Smart City Technologies to generate US$ 301.2 billion by 2032

Trends that have been key drivers of smart city programmes have accelerated recently due to the combined effects of the Covid-19 pandemic, climate change and digitization of services. Because of this backdrop, the global smart city technologies market is expected to grow from the plateau of about $121.1 billion in annual revenue in 2023 to $301.2 billion by 2032, at a compound annual growth rate of 10.7%, according to a new report by Guidehouse Insights. Cumulative revenue in the period between 2023 and 2032 is expected to reach just under US$2.0 trillion.

“These global challenges are amplifying local issues around the quality of public services, environmental standards and social inequalities. At the same time, technology is transforming how cities function and how they are experienced,” says Eric Woods, research director at Guidehouse Insights.

Many cities still have a long way to go to become smarter, but some are already demonstrating a strong commitment to investments in infrastructure, digital technologies and sustainability goals. They are looking at the adaptability and resilience of their digital infrastructure and mobilizing resources to meet new priorities and ensure a more sustainable future, says the study.

These initiatives are expected to boost the smart city market and accelerate the digitization of many urban services. According to the research, new business models and financial programmes are also expected to help accelerate investments. In addition, new partnerships are being established in the public, technology and financial sectors to reduce the lack of investment, which has long been a considerable drag, according to the Guidehouse Insights report.

All segments of the smart city market will present interesting opportunities. The search for decarbonization of urban energy systems continues to drive the development of smarter systems. The same logic also applies to smart buildings. Mobility issues are becoming the target of more initiatives as advanced traffic management solutions are deployed alongside low-carbon transport infrastructure and services. The sector that is expected to grow most is water systems, considering the impacts of climate change.

A few catalysts can shape the evolution of smart city-focused programmes, considering the intersection of social, environmental factors and economic challenges, in Guidehouse Insights’ view:

• Innovations in urban design. New approaches to city planning can help address social and environmental challenges by incorporating digitalization and decarbonization as basic principles.
• Accelerating digital transformation. Cities are already recognizing the importance and potential of the changes brought about by digital infrastructure and solutions, of data analytics and that they should not neglect data privacy and cybersecurity.
• Investments in resilient and sustainable infrastructure. IoT and data collected by sensors can be used to design, monitor, control and maintain urban infrastructure and transform services and operations in cities.
• New business models. New approaches to smart city financing are emerging, as well as more platform models and forms of value recognition.

Connectivity for smart cities

All of these smart city programmes are based on one precise asset, data, so it is only natural that we will see a dizzying growth in the volume consumed, which is already being predicted in numbers. According to a new report by Kaleido Intelligence, data usage in smart cities will increase by more than 140% between 2023 and 2027.

The Cellular IoT Connectivity Series: Smart Cities Opportunities & Forecasts study also highlights that smart city initiatives will grow the use of cellular IoT connections at a compound annual rate of 17.9% over the same period, reaching more than 122 million units, with particularly high amplification over the next two years.

The largest number of connections will be found in the smart lighting space. Kaleido Intelligence predicts beyond 161 million light points will be interconnected to a cellular connection. However, these and many others will be served by gateways, with a single cellular connection relaying data to and from many light points, which will rely on non-cellular technologies at the terminals. This emphasizes the need for interoperable data protocols to simplify data transfer between technologies, the study highlights.

It is expected that relatively high data traffic will happen over these connections, even when an LPWAN is deployed, due to the number of endpoints in the network. This will require effective edge computing capabilities to limit data flow on the network. This can, in some cases, reduce data throughput by more than 80 percent, the report calculates.

Another point highlighted in the research is that intelligent traffic management will be responsible for the highest revenue in the connectivity area, mainly due to the prevalence of video use, and may exceed US$ 900 million by 2027, compared to US$ 292 million in 2022.