07 Feb 2017 - Prague: Spending on the Internet of Things (IoT) in Central and Eastern Europe (CEE) has reached an astonishing $11 billion in 2016 as organizations accelerated their investments in the hardware, software, services, and connectivity that enable the IoT. According to a new update to the Worldwide Semiannual Internet of Things Spending Guide from International Data Corporation (IDC), IoT revenues in the CEE region will post a compound annual growth rate (CAGR) of 21.5% over the 2016‒2020 forecast period, reaching $24 billion in 2020.

The CEE industries leading the way in IoT investments are transportation, at $2.3 billion in 2016, followed by manufacturing at $2.1 billion and utilities at $1.2 billion, as organizations across these verticals look to digitalize their operations and improve their value proposition across different lines of business. In addition, the consumer segment will rank among the top sources of IoT spending throughout the five-year forecast. The industries that will record the fastest spending growth in CEE are insurance, construction, transportation, and cross-industry IoT investments, which represent use cases common to more than one industry, such as connected vehicles and smart buildings.

Given transportation's position as the leading IoT industry, it is no surprise that freight monitoring is the IoT use case forecast to represent the largest investment ($1.6 billion) in 2016, which aptly highlights the increasing importance of monitoring goods and improving productivity. Manufacturing operations, the second-largest use case in CEE ($1.0 billion), which supports digitally executed manufacturing, will account for much of the IoT spending in the manufacturing industry. Other IoT use cases being deployed in manufacturing include production asset management and maintenance and field service. In the utilities space, combined investments in smart grids for electricity and gas will total $1.1 billion in 2016. Investments by consumers in smart homes will more than double over the forecast period, exceeding $1.1 billion by 2020. In the insurance industry, telematics will be the leading use case, while construction machinery management will see the greatest investment in the construction industry. Retail firms are already investing in a variety of use cases, including connected vending machines and in-store contextualized marketing.

"Businesses and government organizations in the CEE region, as well as consumers, are now familiar with the IoT concept and will invest significant amounts on IoT solutions, making the market potential highly attractive for the vast ecosystem of technology vendors," says Milan Kalal, program manager of Internet of Things research with IDC CEMA. "Moreover, our annual survey among IoT decision makers across CEE shows that a high number already have an existing IoT solution in place and plan to expand it during the next two years to increase the impact on their business activities."

From a technology perspective, services will remain the largest spending category throughout the coming years, followed by hardware, software, and connectivity. And while services spending will more than double over the five-year timeframe, it represents the slowest growing IoT technology group. Hardware and software spending will both grow faster than services and connectivity, although services spending will approach $7 billion by 2020. Modules and sensors, that connect end points to networks, will dominate hardware purchases, while application software will represent more than one half of all IoT software investments.

The Worldwide Semiannual Internet of Things Spending Guide forecasts IoT investments into 12 technologies and 49 use cases across 20 vertical industries in eight regions and 52 countries. Unlike any other research in the market, the comprehensive spending guide was designed to help vendors clearly understand the industry-specific opportunity for IoT technologies today.