Smart Cities Market Statistics: 2030
The global smart cities market size was valued at $648.36 billion in 2020, and is projected to reach $6,061.00 billion by 2030, growing at a CAGR of 25.2% from 2021 to 2030. The surge in adoption of smart cities in multiple regions is driven by various government digital cites initiatives and rise in the need for better natural resource management in urban environments. In addition, the growth in need for public safety and security fuel the growth of the smart cities market. However, security concerns associated with smart cities and lack of funding & adequate infrastructure limit the growth of this market. Conversely, the emergence of artificial intelligence in smart cities and the rise in the IoT market & its application in digital cities are anticipated to provide numerous opportunities for the expansion of the market during the forecast period.
Smart cities utilize information and communication technologies to achieve long-term economic development, efficient management of resources, and provide a higher quality of life for their residents. A smart city may use its advanced infrastructure to aid the local businesses, environment, transport & mobility, healthcare, lifestyle, and governance. The adoption of smart cities solutions is being driven by rise in urbanization trends across the world, and a desire for a higher quality of life. The key objective of intelligent cities is to create economic growth and improve people's quality of life by empowering local area development and utilizing technology that leads to smart results.
Depending on functional area, the smart infrastructure segment dominated the smart cities market share in 2020, and is expected to continue this trend during the forecast period. The growth in digital disruption in people's everyday lifestyles contributes to the growth in demand for smart infrastructure solutions. Moreover, the severe supply chain disruption during the pandemic has further empowered the growth of the segment as businesses rely on smart infrastructure solutions for efficient management of their resources. However, the smart energy segment is expected to witness the highest growth in the upcoming years, as the demand for IoT powered energy applications such as smart energy grids and smart meters are on a rise. Furthermore, numerous government initiates that support the implementation of smart energy solutions are expected to drive the smart energy market segment.
Region wise, the smart cities market was dominated by North America in 2020 and is expected to retain its position during the forecast period, owing to the presence of a highly developed ICT sector and high spending that aid the growth of the market. However, Asia-Pacific is expected to witness significant growth during the forecast period, owing to various government initiatives and digital transformation trends within the region, which is
expected to fuel the market growth in this region.
The report focuses on growth prospects, restraints, and analysis of the global smart cities market trends. The study provides Porter’s five forces analysis to understand the impact of various factors, such as bargaining power of suppliers, competitive intensity of competitors, threat of new entrants, threat of substitutes, and bargaining power of buyers on the global smart cities market share.
Hardware segment is projected as one of the most lucrative segment.
The global smart cities market is segmented into component, functional area, and region. Based on component, the market is divided into hardware, software, and service. Depending on the functional area, the market is fragmented into smart infrastructure, smart governance and smart education, smart energy, smart mobility, smart healthcare, smart buildings, and others. Region wise, it is analyzed across North America, Europe, Asia-Pacific, and LAMEA. The global market is dominated by key players such as AT&T Intellectual Property, Cisco Systems, Inc., Ericsson, General Electric, Hitachi, Ltd, Huawei Technologies Co. Ltd., IBM Corporation, Intel Corporation, Microsoft Corporation, and Schneider Electric. These players have adopted various strategies to increase their market penetration and strengthen their position in the industry.
By Functional Area
Smart infrastructure segment is projected as one of the most lucrative segment.
Top Impacting Factors
Government Smart City Initiatives
Globally, governments have been playing a major role in the smart cities industry through their regulations and initiatives focused on the deployment of smart services as a major part of their infrastructure. For instance, General Services Administration’s (GSA) Smart Buildings initiative, started in May 2012, was aimed to reduce costs and promote smart services with modernized federal government buildings in large part through connected technologies. Similarly, the European smart cities industry is expected to grow at a significant rate due to its focus on energy and climate objectives. Therefore, the government is focused on the distribution of energy with efficient models and strategies for progressing toward a low carbon future in this region. Moreover, governments in emerging economies such as China, South Korea, Dubai, India, Singapore, and Japan, are aimed for the smart development of their economies. Further, China has announced 500 digital cities pilot projects, which is again a huge investment by the government in the region. Moreover, Dubai’s goal to achieve the objective of the Smart Dubai Plan 2021 for transforming their country into a 100% paperless government has fueled the adoption of smart services in the country that drives the growth of the smart cities market.
Rise In Need of Better Natural Resource Management
The global population has urbanized and increased at a rapid pace. According to a research, it is estimated that around two-third of the world population is expected to live in cities or urban centers by 2050, which is anticipated to be a major factor leading to resource scarcity in the upcoming years. Moreover, as cities drive the economic growth in most of the countries, urbanization is projected to surge further in the near future. To cope with rise in urbanization and climate change issues, innovation & digital technology must be leveraged to minimize energy consumption and improve quality of life. In addition, innovation must be combined with energy, digital technology, and information & communications technology to address urbanization challenges and ensure sustainability, which is expected to drive the growth of the market in near future. Furthermore, solar energy needs to be encouraged. The government has started taking initiative for adoption of solar energy. However, use of gas along with solar and wind energy is less than 2% at present, which is very crucial.
Asia-Pacific would exhibit the highest CAGR of 28.7% during 2021-2030.
Technological capabilities are interconnected and work together to create an integrated and efficient urban environment in smart cities. In addition, smart cities leverage sensors and monitoring systems to collect data on air quality, water management, waste management, and environmental conditions. These technological enhancements help in monitoring pollution levels, identifying environmental risks, and implementing sustainable practices. Moreover, technological developments such as AI and ML technologies are utilized in smart cities to automate processes, optimize resource allocation, and enhance decision-making. These technologies are expected to be applied in various areas, including traffic management, predictive maintenance of infrastructure, energy optimization, and public safety. AI-powered systems are anticipated to analyze complex data patterns, predict outcomes, and enable autonomous decision-making in real time. Furthermore, in smart cities, IoT is used to gather and analyze real-time data from sensors embedded in infrastructure, buildings, transportation systems, and other objects. For instance, in January 2021, Cisco enhanced its smart city services and partnered with cities, communities and governments around the world to reimagine their future to be inclusive, sustainable and securely connected. Such strategies to enhance technological capabilities in market to fuel the smart cities market growth.
It becomes essential to establish appropriate government regulations to ensure the effective and ethical deployment of technologies as the development of smart cities progresses. Hence, smart cities employ digital platforms and e-government solutions to streamline administrative processes, provide online services, and enhance citizen engagement. This is expected to include online portals for accessing government services, digital payment systems, open data initiatives, and platforms for citizen participation and feedback. Moreover, enforcing government regulations to ensure the ethical use of technologies in smart cities involves guidelines for the responsible use of artificial intelligence (AI), facial recognition, and other advanced technologies, with a focus on preventing discriminatory practices and protecting civil liberties. For instance, in September 2021, Dubai government launched over 100 smart initiatives and 1,000 smart services to boost seamlessness and sustainability and transform the way government services are delivered to citizens thereby increasing their happiness quotient. As a result, due to its landmark efforts, Dubai has recently been recognized as a role model for smart, sustainable and resilient city by the UN.
Key Benefits for Stakeholders
- The study provides an in-depth analysis of the global smart cities market forecast along with current & future trends to explain the imminent investment pockets.
- Information about key drivers, restraints, & opportunities and their impact analysis on global smart cities market trends is provided in the report.
- Porter’s five forces analysis illustrates the potency of the buyers and suppliers operating in the industry.
- The quantitative analysis of the market from 2021 to 2030 is provided to determine the market potential.
Smart Cities Market Report Highlights
By Functional Area
By Key Market Players
The demand for smart cities has grown over the past few decades as smart cities enable governments to deploy more sustainable and green infrastructure. A smart city is fundamentally a network made up of IoT, cloud computing, and artificial intelligence solutions that helps collect, manage, and analyze data from citizen and city resources in order to assist cities in becoming more efficient and responsive to its inhabitants. Smart city solutions offer a wide range of possible applications, such as smart IoT-enabled traffic management systems that minimize traffic congestion & accidents and AI-Powered smart energy grids that can save energy and allow greater use of renewable energy. Such feature sets of smart cities have promoted the growth of the global smart cities market.
Key providers in the smart cities market are Hitachi, Ltd, Huawei Technologies Co. Ltd., and IBM Corporation. With growth in demand for smart cities, various companies have established partnerships to increase their smart city solutions offerings. For instance, in June 2020, Huawei Technologies, the Chinese technology corporation, collaborated with Smart City Solutions Company (SC2), a leading service provider for the Saudi Arabian region, to support local smart city initiatives such as the National Transformation Plan 2020 and Saudi Vision 2030. Such collaboration has empowered the smart city programs of the region. Moreover, the involvement of big industry players of the smart city industry in government and public initiatives is expected to further aid the demand in the smart city market.
In addition, with surge in demand for smart cities, various companies have expanded their current services to continue with the rise in demand for smart city solutions. For instance, in July 2021, Japanese multinational conglomerate, Hitachi, Ltd announced the launch of its specialized IoT platform for smart buildings. Such products bring high added value for smart city infrastructures and help infrastructures to be more highly efficient and easily operable.
Moreover, many market players have expanded their business operations and customer base by increasing their acquisitions. For instance, in November 2021, Swedish multinational networking and telecommunications company, Ericsson, announced the acquisition of an American cloud communications service provider, Vonage Holdings Corp. Such acquisitions are expected to aid Ericsson’s cloud and IoT offerings, which further support the growth of smart city solutions that are highly dependent on IoT and cloud communication services.