$265bn global spend on smart city M2M this year

Guy Daniels
By Guy Daniels

Feb 4, 2014

The Smart Cities Council has commissioned a set of predictions from research firm IDC that show positive advances this year. Smart Cities have been on the verge of becoming a lucrative and important sector for telecoms vendors and operators for a number of years now, but various factors have held back their potential.

So why does IDC research director Ruthbea Yesner Clarke say that 2014 “is going to be a big year for smart cities”? For the full report, you need to sign up to the Smart Cities Council’s membership programme, which is free. But its top highlights (in no particular order) are as follows:

* Worldwide smart city spending on the Internet of Things will be $265 billion in 2014.

* In 2014, smart cities will redirect 15-20 per cent of traditional IT spending to the cloud.

* 45 per cent of all big data use cases will be in financial performance, public safety and transportation.

* In 2014, 15 per cent of cities in the world will be in the opportunistic stage of smart city maturity.

* Open data sets and open APIs will start to affect policy decision-making.

* Shadow IT will be a major source of departmental level innovation but will threaten smart city roadmaps.

* The key enabler of omnichannel citizen experience will be mobile.

* Leading-edge cities experiment with gamification as first step to nudge citizen behaviour change.

* Competition heats up and there is significant M&A and partnership activity as vendors better define their offerings.

We have still to see the full potential of smart cities, although advances in cloud, big data and M2M technologies surely means that it can’t be far off. And whilst a great deal of attention has been on M2M and the Internet of Things (a city full of smart sensors, all wirelessly connected), IDC believes it may actually be the benefits of cloud computing that further the push towards smart cities:

That’s not required for cities to go smart, according to Ruthbea Yesner Clarke, IDC’s smart city strategies director, but it saves city governments from having to switch money from capital to operational expenditures.

“I haven’t come across a city government yet that thinks that’s a brilliant way to do business,” she said, noting that “operational budgets can be cut at someone’s whim.”

“When you are looking at such things as the sensors you need for a smart city and you simply want to manage all of that and not buy, then cloud becomes an enabler in moving to the next innovative thing quickly and easily, and there are obvious business models for that,” said Clarke. “There are value propositions that are almost impossible to ignore, and that means cities have to find ways to pay for all of this. That’s where the cloud and mobile apps help to push them over the edge in being able to adopt all of these things.”

For many years now, the big IT vendors have all been pushing their ideas of smart cities – notably IBM and Cisco. Their notion of a ‘city operating system’ is one that still remains. Yet city authorities struggle to buy into the concept wholesale, and often don’t get beyond pilot or trial projects. Yes, there are some new smart cities being built, such as Songdo in South Korea and Masdar in the UAE (although the latter is on something of a go-slow at present)

We’ve not seen much of a backlash against smart cities, but you can be sure there’ll be one. Author Adam Greenfield is one of the early critics, who urges cities not to become “just another terrain for business operations” of the likes of IBM and Cisco, and to instead focus on “the salient, defining features of urban life”.

There’s a terrific debate at the Economist’s website, held at the end of December last year, which is well worth a read. Anthony Townsend, research director for the Institute of the Future, argues that whilst the new model smart cities are over-hyped, this shouldn’t detract from the wider benefits for existing cities.

“Rather than design and build a smart city like a mainframe, what if we built it like the web,” he argues. “Yesterday's grandiose blueprints and their tech-industry contractors are yielding to a bustling planet of 500,000 municipalities, which are home to millions of start-ups, NGOs and civic hackers. Participants in these civic laboratories are patching together bits of open-source code, government data and consumer hardware to craft bespoke solutions to local problems.”

So top-down or bottom-up? Will it be enthusiasts, entrepreneurs and hackers that build our smart cities, or the giant IT vendors? And in this age of austerity, who pays? 2014 could well turn out to be a defining year.

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