Global spending on Internet of Things (IoT) is expected to grow at a single digit figure of 8.2% y-o-y (year on year) in 2020, due to the coronavirus induced economic fall out, missing the previous growth forecast of 14.9% for the year, IDC (International Data Corporation) said in a report.
Despite the current setback, global IoT spending is expected to return to double-digit growth rates in 2021 mustering compound annual growth rate (CAGR) of 11.3% between 2020 and 2024, the report adds.
The decline in spending can be attributed to the economic setback in consumer services industry which includes hotels, theme parks, casinos, and movie theatres. Spending in discrete manufacturing (growing at 4.3%), resource industries including oil and gas (growing at 5%), and transportation (5.7%) is also expected to shrink.
Strong investments in IoT in 2020 are expected to come from healthcare (14.5% growth), insurance (12.3%), and education (11.9%), the IDC report says.
Consumer driven smart home spending, which includes expenses on products like smart speakers, internet cameras, smart bulbs, smart locks, smart mesh WiFi routers will grow 14.4% y-o-y in 2020.
This is the second largest use case in terms of overall spend.
“Although the current pandemic forced many organizations to pause some innovative IoT deployments, IoT will be a key return to growth accelerator with selected use cases being safe bets for end users to focus on in order to reach a new level of automation, remote everywhere experience, and hyper-connectivity,” Andrea Siviero, associate research director, Customer Insights & Analysis, IDC said in a statement.
Further, the report states that covid-19 and it’s economic fall out will force companies to revise their technology roadmaps and this may widen the gap between the two types of IoT adopters – determined advanced users and those who were struggling to understand ROI and monetize their IoT initiatives.
Svetlana Khimina, senior research analyst with Customer Insights & Analysis, IDC, feels, this will force the second group to postpone their IoT investment in all likelihood. As a result, they will fall further behind, while others will leverage their IoT expertise focusing on the use cases that will help them secure a more advanced position in the next normal.
In terms of region specific spending, China, US, and Western Europe will account for roughly 75% of all IoT spending during the forecast period. China with 13.4% CAGR will have a slight lead over US (9%) and Europe (11.4%).
However, fastest IoT spending growth is expected in Middle East & Africa (19% CAGR), followed by Central and Eastern Europe (17.6%).