Worldwide spending on the Internet of things (IOT) is forecast to reach $1.29 trillion in 2020, according to forecasts by the International Data Corporation (IDC).
According to the IDC's worldwide semi-annual guide, global IOT spending will experience a compound annual growth rate of 15.6% over the 2015 to 2020 period.
The IDC guide highlights that industries such as manufacturing, transportation and utilities will continue to make the largest IOT investments.
Consumer IOT purchases, the fourth largest market segment in 2016, will become the third largest segment by 2020, it says.
The industries that will see the fastest spending growth are insurance, consumer, healthcare and retail, according to the research firm.
"A fairly close relationship exists between high growth IOT use cases in consumer product and services-oriented verticals like retail, insurance, and healthcare," says Marcus Torchia, research manager for IOT with IDC's customer insights and analysis team.
"In some cases, these are greenfield opportunities with tremendous room to run. In other verticals, like manufacturing and transportation, large market size and more moderate growth rate use cases characterise these verticals. As a whole, the IOT opportunity is a diverse developing marketplace for vendors and end-users alike."
The IDC's forecasts reveal that Asia/Pacific (APeJ) is the geographic region that will see the greatest IOT spending throughout the period, followed by the US, Western Europe and Japan.
Nearly a third of IOT purchases in APeJ will be made by the manufacturing industry, while utilities and transportation will change places as the second and third largest IOT industries by the end of the forecast. In the US, manufacturing will be the industry with the largest IOT investments throughout the forecast, but with a lower share (roughly 15%) of total spending.
"It is great to see that the Internet of things will continue to fuel both business transformation and innovation acceleration markets such as robotics, cognitive computing and virtual reality," states IOT research fellow and senior VP, Vernon Turner.
"The investments by China and the United States in IOT solutions are driving these two countries to account for double-digit annual growth rates and over half of the IOT spending."