Smart Cities Market

Smart Cities Market - Analysis, Industry Size & Forecast

The global Smart Cities Market size was valued at USD 549.1 billion in 2023 and is expected to grow at a CAGR of 15.2% from 2023 to 2028. The revenue forecast for 2028 is projected to reach $1,114.4 billion. The base year for estimation is 2022, and the historical data spans from 2023 to 2028. Rising concerns over environmental sustainability propel the adoption of smart city technologies for efficient resource management and environmental monitoring, influencing market growth.

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Smart Cities Market Dynamics

Driver: Enhancing Public Safety in Smart Cities Through Technological Innovation

In smart urban environments, technologies such as video surveillance, DNA phenotyping, real-time license plate tracking, and facial recognition are extensively deployed for public safety, highlighting the importance of surveillance in safeguarding citizens. Smart city solutions aggregate data from diverse urban sources to facilitate traffic safety, data-driven policing, and optimized emergency response protocols. This proactive approach not only enhances crime-fighting capabilities but also ensures safer conditions for first responders. Utilizing smart systems can streamline call center and field operations, while preemptive traffic signal management prioritizes clear pathways for emergency vehicles. According to McKinsey, technologically empowered smart cities could potentially reduce crime rates by 30-40% through expedited first responder arrival times. Advanced applications like gunshot detection, intelligent surveillance, and home security systems further augment law enforcement responses. For example, New York City has trialed gunshot detection technology in police precincts, while San Diego utilizes streetlight-integrated cameras to monitor pedestrian traffic and manage congestion during peak hours.

Restraint: High cost of implementation

Smart city solutions integrated with analytics help save energy and cut operational and maintenance costs. However, economies with tight budgets cannot implement smart city solutions due to the cost of deploying these systems. Integrating major functions like big data analytics involves the significant design, coding, testing, and documentation tasks. Determining the correct software and hardware configuration to meet computing, storage, networking, and software integration requirements consumes time. It needs a highly expert team of software and hardware engineers with knowledge across numerous technology domains.

End users must know that costs primarily depend on integration complexities related to specific applications. They demand cost-effective systems for energy savings but need to realize the extent of the energy savings and associated long-term cost savings. The cost incurred in transforming the existing infrastructure prevents governments from continuing large-scale investments. Though smarter infrastructure helps reduce operating costs and increase energy efficiency, initial costs are a significant barrier. Smart city projects in Amsterdam, Chengdu, and Masdar City have stood out as exceptions, as they have substantial government backing for new technology deployment and project funding.

Opportunity: Rise of 5G

The integration of 5G technology has substantially impacted the realm of cloud computing. The high-speed, low-latency connectivity facilitated by 5G has revolutionized communication and expedited data transfers. For example, a 5G-connected streetlight equipped with a video camera or gunshot detection sensor can relay information swiftly to public safety officials, enhancing response times. Furthermore, 5G enables rapid video analytics and AI access, contributing to heightened city safety. Drones in various 5G use cases are crucial in ensuring public safety, particularly for first responders utilizing low latency 5G video cameras scattered across the city. In the healthcare sector, a 5G-connected ambulance constantly communicates with traffic signals, opting for congestion-free routes while maintaining real-time communication with hospital staff. The advent of 5G also empowers cities to leverage AI for analyzing extensive data from sensors and cameras, aiding decision-making for city managers, building owners, and facility managers. Significant cost savings are anticipated as countries actively upgrade their networks to implement smart city initiatives through 5G. According to Accenture, applying smart city solutions to manage vehicle traffic and electrical grids could result in USD 160 billion in benefits, including reductions in energy usage, traffic congestion, and fuel costs. This implies reduced commute times and signifies improvements in public safety and smart grid efficiency. While the full transformative potential of 5G still needs to be realized, it presents substantial growth opportunities for the smart cities market.

Challenge: Crafting Future-Ready Smart Cities for Sustainable Urban Living

In the pursuit of developing smart cities in the digital era, numerous challenges emerge that necessitate careful consideration and strategic solutions. Beyond the existing legal, regulatory, and socio-economic factors inherent in regional markets, key stakeholders face hurdles in cybersecurity, data stewardship, and ownership. The need for interoperability and cross-border portability further complicates the landscape, requiring collaborative efforts to create seamless smart city ecosystems. Additionally, proving ESG (Environmental, Social, and Governance) consciousness with reliable metrics becomes imperative for sustainable urban development. In this highly volatile, risk-prone, hyper-connected, and hyper-virtualized economic landscape, business leaders must adapt by crafting innovative business models capable of addressing the unique demands of the digital era. Traditional approaches no longer suffice, demanding a paradigm shift to ensure the design and construction of future-ready, sustainable urban living for the well-being of subsequent generations.

Ecosystem Of Smart Cities Market

By smart citizen service, smart healthcare service registered the highest CAGR in the smart cities market during the forecast period.

Increasing digitalization and connectivity within the modern healthcare landscape and ongoing innovations are expected to drive the market. The healthcare industry is witnessing a significant surge in adopting Internet of Things (IoT) technologies, revolutionizing patient care delivery. Smart healthcare solutions are instrumental in addressing various challenges encountered in caregiving and narrowing the gap between patients and care providers. The evolution of these smart healthcare solutions is reshaping the healthcare delivery model, enhancing efficiency, improving patient outcomes, and optimizing resource utilization. As healthcare organizations increasingly adopt these technologies, they are poised to unlock new opportunities for delivering personalized and accessible care to patients, thereby driving the growth of the smart healthcare market.

By smart utilities solution, advanced metering infrastructure will account for the largest market size during the forecast.

Enterprises rely on sophisticated meter data management (MDM) solutions to streamline the handling of smart metering data and other utilities-related information. These solutions, integrated into enterprise applications, serve as centralized hubs for collecting, processing, and storing vast volumes of meter data. By centralizing data management, MDM simplifies IT integration efforts and consolidates data from diverse collection systems into a unified repository. Once the data undergoes processing, it becomes accessible across utility organizations, offering many applications. These applications span billing processes, revenue assurance, leak detection and management, analysis of losses, capacity planning, and fostering consumer engagement. Advanced metering solutions enable utilities to harness the data generated by metering systems, transforming it into actionable insights to enhance operational efficiency and customer satisfaction.

Based on region, North America is expected to hold the largest market size during the forecast.

North America is poised to dominate the smart cities market during the forecast period. The United States, in particular, demonstrates robust adoption of smart city technologies within the region. North America leads the global landscape in smart city utilization, with the US and Canada taking the lead. These nations boast resilient and well-established economies, providing a solid foundation for substantial investments in research and development endeavors, thus facilitating the advancement of novel technologies.

Furthermore, network operators across North America consistently invest in expanding and enhancing their telecommunications infrastructure, notably transitioning towards 5G networks. This strategic move enhances connectivity and unlocks the potential for technologies like cloud edge computing and network slicing. Consequently, integrating such cutting-edge technologies contributes to the widespread adoption of smart city solutions, enabling efficient urban management at a relatively lower cost.

Market Players:

The major vendors in smart cities market include Cisco (US), IBM (US), Siemens (Germany), Microsoft (US), Hitachi (Japan), Schneider Electric (France), Huawei (China), Intel (US), NEC (Japan), ABB (Switzerland), Ericsson (Sweden), Oracle (US), Fujitsu (Japan), Honeywell (US), Accenture (Ireland), Vodafone (UK), AWS (US), Thales (France), Signify (Netherlands), Kapsch (Austria), Motorola (US), GE (US), Google (US), TCS (India), AT&T (US), Nokia (Finland), Samsung (South Korea), SAP (Germany), TomTom (Netherlands), AppyWay (UK), Ketos (US), Gaia (India), TaKaDu (Israel), FlamencoTech (India), XENIUS (India), Bright Cities (Brazil), Maydtech (Mexico), Zencity (Israel), Itron (US), and IXDen (Israel). These players have adopted various growth strategies, such as partnerships, agreements and collaborations, new product launches and enhancements, and acquisitions to expand their smart city footprint.

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Scope of the Report

This research report categorizes the smart cities market to forecast revenues and analyze trends in each of the following submarkets:

By Focus Area Type:

• Smart Transportation
• Smart Building
• Smart Utilities
• Smart Citizen Services

By Smart Transportation

• By Offering:
  • Solutions
    • Smart Ticketing
    • Traffic Management
    • Parking Management
    • Traffic Surveillance
    • Passenger Information Management
    • Connected Logistics
    • Other Solutions
  • Services
    • Consulting
    • Deployment and Integration
    • Infrastructure Monitoring and Management
• By Type:
  • Roadway
  • Railway
  • Airway

By Smart Building

• BY Offering:
  • Solutions
    • Building Infrastructure Management
      • Parking Management System
      • Smart Water Management System
      • Elevator and Escalators Management System
    • Safety and Security Management
      • Access Control System
      • Video Surveilliance System
      • Safety System
    • Energy Management
      • HVAC System
      • Lighting System
    • Network Management
    • Integrated Workspace Management System
  • Services
    • Consulting
    • Deployment and integration
    • Infrastructure monitoring and management
• By Type:
  • Residential
  • Commercial
  • Industrial

By Smart Utilities

• By Offering:
  • Solutions
    • Advanced metering infrastructure
      • Meter Data Management
      • Meter Data Analytics
      • Smart Meter
      • Others
    • Distribution management system
    • Substation automation
    • Others
  • Services
    • Consulting
    • Deployment and integration
    • Infrastructure monitoring and management
• By Type:
  • Energy/power
  • Water
  • Gas
  • Others

By Smart Citizen Services Type:

• Smart healthcare
  • Medical Devices
  • System and Software
  • Services
• Smart Education
  • Solution
  • Services
• Smart public safety
  • Solution
  • Services
• Smart street lighting
  • Solution
  • Services
• E-governance
  • Solution
  • Services

By Region:

• North America
  • US
  • Canada
• Europe
  • UK
  • France
  • Germany
  • Spain
  • Italy
  • Nordics
  • Rest of Europe
• Asia Pacific
  • China
  • Japan
  • India
  • Australia and New Zealand
  • South East Asia
  • Rest of Asia Pacific
• Middle East and Africa
  • GCC Countries
    • UAE
    • KSA
    • Rest of GCC Countries
  • South Africa
  • Rest of the Middle East & Africa
• Latin America
  • Brazil
  • Mexico
  • Rest of Latin America

Recent Developments:

• In June 2022, Siemens Smart Infrastructure (SI) signed an agreement to acquire Brightly Software, a leading U.S.-based software-as-a-service (SaaS) asset and maintenance management solutions provider. The acquisition elevates SI to lead in the building and infrastructure software market.
• In February 2022, IBM acquired Neudesic, a leading Microsoft Azure Consultancy. This acquisition aims to expand IBM's portfolio of hybrid multi-cloud services and further influence the company's hybrid cloud and AI strategy.
• In December 2021, Schneider Electric launched EcoStruxure for eMobility in buildings. It is an end-to-end EV charging solution for efficient, resilient, sustainable electric mobility and net-zero buildings. It provides energy management capabilities to accommodate the increased power demand.

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