Global spending on the IoT is projected to reach $805.7 billion in 2023, marking a 10.6% increase from 2022, according to the International Data Corporation (IDC) Worldwide Internet of Things Spending Guide. The report also anticipates that investments in the IoT ecosystem will surpass $1 trillion in 2026, with a CAGR of 10.4% during the 2023-2027 forecast period.
In 2023, the two IoT use cases attracting the most investment are Manufacturing Operations ($73.0 billion) and Production Asset Management ($68.2 billion), closely aligned with the manufacturing industry. Other significant use cases include Inventory Intelligence ($37.6 billion), Smart Grid (Electricity) ($36.9 billion), and Supply Chain Resilience ($31.6 billion), with strong contributions from the Retail and Utilities sectors. The fastest-growing use cases encompass a diverse range of IoT applications, including Electric Vehicle Charging (30.9% CAGR), Next Generation Loss Prevention (14.5% CAGR), Agriculture Field Monitoring (13.9% CAGR), and Connected Vending and Lockers (13.8% CAGR).
IoT Spending Guide also introduces a Video Analytics overlay forecast, focusing on a widely adopted use case that leverages artificial intelligence to recognize, detect, and analyze live or stored video feeds in applications such as business analytics, security surveillance, and more. Video Analytics is expected to account for over $23.5 billion in spending in 2023. Future releases of the IoT Spending Guide will include other broadly adopted use cases, such as smart buildings.
From a technology perspective, IoT services will represent the largest area of spending in 2023, making up nearly 40% of total global IoT spending. Hardware spending is the second-largest category, primarily driven by module/sensor purchases. Software is projected to be the fastest-growing category, with a five-year CAGR of 11.0%, focusing on application and analytics software acquisitions.
Geographically, Western Europe, the United States, and China are expected to account for over half of global IoT spending throughout the forecast period. While Western Europe and the United States currently have similar spending levels, Western Europe is predicted to extend its lead with an 11.0% CAGR from 2023 to 2027, compared to an 8.0% CAGR for the United States. China’s IoT spending is forecasted to surpass the United States by the end of the forecast period, driven by its 13.2% CAGR.