The “Global Smart Cities Market, by Component (Hardware, Software, and Services), by Application (smart Security, Smart Building, Smart Transportation, Smart Governance, Smart Energy, Smart Healthcare, Smart Water Network System, and Smart Education), and by Geography (North America, Europe, Asia Pacific, and Latin America, Middle East & Africa) - Global Forecast to 2027”, is expected to be valued at US$ 3,830.4 billion by 2027, witnessing a CAGR of 17.3% during the forecast period (2019-2027), as highlighted in a report published by Coherent Market Insights.
A smart city is a combination of smart environment and advanced technology. Smart cities deploy IT-based devices to develop critical infrastructure of a city, which includes facilities such as smart education, smart building, smart transportation, smart water, smart electricity, smart health, smart governance, and smart energy. Smart city applications include
Growing need for improvement in energy infrastructure is expected to propel the global smart cities market growth over the forecast period
Existing energy infrastructures such as power transmission assets have become obsolete in emerging and developed economies. Such transmission assets pose major threat to reliability of gird. In developed countries there is constant demand for maintenance of aging energy infrastructure, while there is need for installation of new energy infrastructure in emerging economies that can support the ever-increasing demand for energy. Smart cities offer improved infrastructure for optimal utilization of energy, thus motivating countries to adopt the same. Thus, these factors are expected to boost the global smart cities market growth in the near future. For instance, the objective behind the smart city initiative by the European Union is to increase energy efficiency by 20% by 2020, using smart energy grids and streetlights.
Increasing demand for digitization worldwide is expected to present major growth opportunities for market players
Penetration of digital technologies has accelerated the demand for digitization around the globe. Digitization aids in information sharing and enables connectivity between devices, which is one of the primary requirements of smart cities. Furthermore, governments of various countries are focused on launched digitized platform for e-governance. For instance, the Government of India has set up e-Governance platform under The Digital India Programme to support citizens. This platform includes features such as e-Locker, e-Office, e-Sign and mobile governance. Moreover, in March 2016, Cisco Inc. announced to invest in digitizing Berlin Smart City, primarily focusing on three areas: security, telemedicine and network infrastructure. Hence, such factors are expected to present lucrative business opportunities in the near future.
Challenges associated with funding are expected to restrain growth of the global smart cities market during the forecast period
Developing a smart city entails significant amount of funding since it uses high-end technologies. Although financing options such as private funding, grants and partnerships are available, they are not so easy to acquire. Furthermore, municipal bonds and grants have increased the complexity of large amounts. There are certain restrictions on the amount of money that can be used. Moreover, public-private partnerships face certain difficulties, such as access to private property and carrier contractual requirements. Therefore, these factors are expected to hinder the global smart cities market growth over the forecast period.
Clean technology or Cleantech startups offer novel products and services that can increase productivity and efficiency, while keeping environmental impact minimum. A number of Cleantech startups have realized the growth potential in global smart cities market and are focused on development of products and services exclusive to smart city applications. For instance, venture capital firms are planning to invest significant amounts of capital in clean tech startups. As per Bloomberg, Q3 of FY2016 witnessed an investment of US$ 741 million in clean tech startups across 65 deals.
Smart city infrastructures are expected to generate a vast amount of data in the near future and existing data center infrastructure is not adequate to handle such voluminous data. According to Cisco Inc., currently, 4.7 zettabytes of data center IP traffic per year is being generated globally, which is expected to reach 15.3 zettabytes by 2020. Hence, key changes in data center architecture are necessary and need to be upgraded to all-flash data center and generative data centers, in order store vast amount of data.
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 Corporation.