The market for smart city technology -- from transportation management and water monitoring systems to smart grids -- is already well over a billion dollars per year. Last year the market reached $6.3 billion. By 2020, the market value will more than triple, to $20.2 billion annually, according to a new report from Pike Research.
With 6.3 billion people expected to populate cities by 2050, and booming growth happening in developing countries, it's no surprise that cities are looking for tools to improve efficiency in everything from transportation to energy use. But it isn't just opportunistic tech companies pushing the technologies.
"Over the last twelve months, the market has shifted away from being shaped largely by technology suppliers and city developers," says Pike's research director Eric Woods. "Today, the market is being driven by the enthusiasm of city leaders. Mayors and other city executives have seized on the smart city concept as a rallying point for the technological, commercial, and social innovation needed to meet the challenges and opportunities facing their communities."
The main challenge for smart cities technology going forward is to scale technologies from pilot projects to citywide projects. As Pike put it in a news release: "This will be vital to ensuring momentum in pathfinder cities and building confidence for other cities to embark on the same journey. It will also be necessary to convince commercial partners and other stakeholders that these are economically viable models that will provide long-term returns for citizens and investors."
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