European organizations are expected to spend around $227 billion on Internet of Things (IoT) technology in 2023, according to the Worldwide Internet of Things Spending Guide published by International Data Corporation (IDC).
The report noted that IoT-related spending is expected to continue to expand at a compound annual growth rate (CAGR) of 11%, reaching almost $345 billion by 2027.
According to IDC, the levels of investments in IoT varies across Europe, with Central and Eastern European (CEE) organizations’ investments remaining significantly below the European market average, with expected single-digit increases over the forecast period. In the last three years, many investments were put on hold in this region, due to the pandemic, the war in Ukraine and the adverse macroeconomic environments, IDC said.
IDC also highlighted that European IoT spending will be driven by investments from manufacturing, utilities and professional services organizations, while the main use cases will include production asset management, distribution automation and infrastructure for smart buildings.
In terms of technology, modules and sensors will continue to drive IoT-related spending in Europe, followed by related services such as industrial maintenance to support the ongoing operation of device hardware, vertical business process outsourcing services, infrastructure as a service and data as a service. IDC also explained that low power wide area networks (LPWANs) will see the fastest-growing investments and will be a critical IoT area for telecom providers in the next few years.
“Due to the uncertain macroeconomic context, European organizations are expected to continue feeling pressure on budgets, with additional investments restrained in the short and medium term,” said Alexandra Rotaru, senior research analyst with IDC’s European Data & Analytics Team. “However, IoT will remain a critical tool for improving performance and efficiency and increasing automation capabilities. It will continue to be a key investment area, helping organizations to reduce costs and enhance productivity despite challenges.”
In June, IDC reported that worldwide spending on the Internet of Things (IoT) is forecast to reach $805.7 billion in 2023, an increase of 10.6% compared to the previous year. Investments in the IoT ecosystem are expected to surpass $1 trillion in 2026 with a CAGR of 10.4% over the 2023-2027 forecast period.
Discrete and process manufacturing are the industries that will see the largest investment in IoT solutions globally in 2023 and throughout the forecast period, accounting for more than one-third of all IoT spending worldwide.
