The landscape of enterprise spending on Internet of Things (IoT) technologies is facing a notable shift as we approach 2024, with a discernible slowdown anticipated amid ongoing economic uncertainty. Recent research conducted by IoT Analytics indicates a continuation of the decline in growth observed in 2023, where enterprise IoT spending increased by 15% to $269 billion, down from the 18% growth seen in 2022. For 2024, IoT Analytics anticipates a further deceleration, projecting a modest 12% growth to $301 billion. This declining trend is attributed primarily to broader corporate expenditure reductions that are impacting related services and hardware sectors. However, despite this temporary downturn, there are optimistic expectations that a positive shift will begin in 2025, marking a renewed phase of growth in the IoT landscape.
Economic Uncertainty Dampens Short-Term Projections
The 2024 forecast outlined by IoT Analytics paints a picture of cautious spending by enterprises as they navigate through persistent economic uncertainties. The predicted 12% growth to $301 billion reflects a continuation of the conservative spending behaviors seen in 2023, where growth slowed to 15% from the previous year’s 18%. This trend is representative of a broader cautiousness in corporate expenditures, affecting peripheral services and hardware related to IoT technologies. As firms navigate through economic turbulence, many are opting to delay or scale back significant investments in new IoT deployments. This cautious approach stems from the need to ensure financial stability and prioritize only critical technological enhancements during times of economic uncertainty.
Despite this cautious stance, there is a sense of resilience within the IoT industry, with an anticipated market rebound expected in the longer term. The short-term slowdown is not viewed as an indicator of dwindling interest or utility in IoT applications but rather a strategic pause by enterprises. As economic conditions stabilize, enterprises are expected to resume more aggressive IoT investments. This optimistic outlook is buoyed by the essential role that IoT technologies continue to play in operational efficiency, cost savings, and competitive differentiation. Therefore, while 2024 may see subdued growth, the fundamentals supporting IoT adoption remain robust and poised for resurgence.
Positive Outlook Beyond 2024
Anticipations for a revival in IoT spending beyond 2024 are underpinned by an expected Compound Annual Growth Rate (CAGR) of 15% forecasted until 2030. This projection signals a robust long-term outlook despite the immediate deceleration. According to IoT Analytics, certain regions, notably China, India, and the United States, are pivotal in driving this growth. For instance, China’s IoT spending is expected to see an impressive increase of 17%, followed by India at 14%, and the US at 13%. These nations are positioned to maintain leadership in IoT spending growth over the next three to five years, facilitated by their extensive adoption of smart technologies and supportive governmental policies promoting innovation.
Moreover, the potential for recovery is further amplified by substantial sector-specific investments. The automotive sector, for example, is poised for significant growth driven by the transition to electric vehicles (EVs). IoT spending within this industry is anticipated to rise by 14% in 2024 and experience an even more significant surge of 18% in 2025. The shift from internal combustion engines to electric powertrains necessitates considerable investments in connectivity, real-time data processing, and advanced driver assistance systems. This transition is expected to fuel sustained IoT spending, given the complexity of integrating these technologies into automotive manufacturing infrastructure. Process manufacturing is another critical vertical identified for growth, with spending projected to increase by 13% in 2024. Factors such as operational efficiency, safety enhancements, and improved communications are driving increased IoT investment, enabling this sector to outperform the annual market average by up to 2 percentage points through 2030.
Long-Term Drivers of IoT Growth
Expectations for a resurgence in IoT spending beyond 2024 are supported by a projected Compound Annual Growth Rate (CAGR) of 15% through 2030, indicating a strong long-term outlook despite current slowdowns. IoT Analytics highlights that regions like China, India, and the United States are crucial in driving this growth. Specifically, China’s IoT spending is predicted to increase by 17%, followed by India at 14%, and the US at 13%. These countries are set to lead in IoT spending growth over the next three to five years, thanks to their extensive adoption of smart technologies and supportive government policies that encourage innovation.
Furthermore, sector-specific investments are amplifying recovery prospects. The automotive industry, for instance, is expected to grow significantly due to the transition to electric vehicles (EVs). IoT spending in this sector is projected to rise by 14% in 2024 and 18% in 2025. The switch from internal combustion engines to electric powertrains requires substantial investments in connectivity, real-time data processing, and advanced driver assistance systems, fueling sustained IoT spending. Process manufacturing is another critical sector, with spending expected to grow by 13% in 2024, driven by operational efficiency, safety improvements, and enhanced communications. This sector could outperform the annual market average by up to 2 percentage points through 2030.
