Smart Cities Market Analysis

Market Insights - Global Smart Cities Market

Market Overview

A smart city is an urban unit or area that uses various types of electronic Internet of Things (IoT) devices to collect data and then use the insights to manage resources, assets, and services effectively. This data is collected from devices, citizens, and assets, which is further processed and analyzed to manage and monitor traffic and transportation systems, water supply networks, power plants, crime detection, waste management, school, hospitals, libraries, and other community services. Smart city applications include

1. Smart security: Smart security solutions refer to smart protections against crime, terrorism, and civil unrest. Smart security solutions monitor the city and law enforcement activities 24x7 in public areas by analyzing patterns and tracking incidents and suspects that facilitate a quicker response.
2. Smart transportation: In this, intelligent transport system (ITS) technology is applied to transport and infrastructure to transfer information between systems, in order to enhance safety, productivity, and eco-friendly transportation.

Market Dynamics- Drivers

1. Rampant urbanization worldwide is expected to drive growth of the global smart cities market during the forecast period

Rapid urbanization has congested landscapes and given rise to issues including high energy consumption, climate change, water capacity issues, and other socio-economic challenges. According to the United Nations (UN), the global urban population in 2015 was 54%, which is expected to increase to 66% by 2050. This rapid rate of urbanization is expected to dwindle available resources. According to Coherent Market Insights’ analysis, the annual rate of change in urbanization for the period 2010–2015 for China was 3.0% and for India, it was 2.38%. Thus, the developed and emerging economies are focused on smart city projects to implement new technologies, which ensure optimal utilization of available resources. Therefore, these factors are expected to drive the market growth in the near future.

2. Proactive government initiatives are expected to propel the global smart cities market growth over the forecast period

Government organizations in different countries are taking proactive initiatives to develop smart cities within their countries. E-government portals have been developed to advertise all information regarding government’s policies, regulations, and services onto a single platform thereby allow citizens straightforward access to government services. For instance, the Dubai Smart City initiative strategy includes a plan to transform 1,000 government services into smart services. Moreover, government organizations of various countries have partnered with major technology companies, in order to implement IoT devices and sensors across urban cities. These organizations are providing funds for the development of IoT applications to technology providers. For instance, in 2015, the U.S. Government invested US$ 8.8 billion in IoT, which includes infrastructure, software and cybersecurity solutions.

North America region dominated the global smart cities market in 2018, accounting for 31.1% share in terms of value, followed by Asia Pacific, Europe, Latin America, and MEA, respectively.

Source: Coherent Market Insights

1. Integration of new technologies within existing infrastructure is expected to restrain growth of the global smart cities market during the forecast period

Incorporation of new technologies within existing infrastructure may pose major challenges for growth of the market. The existing infrastructure may not support new technologies and hence old infrastructure needs to be replaced with new and advanced infrastructure, which in turn, increases the investment. Moreover, new innovations and technologies include high risk investments and unsecured ROI, thereby restraining growth of the global smart cities market.

2. Growing susceptibility to cybercrimes and privacy violations due to digitization is expected to hinder the global smart cities market growth over the forecast period

Interconnected devices pose major threat such as cybercrimes. Since all components in smart city infrastructure use IoT applications and smart applications, security devices, and transit systems, they will be connected through the IoT. In such situations, a simple software bug can cause severe damage and compromise security of numerous systems. Moreover, growing digitization has led to storage of data on cloud. This data may include an individual’s record of daily activities such as payments, geographical location, and health records, which is accessible at any point. Digital systems can be hacked into thereby resulting in loss of private information while data analytics can combine data sets to gather information related to lifestyle and habit- or behavior-related information of an individual. Therefore, these factors are expected to hinder the global smart cities market growth in the near future.

Market Opportunity

1. Increasing need for waste management platform is expected to present lucrative business opportunity for market players

According to Coherent Market Insights’ analysis, the total amount of waste generated globally is expected to increase by around 50% over the next decade. This has necessitated the need for smart waste management solutions apart from conventional landfills. Smart citifies can deploy waste management solutions for recycling and reduction of waste. For instance, IBM Intelligent Waste Management Platform provides analytic tools that allow users to collate information on waste collection, demographics and financial information and present it in the form of visual analytics, based on which cities can plan recycling programs and other activities.

2. Growing awareness regarding sustainable living is expected to present major growth opportunities in the near future

Growing awareness of sustainable living has encouraged many countries including Ecuador and Bolivia to develop their own consumption and sustainable lifestyle pattern. Sustainable living requires implementation of eco-friendly lifestyle and reducing carbon footprint by altering energy consumption, mode of transportation, etc. Thus, increasing awareness of sustainable lifestyle among consumers is expected to provide major market opportunities in the near future.

Source: Coherent Market Insights

Global smart cities market was valued at US$ 334.2 Bn in 2018 and is forecasted to reach a value of US$ 1,359.8 Bn by 2027 at a CAGR of 16.3% between 2017 and 2027.

Market Trends

1. Collaborations and partnerships between government and service providers

Governments of various countries are focused on collaboration and partnerships with private service providers, in order to collect more data and make well-informed decisions. For instance, in June 2016, Boston municipality partnered with Uber, a taxi service provider. Through this collaboration, Uber is expected to share its data such as traffic flow and congestion in the city, helping the municipality to improve traffic planning, solving parking issues, expand transit lines and improve road infrastructure.

2. Increasing adoption of green building is a major trend in the market

Green buildings is a growing trend in the global smart cities market. Constructing eco-friendly infrastructure facilities can provide sustainable environment in the cities. Moreover, governments are focused on constructing energy-efficient buildings, in order to minimize costs and achieve sustainable growth and development.

Segment information:

In global smart cities market, by application segment, the smart energy sub-segment dominated the global market in 2018, accounting for 18.2% share in terms of value, followed by smart security, smart transportation, smart governance, smart building, smart healthcare, smart water network system, and smart education, respectively.

Source: Coherent Market Insights

Value Chain Analysis

Source: Coherent Market Insights

Competitive Section

Key players involved in the global smart cities market are Microsoft Corporation, Toshiba Corporation, AT&T, Inc., SAP SE, Cisco Systems, Inc., Philips Lighting, Ericsson, Huawei Technologies Co., Ltd., Panasonic Corporation, General Electric, Oracle Corporation, Hitachi Data Systems Corporation, and IBM. 

Key Development

1. Key companies in the market are focused on agreement, partnerships, and collaborations, in order to enhance their market presence. For instance, in November 2019, Microsoft Corporation entered into a three-year agreement with City of Charlotte, North Carolina (NC) to create regional center focused on STEM workforce development, IoT technology and innovation.
2. Key players in the market are involved in product launches, in order to expand their product portfolio. For instance, in January 2018, AT&T Inc. introduced new structure monitoring solutions for the U.S. Railways and Roadways.