ID: MRFR/SEM/1955-CR | June 2017 | Region: Global | 103 pages
The smart cities concept is garnering significant market prominence, mainly due to the rising need for smart living, which has become a trend. Smart living encompasses advancements that influence people's lives, allowing them to lead a new way of living. It involves innovative solutions to make life more efficient, controllable, economical, productive, integrated, and sustainable.
Resultantly, governments across the countries in the world are increasingly taking up smart city projects to drive economic growth by making their cities smarter. Subsequently, the global smart city market is garnering substantial traction. The market valuation is projected to touch USD 1933 Billion by 2022, registering an impressive CAGR throughout the forecast period.
Smart City innovations offer a promising new way to foster development plans, offering guidance, facilitation, and tracking initiatives. Today, the world is progressing to become smarter where everything is connected digitally. Then why not cities that are entirely smart and connected on a deeper level? The smart city mission enables local area development, harnessing technology, especially the one that leads to smart outcomes.
Therefore, governments are increasingly taking up and investing in the smart city mission that can also drive economic growth while enhancing the quality of life of people. The purpose of the governmental smart city initiatives is area-based development to transform existing areas by retrofitting and redeveloping slums into better-planned ones, thereby improving the city's livability.
New areas, including greenfield, are developed around cities to minimize the increasing pollution levels due to the expanding population in urban areas. Application of smart solutions enables cities to use technology, information, and data to improve infrastructure and services. This kind of comprehensive development not only improves the quality of life but also creates employment and enhances incomes for all.
Increased urbanization worldwide has entailed the need for smart cities. Moreover, government initiatives and funding for R & D activities have significantly diversified the demand for the smart cities concept. Development of the Internet of things (IoT) technologies and devices has also fostered the growth of the smart cities concept. The increasing need for high-speed internet connectivity plays a vital role in developing the smart city industry.
Apart from software solutions, hardware components also play an equally important role in market development. Therefore, the hardware segment accounts for a principal market share. The hardware segment by component is projected to grow further at around 30.65% CAGR throughout the forecast period. Similarly, by application, the sub-segment transport holds the major market share.
The transport segment is estimated to grow approximately at 30.34% CAGR during the assessment period. Region-wise, North America accounts for the leading share in the global smart city market, followed by the European and Asia Pacific region, respectively.
The COVID-19 presented some unprecedented challenges to the smart cities mission. As we recently saw that Covid-19 happened to be very much an urban phenomenon. In the case of the pandemic lockdown, there was an inadequate understanding of the urbanness of the pandemic, which has created problems in the decision-making process. Large metropolitan regions faced some dichotomy in the urbanization process, which is the real growth driver.
On the other hand, the pandemic challenges underscored the importance of a city-level platform for integrated data governance, which would facilitate evidence-based decision making at an urban scale, bring data integration between multiple sources and agencies. Simultaneously, it also prompted the need to make the data accessible, focusing on wide dissemination so that data can be a way to engage with the citizens.
In this, smart cities became the need of the hour to reboot the mission and its priorities. The smart city plan is the only resource for overarching processes of the city. The smart city missions worldwide sought to bring in smart governance addressing urban densification and inadequate provision of basic urban services, including drinking water and sanitation. Especially, the population living in slums and peri-urban areas stand vulnerable to diseases like the COVID-19.
The pandemic significantly altered urban life in terms of peoples' movement and mode of work and the fate of millions of small businesses & workers that make cities. Various discussions two scented on addressing the urgent need to rethink the way cities are organized. It quickly set up effective decision-making processes at different scales, design economic activities, and ways to encourage cities to better respond to current and future crises.
Besides, digital transformation has trickled into nearly all aspects of urban lives and changed every major industry. From delivering efficient services, hospitals using telehealth services to treat patients from the other side of the world, IoT and 5G technology has kept cities connected amid a pandemic. Using digital technologies, smart cities improve quality of life, significantly boost the economy, and attempt to further the human race prosperity in coming years.
Rapid Urbanization across the Globe is a Significant Market Growth Driver.
Adequate and reliable water & electricity supply, sanitation, including solid waste management, efficient mobility & public transport, affordable housing, health & education, and a sustainable environment are basic urban life requirements. Besides, the rising demand for robust IT connectivity & digitalization, and good governance that promotes e-governance & citizen participation, and the safety and security of citizens, particularly women, children, and the elderly, drive the market growth, prompting needs for smart city initiatives.
Moreover, the ever-increasing population, especially in urban areas, and the rising industrialization worldwide push the growth of the market. Better housing solutions in order to accommodate the expanding population and better infrastructure in urban areas. Rising economic growth and the pressure to improve the economy further is directing governments to take up smart city projects, thereby driving the market growth. Also, increasing road accidents and traffic issues foster market growth by endorsing smart street lighting and smart traffic managing technology & devices.
High Implementation & Maintenance Costs could be the only restraint for the market growth.
Despite the promising growth trends, the market still witnesses significant challenges. High costs associated with the implementation & maintenance of components are the only factor that could slow down market growth. Smart city systems comprise various high-end devices and solutions that are quite expensive and require regular maintenance. Innovative smart city funding mechanisms include partnerships with private companies, smart procurement policies, and national- or state-level funds.
Lack of expertise and proficiencies of users is the biggest challenge.
Smart city projects need a certain level of expertise and proficiencies. A truly smart city has the exponential potential to transform the character and lifestyle of a city. It rejuvenates the economy & heritage, enhances resilience & sustainability, and even tightens the social pact between the government and citizens. However, a city only becomes truly "smart" when all citizens become familiar with various technologies.
Teaching people to navigate the digital world is an important aspect of a digital inclusion plan. Although citizens usually show great enthusiasm when they are allowed to participate in designing their cities, governments need to support them with digital skills.
As smart city initiatives increase complexities as the focus of initiatives broaden, or as the numbers of constituents grow in the city, the government should design flexible pathways for communities to evolve naturally by giving them learning experiences to familiarize themselves with digital tools, formal educational programs, and industry engrossment to help create the workforce of the future.
The market is segmented into three dynamics; i.e., by component, by application, and by region. By component, the market is sub-segmented into hardware, software, and service. The application segmented is further divided into transport, utility, residential, education, government, healthcare, and others. By region, various major countries, including the US, UK, Germany, India, South Korea, and others, are studied region-wise.
Software and hardware are the major components of any smart city solution; however, services can't be ignored when it comes to training and maintenance. Hardware is the largest segment by component, which also plays an equally important role as software for market development. The hardware segment accounts for a principal market share and is further projected to grow at around 30.65% CAGR throughout the forecast period.
By application, the sub-segment transport holds the major market share and is estimated to grow approximately at 30.34% CAGR during the assessment period. Region-wise, North America accounts for the leading share in the global smart city market, followed by the European and Asia Pacific region, respectively.
North America Leads the Global Market
North America accounts for the leading share in the global smart city market. The region emphasizes on the conservation of the environment and low energy consumption, which helps the market proliferate. Besides, high-end infrastructure development to enhance the network connectivity and implementation of the internet of things are the major factors impacting the market growth positively.
The US dominates the regional market, followed by Canada, due to the presence of many notable technology providers and equipment manufacturers. Also, the availability of highly advanced technologies is a key driving force behind the regional market's flourishing growth. Augmenting demand for safety and comfort features boost the market growth in this region.
Europe holds the second-largest share of the global smart city market. Increasing smart city projects and government initiatives & funding to improve infrastructure increase the market size. Additionally, the rapid adoption of connected devices and vast advancements in sensor technology, alongside the improving technical infrastructure, fosters regional market growth.
Countries such as U.K, Germany, Norway, and France account for leading shares in the regional market due to the presence of several notable industry players such as Ericsson, Schneider Electric, Siemens, and others. Furthermore, various business initiatives between major European countries such as Germany & Sweden and other countries from developing regions such as India & Qatar have grown significantly, supported by smart city projects, fintech, and other digital technologies.
The Asia Pacific region is the fastest-growing smart city market in the world. Collective initiatives and elevated investments by various governments in the region propel market growth. Increasing numbers of smart city projects and the rapidly growing economy in the region increase the market share. Besides, considerable advances in artificial intelligence (AI) and other similar technologies push market growth.
High attention to citizens' safety and security and various ongoing smart road projects influence the regional market growth. China, Japan, and India are key smart city markets in the region.
Major market players incorporate strategic initiatives such as mergers & acquisitions, collaborations, expansion, and product/ technology launches to gain a larger competitive share. They also take part in helping cities participate and win the 'ideal smart city' and various such competitions.
They actively work with different partners involved in a smart city project to innovate multi-scenario solutions, such as social governance, government & public services, ecological civilization, and economic service, meeting diversified city development requirements, and helping consumer-based intelligent cities to improve overall competitiveness.
On November 17, 2020, Honeywell announced its investments in an Indian software firm Trinity Mobility which provides the internet of things (IoT) Smart City platform and software applications. This investment would Honeywell to expand its smart cities suite.
Frequently Asked Questions (FAQ) :
As per the analysis of Market Research Future (MRFR), the global smart city market is expected to value at USD 1933 Billion by 2022.
Increase in urban migration and rise in comfort threshold of people are main drivers identified by MFFR causing fast-paced expansion of the smart city market.
The transportation industry is expected to generate considerable traction for the global smart city market as the industry largely deploy smart city solutions.
North America, followed by Asia Pacific, is expected to hold a large share of the global smart city market by 2022.
IBM Corporation (U.S.) and Huawei Technologies Co Ltd. (China) are some of the major players of the global smart city market.