The forecast represents an increase of 14.6% over the $674 billion that will be spent in 2017. Looking ahead through 2021, the firm expects worldwide spending on IoT to sustain a compound annual growth rate (CAGR) of 14.4% through the 2017-2021 forecast period, surpassing $1 trillion in 2020 and reaching $1.1 trillion in 2021.
The largest IoT category in 2018, the report says, will be hardware, with modules and sensors along with some spending on infrastructure and security accounting for about $239 billion. Services is expected be the second largest technology category, followed by software and connectivity.
In the software category - predicted to be the fastest growing technology segment with a five-year CAGR of 16.1% - spending will be led by application software along with analytics, IoT platforms, and security software. Services spending is also expected to grow at a faster rate than overall rate - with a CAGR of 15.1% - and to nearly equal hardware spending by the end of the forecast.
"By 2021, more than 55% of spending on IoT projects will be for software and services. This is directly in line with results from IDC's 2017 Global IoT Decision Maker Survey where organizations indicate that software and services are the key areas of focused investment for their IoT projects," says Carrie MacGillivray, vice president, Internet of Things and Mobility at IDC.
"Software creates the foundation upon which IoT applications and use cases can be realized," says MacGillivray. "However, it is the services that help bring all the technology elements together to create a comprehensive solution that will benefit organizations and help them achieve a quicker time to value."
Among the industries expected to spend the most on IoT solutions in 2018 are manufacturing ($189 billion), transportation ($85 billion), and utilities ($73 billion). Manufacturers will be largely focused on solutions that support manufacturing operations and production asset management, while in transportation, two thirds of IoT spending