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APAC smart city spending to exceed $54b – more data centers needed

FYI, this story is more than a year old

With our increasing dependence on data, it's no secret that smart cities are the future. A recent report from IDC shows Asia Pacific excluding Japan (APeJ) is certainly gearing up.

Spending on technologies enabling smart city initiatives in APeJ is forecast to reach US$30 billion in 2018.

Fast forward just four years later and IDC expects that spending to almost double in 2022 to $54 billion. This of course has many repercussions, including the skyrocketing demand for not only more data centers, but more data centers closer to the action on the edge.

Going deeper within this figure, the fastest growing use cases will be in Vehicle to Everything (V2X) connectivity and Officer Wearables (Fitbit/smart glasses) with five year compound annual growth rates (CAGRs) of 44.4 percent and 36.9 percent respectively.

"Cities in the Asia Pacific are challenged to continually deliver smart, livable, and sustainable urban ecosystems by harnessing technology innovations and widespread collaborations. This also requires clarity around implementation policies that are focused on the building and financing of city infrastructures as well as new city digital services in the long-term," says IDC Asia Pacific head of public sector Gerald Wang.

"City governments need to continually analyze the impact of rapid advances in technologies on city transformation goals and create outcome-based metrics for future smart city investments. This approach requires a rethink of the way governments traditionally procure for technologies and innovative solutions."

The hardware sector continues to dominate the market with a 38.1 percent piece of the pie in 2018. However, the IDC believes it will maintain a comparatively slow five year CAGR of 14.4 percent, reaching $19.4 billion by 2022.

With $8.9 billion, the second largest technology spend is currently on services, followed by software and connectivity. The services sector is expected to undergo a five year CAGR of 18.4 percent.

According to IDC, the growth in services and hardware will be predominantly driven by state and local government with the maximum usage of fixed visual surveillance and smart outdoor lighting, attracting considerable investment across APeJ.

Within China, fixed visual surveillance will be the leading use case accounting for 173 percent of the country's spending in 2018. According to IDC, China has already deployed around 20 million security cameras that are facilitated by AI technology to locate and track criminals.

IDC expects that by 2020 China will complete building its facial recognition and surveillance network across the country, achieving almost total surveillance of urban residents (including their homes) via smartphones and smart TVs.

“Data-Driven Public Safety and Intelligent Transportation are the two priority investments centered around the region in response to growing urban population,” says IDC Asia Pacific market analyst Malini Swamy.

“However, we are also finding significant spending and growth in platform related and smart lighting related use cases, which are less often publicized but increasingly happening in cities around the region.

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