The manufacturing and transportation industries spend the most now, but insurance, health care and consumer will grow fastest, the analysts say.
Spending on the Internet of things will reach almost $1.3 trillion in 2019, almost double the $689.6 billion being spent this year, according to analysts with IDC.
In all, IoT spending
will increase 17 percent a year between 2015 and 2019, the market research firm found in its latest spending guide, released Dec. 10.
Analyst firms and vendors have been predicting rapid growth for the IoT, with the number of connected devices, systems and sensors—from industrial machines and home appliances to cars, buildings and wearable devices—jumping over the next several years. Cisco Systems, for example, is predicting the number of connected "things" globally will grow from 25 billion last year to more than 50 billion in 2020.
Gartner analysts in November predicted the number of connected devices will jump 30 percent between this year and 2016, when 6.4 billion will be in use worldwide, with 5.5 million new things getting connected every day. They also said earlier this month that 1.6 billion connected things will be used by smart cities
in 2016, a 39 percent increase over this year.
"Smart commercial buildings will be the highest user of Internet of Things (IoT) until 2017, after which smart homes will take the lead with just over 1 billion connected things in 2018," Gartner Research Vice President Bettina Tratz-Ryan said in a statement.
According to IDC, commercial segments are leading the way on spending right now. The manufacturing and transportation verticals currently spend the most money on IoT, at $165.6 billion and $78.7 billion, respectively. However, over the next five years, the insurance industry will have the fastest IoT spending growth, at $31.8 percent per year, followed by the health care and consumer segments.
By 2019, consumers will be the third-largest segment in IoT spending, the analyst firm reported.
"Manufacturing and transportation are both a good fit for IoT deployments," Vernon Tuner, senior vice president and IoT Research Fellow at IDC, said in a statement. "Both industries have been connecting their supply chains, products, customers, and even workers for some time now, and really embrace the value of business outcomes."
Geographically, the Asia/Pacific region is tops in IoT spending with more than 40 percent of the market, IDC found. North America and Western Europe—the second- and third-largest—have a combined spending of more than $250 billion this year. However, the fastest growth over the next five years will come from Latin America, with 26.5 percent annual growth.
"The Asia/Pacific region's robust IoT spending outlook builds on three dynamics: developing countries' technology investment needs are not fully met with traditional IT, which is allowing IoT investments to accelerate; government investments in infrastructure development and local business modernization, in China, India and the Philippines for example, are incorporating more and more IoT elements; and a burgeoning new consumer class is accelerating expenditures in goods and services, including those with IoT components," Marcus Torchia, IoT research manager, said in a statement.