On a geographical perspective, China, Korea, and India will account for more than three quarters of overall IoT spending in APeJ throughout the forecast, followed by Australia and Indonesia
APeJ spending on Internet of Things (IoT) was deeply impacted in 2020 due to the pandemic hitting major economies in the region, with spending growth descending to 7.1% YoY in 2020 – down from the 12.5% forecasted prior to COVID-19. However, IDC’s Worldwide Semiannual Internet of Things Spending Guide indicates a rebound to double-digit growth in 2021 and achieve a compound annual growth rate (CAGR) of 11.7% over the 2020-2024 forecast period in APeJ.
“The current COVID-19 pandemic has slowed the growth of IoT spending in 2020 while at the same time highlighting the importance of public priorities to be rearranged in IoT for public healthcare and telemedicine, remote/online education, disaster management, automated manufacturing, online retail, food delivery, logistics and transportation and smart home services" says Bill Rojas, Adjunct Research Director at IDC Asia/Pacific.
Industries which were highly impacted by the pandemic (personal & consumer services, transportation, and discrete manufacturing resources) suffered reduced IoT investments in line to their reduction in overall IT spend. With resumption of economic activities in the region due to better control of pandemic, these industries spend are expected to rebound back in 2021 and achieve double digit growth in the forecast period to 2024. Driven by the pandemic in 2020, emphasis on overall health, work from home, safety, and need for better connectivity resulted in double-digit growth of healthcare, telecommunications, retail, and consumer industry.
As expected, IoT use cases that see the slowest spending growth in 2020 are air traffic monitoring, freight monitoring, manufacturing operations, production asset management, and connected oil field exploration which follows a similar pattern – with spending growth affected by the impact of the pandemic on the host industry. The use cases that will see the fastest spending growth in 2020 are healthcare use-cases such as bedside telemetry, remote healthcare monitoring and use-cases which reduces human interactions like omni-channel operations, advanced payment/shopping etc. Long term focus on environmental conservation will lead to use cases such as electric vehicle charging and environmental monitoring detection to grow by 17.8% and 17.7% respectively in the forecasted period.
“Although COVID-19 continues to impact the economies in Asia/Pacific, more than two thirds of the organizations intend to retain their IoT budgets at same or increased level – 50% of which will increase the IoT investments. This is because enterprises view IoT as a key platform to build new business models, helping them evolve and grow in the new normal with focus on people and infrastructure,” adds Sharad Kotagi, Associate Market Analyst at IDC Asia/Pacific.
The services market for IoT will be the largest technology group in 2020 and through the end of the forecast. IoT services spending is dominated by Industrial Implementation and Other Ongoing Services. Together, these two categories account for roughly a third of all IoT spending. Hardware spending is dominated by module/sensor purchases and will be nearly as large as IoT services. Software will be the fastest growing technology category with a five-year CAGR of 13.5% with a focus on application and analytics software purchases.
On a geographical perspective, China, Korea, and India will account for more than three quarters of overall IoT spending in APeJ throughout the forecast, followed by Australia and Indonesia. Countries that will see the fastest IoT spending are China, Malaysia, and Hong Kong.