IDC estimates that Asia/Pacific spending on the Internet of Things (IoT) is forecasted to be US$277.5 billion in 2023, up 11% over 2022.
The analyst attributes continued spending on IoT to come from rising demand for remote operations, supply chain efficiency, deployment of commercial 5G, and increasing digital footprint are driving IoT adoption in the region. IoT investments are expected to reach US$435 billion in 2027, growing at a compound annual growth rate (CAGR) of 11.7% between 2023 and 2027.
"IoT connectivity technology both fixed and wireless continues to improve and play an increasingly important role in IoT adoption," says Bill Rojas, adjunct research director for IDC Asia/Pacific.
He goes on to add that power-saving IoT devices built with 5G enhanced Machine Type Communications technologies such as 5G Reduced Capacity (RedCap) will start to be introduced into the market to gradually replace LTE Cat 3/4 devices.
He posits that the result will be more video-enabled endpoints and advanced analytics. 5G Non-Terrestrial Network satellite connectivity is expected to be introduced to the market during the forecast period further extending the reach of IoT to remote areas.
Industry use cases
“Use cases include disaster recovery and response, oil & gas, mining and resources monitoring. 5G-enabled mobile private networks in manufacturing, transportation and utilities will take advantage of mid-band and mmWave IoT device connectivity enabling 4K video cameras and ultra-low latency for automated mobile robots.
Fibre-connected smart sensors for many applications including monitoring of bridges and highways, and control of smart elevators, traffic lights, and streetlights are starting to gain traction and be combined with wireless technologies to provide robust scalable solutions", he added.
Discrete and process manufacturing will see the largest investment in IoT solutions in 2023 and throughout the forecast period, accounting for more than one-third of all IoT spending in the region. State/local government and professional services are the following largest industries in terms of IoT spending.
Use cases beyond industry and into processes
The potential to improve the quality, efficacy, and customer experience of their products and services is what motivates these organisations to invest in IoT. State/local government and telecommunications will deliver the fastest spending growth over the five-year forecast with CAGRs of 15.1% and 14% respectively.
IoT use cases that see the highest spending in 2023 are manufacturing operations, production asset management, supply chain resilience, inventory intelligence and public safety and emergency response which follow similar growth patterns as the host industries.
Together these use cases will make more than one-third of the overall IoT spending in the region. The use cases that will experience the fastest spending growth represent the diverse application of IoT technologies – electric vehicle charging, next-generation loss prevention and agriculture field monitoring.
“Organisations are more focused on data-driven operations to address specific business goals and customer challenges, and investing in the IoT ecosystem is crucial. The majority of the enterprises indicated in an IDC survey that they are collecting or plan to collect biometric, video, and transactional data to achieve the above goals”, says Sharad Kotagi, market analyst at IDC IT Spending Guides, Customer Insights & Analysis.
From a technology perspective, in 2023, the largest portion of spending is expected to remain in the services category, representing roughly 40% of the overall IoT spending in the region. The emphasis on IT/OT convergence, as organisations build cross-functional IoT centres of excellence, has increased their reliance on system integrators and other outsourcing partners.
The hardware market for IoT will be the second-largest technology group in 2023, primarily driven by purchases of modules and sensors. The software will be the fastest-growing technology category with a five-year CAGR of 13% with a focus on application and analytics software purchases. Connectivity spending will grow at 7.6% CAGR during the forecast period and will account for 7.9% of the total spending in 2027.
Country landscape
China (PRC) - continues to hold the largest share, with more than 60% in 2023, followed by South Korea and India. Countries with the fastest IoT spending in 2023 are China, Singapore, and Hong Kong. The advent of smart factories and Industry 4.0, along with government-led IoT programs and policies, has sped up IoT adoption across the Asia Pacific nations.
