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The smart city market size is forecast to increase by USD 345.8 million at a CAGR of 24.81% between 2023 and 2028. The market's growth rate is influenced by several key factors. One such factor is the increasing demand for metal machining within the oil and gas sector, driven by the need for precision components in drilling and extraction processes. Additionally, the expansion of production facilities dedicated to metal machining contributes to smart city market growth, enabling manufacturers to meet the rising demand effectively. Moreover, increased investments in infrastructure projects, such as construction and transportation, further propel the market forward. These elements collectively indicate a positive growth trajectory for the market, highlighting the crucial role played by metal machining in various industrial applications, including automotive, aerospace, and energy sectors.
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The market is driven by a surge in demand for energy-efficient systems and innovative IoT solutions like PoE (Power over Ethernet), enhancing Buildings with advanced energy management and reducing greenhouse gas emissions. The integration of 5G technology in Commercial buildings is a notable trend, facilitating robust Security & emergency management and efficient Building infrastructure management. Challenges include ensuring seamless integration of AI, Internet-of-Things (IoT), and Virtual Reality (VR) technologies, and addressing complexities in data analytics and cloud computing for optimal waste management and energy consumption control. Our researchers analyzed the market research and growth data with 2023 as the base year, along with the key drivers, trends, and challenges. A holistic analysis of drivers will help companies refine their marketing strategies to gain a competitive advantage.
The increase in IT consolidation and modernization is the key factor driving global smart city market growth. IT consolidations in organizations help improve operational efficiency and achieve economies of scale. The ever-increasing consolidation of IT infrastructures such as data centers and networking systems in organizations is forcing C-suite executives to implement advanced IT service delivery models like shared and managed IT services.
Moreover, the continual change in technology and the need for IT modernization in numerous industry verticals, such as manufacturing, BFSI, telecom, and healthcare sectors, are the key factors driving the adoption of IT services and the deployment of projects for providing better connectivity and sustainability. The growing popularity of social media and mobile devices and organizations' focus on modernizing their IT infrastructure are the other factors driving the market during the forecast period. In addition, the expansion in the commercial construction market in the US is also contributing to the demand for IT services, as businesses within this sector increasingly invest in digital transformation and infrastructure upgrades to enhance operational efficiency and meet modern market demands.
The proliferation of smart city projects in emerging economies is the primary trend in the global market. Developed economies in North America and Europe have been working on developing smart cities for a decade and have already implemented many projects. APAC is the fastest-growing region in terms of smart city technologies. Rapid urban growth, fueled by mass migration to the cities, is increasing the urban population in Asia, which is leading to the development of infrastructure in cities, particularly in emerging countries in Asia. Emerging economies like India and China are still in the planning phase and are launching many pilot projects.
Moreover, Cambodia, Phnom Penh, Battambang, and Siem Reap have been selected to take part in the Association of Southeast Asian Nations (ASEAN's) Smart Cities Network, which is working on developing smart, sustainable urban development in 26 cities around the region by 2025. The rapid rate of urbanization in countries like India is also a major factor responsible for the roll-out of projects, as the infrastructure help end-users (such as government agencies, healthcare, and transportation service providers) respond faster to the challenges being faced by urban settlements.
The high cost of upgrading smart grids is a major challenge to global smart city market growth. The high cost of upgrading smart grids is expected to hinder the growth of the global market during the forecast period. The costs involved in upgrading smart grids include additional investments in distribution systems, replacement of transmission lines, power delivering systems, substation digitalization, and digital controls. Consequently, power utilities and independent power producers face the prospect of huge initial capital investment.
The aging power infrastructure of these utilities and their growing need for renewable power grid integration will increase their grid renovation budgets in the coming years. This is the consequence of the near-term cost evasion by utilities, and it acts as a barrier to the adoption of smart grid data management solutions. The power utility providers are reluctant to upgrade their power grids to make them compatible with Smart City Information and Communication Technologies (ICT) infrastructure, such as advanced metering infrastructure (AMI) and distributed energy resources (DER) management systems, because of the high costs involved. This is expected to have a significant impact on the growth of the global market in the future.
The smart city market forecasting report includes the adoption lifecycle of the market, covering from the innovator’s stage to the laggard’s stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the smart city market analysis report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their market growth and forecasting strategies.
Market Customer Landscape
Companies are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.
ABB Ltd.- The company offers smart city solutions such as smart buildings, e-mobility, energy management, and data centres.
The smart city market research report also includes detailed analyses of the competitive landscape of the market and information about 15 market companies, including:
Qualitative and quantitative analysis of companies has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize companies as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize companies as dominant, leading, strong, tentative, and weak.
The market is transforming urban environments with a focus on energy-efficient systems and reducing energy consumption. Leveraging Internet of Things (IoT) technologies, cities are implementing Power over Ethernet (PoE) solutions for efficient power delivery, particularly in Smart Buildings solutions and services. These initiatives aim to optimize buildings for sustainability, lower greenhouse gas emissions, and enhance Building management systems to track and manage energy usage effectively. Emerging technologies like 5G technology are driving advancements in Commercial buildings, enabling sophisticated Energy management and robust Security & emergency management solutions. The integration of Artificial Intelligence (AI), Internet-of-Things (IoT), and Virtual Reality (VR) technologies is reshaping Building infrastructure management and enhancing Commercial Real Estate (CRE) operations through Business Information Modeling (BIM).
The market share growth by the smart infrastructure segment will be significant during the forecast period. Smart infrastructure involves digitalization in energy systems, buildings, and industries to enhance the way people live and work by improving efficiency and sustainability. Smart buildings have advanced installation and technology systems that allow the automation of numerous internal processes, such as heating, ventilation, lighting, security, and other systems in the building.
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The smart infrastructure segment was valued at USD 28.67 billion in 2018. Smart infrastructures are based on their physical structure (cabling, sensors, etc.) and are based on four principles: data, analytics, feedback, and adaptability. Increasing industrial development, commercialization, and awareness of effective utilization of energy and building optimization will drive the adoption of smart infrastructures. Smart infrastructure combines the real and digital worlds in energy systems, buildings, and industries, enhancing the way people live and work and significantly improving efficiency and sustainability. These factors will positively impact the growth of the smart cities market in focus during the forecast period.
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APAC is estimated to contribute 32% to the growth of the global market during the forecast period. Technavio’s analysts have elaborately explained the regional trends and drivers that shape the market during the forecast period.
Another region offering significant growth opportunities to vendors is North America. In the European digital era, these initiatives are transforming urban landscapes with advanced technologies. Key components include video cameras for public safety surveillance, gunshot detection sensors for swift response times, and AI access for rapid video analytics. Drones and traffic signals optimize congestion-free routes, while extensive data supports informed decision-making for city managers, building owners, and facility managers. Cost savings are achieved through network efficiencies in managing vehicle traffic and electrical grids. The market presents significant growth opportunities, with telecom vendors like BT, Vodafone, and Deutsche Telekom leading the way. However, challenges such as cybersecurity, data stewardship, interoperability, and cross-border portability must be addressed. Innovations in healthcare, such as AI-assisted patient care delivery, further highlight the market's potential. Business leaders embrace innovative business models and digitalization to enhance connectivity and modernize the cityscape.
The smart city market is rapidly expanding, driven by urbanization and the need for sustainable solutions. Smart city platforms play a pivotal role in this ecosystem, providing integrated technologies that optimize city operations, enhance citizen services, and promote efficiency in urban management. These platforms serve as centralized hubs that enable data-driven decision-making, facilitate IoT connectivity, and support diverse applications, from transportation to energy management, making cities more connected, resilient, and livable
The smart city market research report provides comprehensive data (region wise segment analysis), with forecasts and estimates in "USD Million" for the period 2024-2028, as well as historical data from 2018 - 2022 for the following segments.
The market is evolving rapidly, driven by imperatives such as environmental sustainability, efficient resource management, and advanced environmental monitoring technologies. Innovations like real-time license plate tracking and facial recognition enhance public safety and surveillance, benefiting urban sources and traffic safety. Data-driven approaches, such as data-driven policing and optimized emergency response protocols, bolster crime-fighting capabilities and empower first responders. Leveraging big data analytics and AI, cities optimize traffic signal management and emergency vehicle deployment, thereby reducing crime rates and improving response times.
Moreover, smart technologies extend to energy savings through intelligent surveillance and home security systems, curbing operational costs and maintenance costs. Despite tight budgets, cities prioritize cost-effective systems with long-term cost savings, leveraging existing infrastructure and making large-scale investments with government backing in cities like Amsterdam and Chengdu. This transformative potential spans sectors like public safety, healthcare, and utilities, fostering innovative business models and enabling modern healthcare landscapes with smart healthcare solutions. Additionally, the integration of Internet of Things (IoT) devices and smart metering data facilitates consumer engagement and enhances revenue assurance in utilities, thus driving the market forward.
Furthermore, the market is revolutionizing urban management by leveraging cutting-edge technologies to enhance citizens' lives. Through software integration and the expertise of software and hardware engineers, cities navigate integration complexities to deploy solutions like gunshot detection sensors and rapid video analytics, empowering public safety officials and law enforcement responses. Key stakeholders such as city managers, building owners, and facility managers drive smart city initiatives forward, optimizing vehicle traffic, electrical grids, and commute times. The emphasis on smart grid efficiency and digital era solutions ensures cybersecurity and effective data stewardship while promoting interoperability and cross-border portability.
Industry Scope |
|
Report Coverage |
Details |
Page number |
193 |
Base year |
2023 |
Historic period |
2018 - 2022 |
Forecast period |
2024-2028 |
Growth momentum & CAGR |
Accelerate at a CAGR of 24.81% |
Market growth 2024-2028 |
USD 345.8 billion |
Market structure |
Fragmented |
YoY growth 2023-2024(%) |
19.53 |
Regional analysis |
Europe, North America, APAC, South America, and Middle East and Africa |
Performing market contribution |
APAC at 32% |
Key countries |
US, UK, Germany, Spain, and Japan |
Competitive landscape |
Leading Companies, Market Positioning of Companies, Competitive Strategies, and Industry Risks |
Key companies profiled |
ABB Ltd., Accenture Plc, Aeris Communications Inc., Alphabet Inc., Cisco Systems Inc., General Electric Co., Hewlett Packard Enterprise Co., Hitachi Ltd., Honeywell International Inc., Huawei Technologies Co. Ltd., International Business Machines Corp., Itron Inc., LG Electronics Inc., Microsoft Corp., Oracle Corp., SAP SE, Schneider Electric SE, Siemens AG, Semtech Corp., and Signify NV |
Market dynamics |
Parent market analysis, Smart city market forecasting, Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, COVID-19 impact and recovery analysis and future consumer dynamics, Smart city market worth and condition analysis for market forecast period |
Customization purview |
If our smart city market research report has not included the data that you are looking for, you can reach out to our analysts and get segments customized. |
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1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation by Application
7 Market Segmentation by Component
8 Customer Landscape
9 Geographic Landscape
10 Drivers, Challenges, and Opportunity/Restraints
11 Competitive Landscape
12 Competitive Analysis
13 Appendix
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