The Smart Cities Market is poised to attain $3,107.05 billion by 2030, with a CAGR of 25.8% during the forecast period 2023–2030. The market's expansion is propelled by government initiatives addressing the needs of the burgeoning urban population and the demand for resource management and sustainable development. However, substantial initial investment requirements hinder market growth. The integration of artificial intelligence and the increasing utilization and broadening applications of IoT technology are anticipated to unlock growth opportunities for market players. Nevertheless, challenges include the risk of data abuse by large corporations, hesitancy in adopting new technologies, and the escalating cases of data theft. Additionally, the deployment of 5G technology for enhanced internet connectivity and the proliferation of connected vehicles and autonomous drones stand out as notable trends in the smart cities market.
Government Initiatives to Manage the Needs of the Rising Urban Population
Governments around the globe are undertaking initiatives to manage the needs of the rising urban population. Currently, over 50% of the global population lives in urban areas. By 2045, the world's urban population is expected to reach 6 billion. Rapid urbanization has created new challenges, such as meeting the ever-increasing demand for housing; developing infrastructure, transport systems, and basic services; and creating jobs. It is necessary to plan and provide basic services, infrastructure, and housing to meet the needs of this growing population. Governments across the globe are undertaking initiatives to develop connected smart cities that use the Internet of Things (IoT), Artificial Intelligence (AI), Machine Learning (ML), M2M communication, and cloud computing, among other technologies, to provide residents with intelligent infrastructure, a clean and sustainable environment, and better living standards. These initiatives are driving economic growth and improving people’s quality of life by enabling the development of local infrastructure and utilizing technology-based solutions that improve the sustainability of cities.
Smart cities have emerged as urban ecosystems that integrate digital technologies, knowledge, and assets to provide residents with smart infrastructure, improve city services, and contribute to sustainability. Government initiatives to expand infrastructure for the urban population are expected to drive the growth of the smart cities market. For instance, in November 2022, the Government of India announced plans to invest USD 40 billion (over the next 15 years) in developing urban infrastructure to effectively meet the needs of its rapidly growing urban population. According to World Bank’s Financing India’s Infrastructure Needs: Constraints to Commercial Financing and Prospects for Policy Action report, by 2036, India’s cities will be home to 600 million people (40% of the country’s population), driving the demand for urban infrastructure and services, clean drinking water, reliable power supply, public safety technologies, and efficient and safe road transport.
Additionally, in its 2023 budget, the Government of India allocated INR 16,000 crore (USD 1.9 billion) to its Smart Cities Mission for FY24. The Union Budget 2023–24 envisions creating sustainable cities of tomorrow by encouraging states and cities to undertake urban planning reforms and actions such as the efficient use of land resources, transit-oriented development, enhanced availability and affordability of urban land, and opportunities for all.
Thus, government initiatives to manage the needs of the rising urban population are expected to support the development of smart cities globally, driving the growth of the smart cities market.
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Key Findings in the Global Smart Cities Market Study:
Based on Solution, the Smart Utilities Segment is Projected to Register the Highest CAGR During the Forecast Period
Based on solution, the smart utilities segment is projected to register the highest CAGR during the forecast period. Smart utilities are electric, gas and water companies that employ connected sensors across their grids to deliver services more efficiently and analyze their operations. Most smart utilities are heavy users of the Internet of Things (IoT) concept of connected devices and incorporate the latest digital technologies in communications, software, computing, and mapping to streamline their businesses. Smart utilities help achieve optimized asset performance and improved operational efficiency using real-time data, leveraging technologies such as IoT, artificial intelligence, machine learning, and digital twin, among others, to identify key insights into customers’ utility usage patterns, preventing supply leaks and modernization of the grid.
Based on Component, the Services Segment is Projected to Register the Highest CAGR During the Forecast Period
Based on component, the services segment is projected to register the highest CAGR during the forecast period. Hardware manufacturers, software developers and system integrators provide various services ranging from installation, implementation, maintenance, and aftersales services to developing customized solutions in accordance with the requirements of clients. These services cover several verticals in smart cities spanning urban planning, intelligent transportation, public utilities, public safety, education, health and social care, logistics, disaster management, and smart infrastructure. Major services include implementing connected city infrastructure such as smart grid, smart security, smart mobility, smart data, building automation, and remote health and wellness monitoring.
Based on Technology, the Cloud Computing Segment is Projected to Register the Highest CAGR During the Forecast Period
Based on technology, the cloud computing market is projected to register the highest CAGR during the forecast period. Smart cities use various IoT devices, sensors, and data analytics to collect and process large amounts of data to improve the quality of life for their citizens. Cloud computing provides a scalable and flexible infrastructure for storing and processing this data, making it an essential component of smart city infrastructure. In addition, cloud computing offers enhanced security and reliability for smart city applications. Cloud providers typically offer robust security measures, such as encryption and multi-factor authentication, to protect against cyber threats. They also provide high availability and disaster recovery capabilities to ensure critical applications remain accessible during an outage or disaster.
Asia-Pacific: The Fastest-growing Regional Market
Asia-Pacific is expected to register the highest CAGR during the forecast period. Smart city projects in Asia-Pacific continue to grow as large nations in the region consolidate their urbanization process. Asia-Pacific's smart cities primarily focus on the areas of digital government services, environmental impact reduction, and improvement of ICT infrastructure and adoption. Growing urban population and rapid expansion of cities are driving governments to deploy smart city solutions to sustain public services, drive economic competitiveness, and enable a thriving environment in the Asia-Pacific region.
Key Players
The key players operating in the global smart cities market are Cisco Systems, Inc. (U.S.), Huawei Investment & Holding Co., Ltd. (China), IBM Corporation (U.S.), Siemens AG (Germany), Cognizant Technology Solutions Corporation (U.S.), Capgemini (Europe), Schneider Electric SE (France), Intel Corporation (U.S.), Qualcomm Technologies, Inc. (U.S.), Fujitsu Ltd. (Japan), Robert Bosch GmbH (Germany), Atos SE (France), Foxconn Electronics Inc. (Hon Hai Precision Industry Co. Ltd.) (China), LTIMindtree Limited (India), and General Electric Company (U.S.)
Scope of the Report
Smart Cities Market, by Solution
- Smart Citizen Services
- Smart Public Safety
- Surveillance
- Command & Control Centers
- Smart Governance
- Smart Emergency Management
- Smart Law Enforcement
- E-Governance
- Smart Street Lighting
- Smart Education
- Smart Healthcare
- Connected Healthcare Solutions
- Telemedicine
- Smart Environment
- Climate Monitoring
- Smart Waste Management
- Air Quality Monitoring
- Noise Mapping & Monitoring
- Smart Buildings
- Smart Building Market, By Solution
- Smart Energy Management
- Smart Facility Management
- Safety And Security Management
- Smart Lighting Control Systems
- Elevators & Escalators Management Systems
- Smart Building Market, By Type
- Commercial Buildings
- Public Buildings
- Residential Buildings
- Smart Transportation
- Smart Transportation Market, By Solution
- Traffic Management Systems
- Parking Management Systems
- Freight Information Systems
- Ticketing & Travel Management Systems
- Passenger Information Management Systems
- Smart Transportation Market, By Application
- Roadways
- Railways
- Airways
- Waterways
- Smart Utilities
- Smart Energy Management
- Smart Grid
- Smart Meter
- Smart Energy Storage
- PV Monitoring
- Meter Data Management
- Power Electronics Converters
- Smart Water Management
- Smart Distribution Management
- Other Smart Solutions
Smart Cities Market, by Component
- Hardware
- Endpoint Devices
- Processing Devices
- Network Devices
- Other Devices
- Software
- Iot Device Software
- Gateway Software
- Cloud Software
- Computing Device Software
- Other Software
- Service
- Consulting Services
- System Integration & Deployment Services
- Infrastructure Monitoring & Management Services
- Network Services
- Other Services
Smart Cities Market, by Technology
- IOT (Internet of Things)
- Artificial Intelligence
- Cloud Computing
- Machine Learning
- Machine-to-Machine Communication
- Other Technologies
Smart Cities Market, by Geography
- North America
- Europe
- Germany
- U.K.
- France
- Italy
- Spain
- Rest of Europe
- Asia-Pacific
- China
- Japan
- India
- Singapore
- Rest of Asia-Pacific
- Latin America
- Middle East & Africa
Key questions answered in the report: