Global IoT Spending to Hit $1.29 Trillion by 2020, Driven by Hardware Investment

According to the latest IDC Worldwide Semiannual Internet of Things Spending Guide, global IoT investment is projected to reach $1.29 trillion by 2020—an increase of nearly 16% over the 2015‑2020 period.

IDC’s analysis attributes the surge to a continued decline in sensor and module costs, which has made hardware the dominant spending category. Hardware purchases—primarily modules and sensors that link endpoints to networks—are expected to climb to nearly $400 billion by 2020.

While hardware will remain the largest component of IoT spend, IDC notes that growth in services and software will outpace hardware in the coming years, reflecting a maturing ecosystem.

See also: China IoT market worth over $120 billion by 2020

IDC’s Marcus Torchia highlights the breadth of the market: "A fairly close relationship exists between high‑growth IoT use cases in consumer product and service‑oriented verticals such as retail, insurance, and healthcare." These sectors, along with manufacturing, are poised for the most significant investment.

Cross‑industry use cases—including connected vehicles, smart buildings, and industrial automation—are expected to rank among the top segments throughout the five‑year forecast.

IoT Investment Will Come from a Lot of Directions

Torchia adds that opportunities driving IoT investment span a spectrum of verticals. "In some cases, these are greenfield opportunities with tremendous room to grow. In other verticals, like manufacturing and transportation, large market size and moderate growth rates characterize these segments," he said.

The IDC report follows earlier research showing that the number of IoT devices will double to 46 billion units by 2021, fueled by falling hardware costs.