Internet of Things market predicted to pass the $1 trillion mark by 2027

In context: The latest market prophecy coming from IDC is focused on the Internet of Things, a category of products seemingly destined to expand beyond the $1 trillion value in just three years from now. But markets, as the COVID-19 pandemic blatantly shows, can drastically change in the most unexpected ways.

Market intelligence company International Data Group (IDC) has published a new "spending guide" about the Internet of Things (IoT), stating that investments in the IoT ecosystems are expected to surpass the $1 trillion mark in 2026. Starting from 2023, the IoT business should provide a very healthy annual growth rate (CAGR) of 10.4% up until 2027.

For 2023 and throughout the entire forecast period, IDC predicts that discrete and process manufacturing industries will experience the largest investment in IoT solutions around the world. Professional services, utilities, and retail will come next, with overall IoT spending of 25%. State/local government and telecommunications, on the other hand, will show the fastest spending growth with a CAGR rate of 12.0% and 11.7% respectively.

IoT investments have become a "key building block" to supporting an increasingly digital and distributed organizational footprint, IDC says. Most of these investments are for solutions that can help companies and organizations achieve a "specific business goal or customer challenge," the analyst firm states, such as cost savings or supply chain efficiency.

IDC also forecasts spending from a technology perspective, saying that IoT Services will be the largest investment area with nearly 40% of all IoT worldwide spending. Hardware spending will come second, and it will be dominated by module and sensor purchases. Software, however, will show the fastest growth rate, with a five-year CAGR of 11.0% and a focus on application and analytics software purchases.

Western Europe, the United States, and China will account for more than half of all IoT spending, IDC says, and Western Europe will lead the race with an 11.0% CAGR over the 2023-2027 period compared to an 8.0% CAGR for the United States. In the end, China will come on top with a 13.2% CAGR growth rate.

According to Carlos M. González, research manager for the Internet of Things at IDC, the last few years have shown that "connecting with a digital infrastructure is no longer a luxury, but a necessity." IoT sensors and projects have become an essential spending voice for organizations that want to excel in "data-driven operations," González remarks.