sustainable Business Revolution 2030, the development of smart cities is dominantly based on the application of advanced technologies such as IoT to deal with such health emergencies.
A smart city can provide vast data that can be utilized in contact tracing, which could be helpful in emergency situations. Similarly, during the pandemic crises, IoT technology can assist in maintaining cleanliness in the city and detect people without masks or not maintaining hygiene in public places. For instance, In India, the state government utilized geospatial information systems and dashboards in smart cities including Pune, Bangalore, and Surat to monitor and map patients diagnosed positive with covid-19. Thus, the post-pandemic is expected to witness IoT in smart cities market growth to ensure a new normal lifestyle.
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Increasing Implementation of 5G Technology to Drive IoT in Smart Cities
The growing implementation of 5G technology and its expanding infrastructure are offering high opportunities for various applications. The 5G technology offers ultra-low latency, ultra-high speeds, and connects a massive number of smart devices. The technology is capable of boosting the operational efficiency of IoT and smart city solutions. It offers high capacity and fast connection, thereby providing real-time support to the smart city solutions to analyze the behavior of citizens, infrastructure, and connected devices. Thus, the 5G technology can play a critical role in driving the IoT in smart cities market.
In addition, government and IoT technology providers across the globe are focusing on implementing 5G infrastructure. For instance, to improve the smart city infrastructure, the Government of India is focusing on developing 5G architecture for smart cities. Thus, the 5G implementation is expected to fuel the demand for this technology in smart cities.
Increasing Government Initiatives and Smart City Projects to Drive Growth
Today, with the growing urbanization, the metro and tier-one cities are witnessing vast population and revenue growth. However, with the growing population, these cities are facing various challenges such as space issues, security risks, and traffic challenges. Also, the demand for energy-efficient technological solutions in metropolitan cities is increasing. Digital technology has huge potential in dealing with these increasing challenges in the cities. For this, governments across the globe are focusing on implementing smart city projects. Smart solutions can be used to address real-time situations in the city, which will reduce its impact on other resources. For instance,
Thus, the growing interest of governments in developing smart spaces and resources in metropolitan cities is expected to drive market growth. Smart city solutions are expected to boost the quality of living along with energy-saving solutions. For instance, according to the report of Philips Lighting and SmartCitesWorld, the Barcelona government achieved 36.5 million euros through smart car parking and saved 42.5 million euros by implementing a smart water management solution. Additionally, the city has steadily generated 47,000 jobs by implementing IoT services and systems in its smart city projects. Thus, increasing government initiatives and interest in advanced technologies are expected to drive market growth.
Security and Privacy Risks with IoT in Smart Cities to Challenge Growth
IoT in smart cities generates and stores a huge set of digital information associated with the citizens and their surrounding environment. The smart city studies, reports, and highlights concerns over security, privacy, and risk of IoT and smart city-generated data. The citizens of smart cities are vulnerable to growing cyberattacks and data breaching. The data hacked from automated homes, smart healthcare services, and ND smart infrastructure could harm the privacy of the citizen. This is likely to hinder the market growth.
Increasing Data Sets in Smart Cities is Boosting Demand for Report and Analytics
Based on deployment, this market is bifurcated into solutions and services. The solution segment is further categorized into location analytics, security management, real-time streaming analytics, remote monitoring system, data management solutions, and reporting and analytics. The service segment is bifurcated into professional and managed services.
The solution segment is likely to be the leading one during the IoT in smart cities market forecast period. Among the solutions, reporting and analytics are expected to showcase rapid growth as it provides real-time on-field data insights that are helpful for users to make required decisions. Also, IoT generates a vast set of information. It sorts, analyzes, and processes the data essential to provide smart city services.
The remote monitoring system is expected to gain a dominant market share during the forecast period. Its capability of providing services, such as weather monitoring, smart utility management, automation of homes, and air quality management, by remotely managing the connected devices is driving its demand. Further, location analytics, real-time streaming, security management, and others are making the IoT technology efficient, accurate, and error-free.
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Growing Awareness of Energy & Resources Management to Fuel Smart Building Demand
Based on application, the IoT in smart cities market is segmented into smart building, smart healthcare, smart energy, smart transportation, public safety, smart infrastructure, and others (environmental monitoring, smart governance, etc.)
The smart building is expected to dominate the segment during the forecast period owing to the increasing demand for smart and efficient spaces for professional and personal requirements. Smart building is the key element of a smart city and provides security, building operation performance, energy management, building management, operational cost management, and health management.
Similarly, increasing public safety concerns in metropolitan cities are likely to fuel the growth of public safety solutions. Smart transportation is also likely to grow significantly owing to the increasing mismanagement of traffic flow, road accidents, and harmful vehicle emission, among others. Considering the impact of transportation on citizens’ life and the economy, technology providers are focusing on providing smart transportation facilities.
Smart healthcare is expected to gain exponential growth during the forecast period owing to its capability of offering real-time health insights. Smart healthcare offers connected and smart devices, such as wearable devices, fitness trackers, or fitness bands, through which the patients can monitor and educate themselves about their daily health conditions. Besides, healthcare providers will be able to offer remote assistance and continuous check-up of the patient. This is expected to fuel the demand for smart healthcare facilities.
Asia Pacific IoT in Smart Cities Market Size, 2020 (USD Billion)
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By region, the IoT in smart cities market has been analyzed across five major regions, namely North America, Europe, Asia Pacific, the Middle East & Africa, and South America.
Asia Pacific is expected to dominate the market during the forecast period. The growing awareness and demand for smart building and space solutions in highly populated areas are driving the demand for this technology in smart cities in Asia Pacific. The rapidly growing countries, such as China, South Korea, Japan, Singapore, and India, are vastly investing in internet of things solutions. Further, governments of these countries are highly focused on implementing smart city projects to boost security and quality of life. For instance, in October 2020, the Xiangtan municipal government of China secured a loan of USD 200 million from the Asian Development Bank (ADB) for the smart city program. Similarly, the government of India launched 100 smart cities vision in 2015 with a total sanctioned investment of USD 14 billion.
Europe is likely to witness rapid growth owing to the huge demand and investments in IoT in smart cities projects. According to the European Regional Development Fund regulations, annually, USD 16 billion is expected to be invested in smart city projects from 2014 to 2020. According to the Huawei UK Index, London and Bristol are the leading countries in adopting smart city solutions. This is expected to boost the internet of things in smart cities market growth in the region. Similarly,
The Middle East & Africa is paving its way by steadily adopting internet of things in smart cities projects. The region is witnessing various collaborations between government and technology-providing companies that are providing smart city solutions across the countries. For instance, in 2018, Technology Strategies Middle East, in partnership with Software AG, completed the smart city project of UAE, Abu Dhabi, along with Cumulocity IoT as a platform provider.
North America is expected to show significant growth during the forecast period. Increasing government initiatives and funding for smart city projects across the U.S. and Canada are driving the growth in the region. The dominant presence of IoT solution providers, 5G infrastructure providers, and mobile network operators in the region is expected to fuel the adoption of IoT in smart cities of North America. Also, the increasing demand for smart buildings as per the industrial requirement is likely to drive market growth.
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Similarly, South America is gaining steady growth in the market during the forecast period. The demand for the internet of things and connected devices is gaining traction in the region. As per the reports of GSMA on IoT and smart cities, by the year 2023, South America is estimated to have 1.2 billion connected devices. Further, in 2017 Sao Paulo and Claro became the first cities of Brazil and Colombia to adopt smart lighting solutions. However, the lack of resources in the region is still a barrier to the rapid adoption of smart solutions in the region.
Microsoft Corporation to Expand Solution Offering by Entering into Strategic Partnerships and Alliances Globally
Microsoft Corporation is focused on offering advanced and intelligent smart city solutions. Through its partnership with advanced technology providers, the company is expanding its product portfolio. The company is offering its advanced solutions, such as digital twin, IoT, and cloud services, to provide highly connected buildings and spaces. Similarly, the key players of the market, such as IBM Corporation, Cisco Systems, Inc., Intel Corporation, Huawei Technologies Co., Ltd., and Microsoft Corporation, and others, are highly focused on business expansion. These players are collaborating with governments across the globe to increase their presence and market share. The key players are connecting with 5G infrastructure providers and mobile network operators to offer uninterrupted connection and smooth operations across the cities.
October 2020 – Microsoft Corporation announced the strategic alliance with Bentley Systems to deliver advanced solutions and technology for smart construction and smart city urban planning. The companies have combined the iTwins platform from Bentley Systems with Azure Maps and Microsoft’s Azure IoT Digital Twins, offering comprehensive city-scale digital twins for constructors, architectures, engineers, and more.
January 2020 – Microsoft Corporation, in collaboration with Akenza Core and ewz, implemented Long Range Wide Area Network at public spaces and building for Smart City Zurich plan. The companies integrated intelligent services and Akenza Core IoT systems for customers to analyze data.
LIST OF KEY COMPANIES PROFILED:
An Infographic Representation of IoT in Smart Cities Market
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The IoT in smart cities market research report highlights leading regions across the world to offer a better understanding to the user. Furthermore, the report provides insights into the latest industry growth trends and analyzes technologies that are being deployed at a rapid pace at the global level. It further highlights some of the drivers and restraints, helping the reader to gain in-depth knowledge about the market.
Value (USD Billion)
Component; Application; and Region
According to Fortune Business Insights, the global market size is projected to reach USD 582.38 billion by 2028.
In 2020, the market value stood at USD 110.56 billion.
The market is projected to grow at a CAGR of 23.3% during the forecast period.
The smart building segment is expected to lead the market.
Increasing government initiatives to commence smart city projects are the key factors driving market growth.
IBM Corporation, Cisco Systems, Inc., Intel Corporation, Huawei Technologies Co., Ltd., Microsoft Corporation, Siemens AG, and Robert Bosch GbmH are the top players in the market.
Asia Pacific is expected to hold the highest market share.
Europe is expected to grow at the highest CAGR during the forecast period
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