The global smart cities market is headed for rapid growth through 2026, according to Persistence Market Research (PMR). The research firm expects the market to expand at a compound annual rate of 18.8 percent over its ten-year forecast.
PMR values the market at US$622 billion. It projects that spending will pass US$1 trillion in 2019 and reach about US$3.48 trillion by the end of 2026.
Several forces drive that demand. Governments back urbanization, the number of vehicles keeps rising, and cities need better energy grids. Rapid digitization helps too, since new technology is being built into old infrastructure. Funding comes from public-private partnerships, crowdfunding and other new sources. That said, developing countries still struggle with network infrastructure and funding.
By application, smart energy held more than 18 percent of the market in 2015, thanks to smart grid rollouts. However, its pace should slow in the second half of the forecast. Smart security grows fastest. Its share is set to climb from over 15 percent in 2015 to more than 22 percent by 2026, when it may reach US$780 billion. Smart buildings should top US$520 billion, while smart transportation and smart governance each take a solid slice of revenue.
By component, hardware stays the largest segment, with more than 35 percent of the market in 2026. Software grows fastest and should take over 33 percent, while services account for more than 30 percent.
Regional trends differ sharply. Asia Pacific excluding Japan is the fastest-growing region, with a CAGR of 22.6 percent, and it should pass US$1 trillion in 2026. China leads there, followed by the ASEAN countries and Australia and New Zealand. North America, led by the U.S., is set to grow at 14.5 percent and reach US$750 billion. Even so, it may lose share later in the period.
Elsewhere, Western Europe should grow by more than 21 percent a year and Japan by over 20 percent. Latin America follows at over 18 percent, then the Middle East and Africa at over 17 percent.
The report names IBM Global Business Services, Cisco Systems, AT&T, Ericsson, GE, Hitachi Data Systems, Huawei, Microsoft, Philips Lighting and SAP SE among the leading players.
