Prague – Spending on the Internet of Things (IoT) in Central and Eastern Europe (CEE) is forecast to reach $11.2 billion in 2018, an increase of 15.5% over the $9.7 billion recorded in 2017. A new update to the International Data Corporation (IDC) Worldwide Semiannual Internet of Things Spending Guide forecasts CEE IoT spending to sustain a compound annual growth rate (CAGR) of 18.8% through the 2017‒2021 forecast period, thus surpassing the $20 billion mark in 2021.

"IoT has been around for a while, but the recent explosion in interest is down to the massive price drops for sensors, combined with near ubiquitous connectivity – we are heading towards everything being smart and connected,” says Milan Kalal, program manager of Internet of Things research with IDC CEMA. This is directly in line with results from IDC’s 2017 IoT Decision Maker Survey, which reveals a growing number of companies in Central and Eastern Europe are testing IoT projects or have already fully deployed the technology. “Their awareness that IoT can help organizations compete more effectively, innovate, and generate additional revenues is stronger every day,” adds Kalal.

The industries that are expected to spend the most on IoT solutions in 2018 are manufacturing ($2.2 billion), transportation ($1.6 billion), and utilities ($1.2 billion). IoT spending among manufacturers will be largely focused on solutions that support manufacturing operations and production asset management. In transportation, almost two thirds of IoT spending will go toward freight monitoring, followed by fleet management. IoT spending in the utilities industry will be dominated by smart grids for electricity, gas, and water. Consumer IoT purchases will grow faster than the market average, making it the third largest segment in 2018 at $1.2 billion. The leading consumer use cases will be related to the smart home, such as home automation, security, and smart appliances.

"Cross-industry IoT investments, which represent use cases common to all industries, such as connected vehicles and smart buildings, are quickly picking up steam in Central and Eastern Europe, and rank among the fastest growing areas of spending throughout our five-year forecast. IDC research indicates that the various connected-vehicles use cases (e.g., infotainment, emergency, vehicle-to-vehicle solutions) will record very strong spending growth over the forecast period and exceed a half billion dollars in 2018,” notes Kalal.

From a technology perspective, IoT hardware will be the largest category in 2018 in revenue terms, with $4 billion going largely toward modules and sensors, along with some spending on infrastructure and security. Services will be the second-largest technology category, followed by software and connectivity. Software spending will be led by application software, analytics software, IoT platforms, and security software. Software will also be the fastest-growing technology segment, with a five-year CAGR of 21.7%.

Among country markets, Russia will continue to be the CEE leader of IoT spending in 2018 – at almost $4 billion – followed by Poland at $2.6 billion and the Czech Republic at $1 billion. Manufacturing and transportation will be the two leading verticals in terms of IoT spending in all three countries, followed by cross-Industry in Russia and the Czech Republic and utilities in Poland. Home IoT deployments will be among the leading categories in all three countries.