Gartner estimates that 1.1 billion connected things will be used by smart cities in 2015, rising to 9.7 billion by 2020.
Smart homes and smart commercial buildings will represent 45% of total connected things in use in 2015, due to investment and service opportunity, and Gartner estimates that this will rise to 81% by 2020. "Smart cities represent a great revenue opportunity for technology and services providers (TSPs), but providers need to start to plan, engage and position their offerings now," said Bettina Tratz-Ryan, research VP at Gartner.
Gartner said it defines a smart city as an urbanized area where multiple sectors cooperate to achieve sustainable outcomes through the analysis of contextual, real-time information shared among sector-specific information and operational technology systems.
"The majority of Internet of Things (IoT) spending for smart cities will come from the private segment. This is good news for TSPs as the private sector has shorter and more succinct procurement cycles than public sectors and cities," said Tratz-Ryan.
While investment in IoT hardware is fundamental for smart cities, the real revenue opportunity for TSPs is in the services and analytics segment, said Gartner. "We expect that by 2020, many IoT TSPs will have grown their hardware revenues through services and software by more than 50%," said Tratz-Ryan. "Gartner also estimates that smart-home security and safety will represent the second-largest service market by revenue in 2017, and that by 2020, the smart healthcare and fitness market will have grown to nearly US$38 billion."