Google has created a new project entitled Sidewalk Labs.

Announced by Google CEO Larry Page, Sidewalk Labs is a smart cities startup, which will build and incubate technologies to help governments run their urban areas more efficiently.

Sidewalk Labs will "develop technology at the intersection of the physical and digital worlds, with a focus on improving city life for residents, businesses, and governments".

It seems Sidewalk Labs' focus is both broad and vague: it will work on "products, platforms, and partnerships" for "the biggest challenges that cities face - such as making transportation more efficient and lowering the cost of living, reducing energy usage, and helping government operate more efficiently", the company said.

The company will be headed up by Dan Doctoroff, the former CEO of Bloomberg, and financed by Google. However, while Page said on Google+ that Sidewalk Labs is a "relatively modest investment and very different from Google's core business", he described the company as a "long-term, 10X bet" similar to its moonshot R&D operation Google X and its health and longevity effort Calico.

According to analyst house Forrester, the global smart cities market will be worth $1.6tn by 2020.

Much of the growth in smart cities is likely to be powered by better connectivity - faster 4G networks and the arrival of 5G - and the spread of the Internet of Things. Gartner predicts that by 2020, there will be 9.7 billion connected objects reporting in to smart cities systems.