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Smart City Spending to Reach $35.4 BN by 2022

Spending on smart city initiatives in Asia/Pacific excluding Japan (APEJ) will reach $35.4bn by 2022, a 16.8 per cent increase over the 2018 forecast, according to IDC.

The analyst’s Worldwide Semiannual Smart Cities Spending Guide reports that the combined spending from smart cities programmes from Singapore, Beijing, Shanghai, and Seoul are expected to hit over $4bn this year.

China will account for majority of the smart cities-related technologies investment, which will largely come from fixed visual surveillance in 2019 with the increasing demand of video information sources to track down and monitor citizen activity, said IDC.

Services will overtake hardware

Hardware represents the highest spending, accounting for nearly 40 per cent of the overall smart cities-related spending in 2019 but this is expected to be overtaken by services by the end of the forecast. Services is currently the second-largest technology group in terms of spending, followed by software and connectivity, but is predicted to have a five-year compound annual growth rate (CAGR) of nearly 18 per cent.

“Prior to 2018, cloud solutions dominated digital transformation imperatives for smart cities. As city governments shift from digitalising siloed cloud-first endeavours, to integrated and cross-agency hubs, interconnected ecosystems such as transport and public safety become increasingly demanded,” says Gerald Wang, head of public sector research at IDC Asia/Pacific.

“The intelligent edge will also be a new phase of development for maturing smart cities. As edge-based smart solutions gain stronger compute capabilities, cloud platforms can be leveraged as a grid computing architecture to fully coordinate and optimise the city’s disparate compute powers, thereby furthering automation within the city.

“Asia Pacific is an epicentre of innovation, and governments are finally realising and focusing their energy and investments on smarter technological choices”

Strategic priorities related to data-driven public safety, resilient energy and infrastructure, and intelligent transportation will bring in the largest part of spending in 2019. The top five use cases among leading strategic priorities that are driving smart cities investments are fixed visual surveillance, advanced public transit, intelligent traffic management, non-revenue water (NRW) management and smart outdoor lighting.

Combined spending of these use cases accounts for two-fifths (41 per cent) of the overall investments in 2019. Likewise, connected back-office and smart kiosks are the key use cases in the fields of economic development, civic engagement, and sustainable planning and administration that will receive sizeable investments.

Market observations

This spending guide also reflects the use cases IDC has been observing in the market. It reports that Singapore is creating its own digital twin while South Korea has become one of the most IoT-connected countries.

Other countries such as China, India, Australia, and Indonesia governments are also taking steps to follow IoT adoption. Moreover, demand for technological investments are increasing in India as a result of the increasing urban population.

“The intelligent edge will also be a new phase of development for maturing smart cities”

“Asia Pacific is an epicentre of innovation, and governments are finally realising and focusing their energy and investments on smarter technological choices, so that cities across region can manage growth and ever-increasing market opportunities,” said Swati Chaturvedi, senior market analyst, IT spending team at IDC Asia/Pacific.

IDC expects APEJ’s regional spending to accelerate during the forecast period, as more cities and communities start adopting the better equipped, connected and sustainable model of living.”

IDC quantifies the expected technology opportunity around smart cities initiatives from a region and worldwide level. Spending data is available for more than 100 cities and 30 use cases, as well as the overall smart cities market size.

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