Are Smart Cities Finally Here? Inside the Trillion Dollar Urban IoT Market

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Until recently, talk of smart cities was mostly relegated to the realm of futurism. Despite hype over Alphabet’s (in)famous smart city in Toronto, the project is years from being completed, and other smart city projects appeared to be stymied by legacy infrastructure. Now, however, a recent survey with IoT leaders, including executives at smart city providers, leaders with Sidewalk Labs (the Alphabet subsidiary building the Toronto smart city), and city planners in major U.S. and European cities including Barcelona, Los Angeles, and New York City, has revealed concrete ways in which cities are becoming smarter.

Smart cities have the potential not only to improve city efficiency, congestion, and citizen quality of life, but also to spawn a multi trillion dollar industry. In fact, the smart city market is projected to be worth over $1.2T by 2025.

The Cities That Are Already Smart: The Technology and Systems Powering the World’s Most Advanced Urban Areas

By 2050, over 70% of the world’s population is expected to live in urban areas. Already, with just over 50% in urban areas, major cities are experiencing unprecedented grid overloads, congestion, and litter issues. At the projected rate of population growth, the world’s largest cities would be unable to continue functioning without significant infrastructure upgrades over the next quarter decade.

Many cities have already begun this process. Using interconnected devices, sensors, cloud infrastructure, and software, cities are using IoT to become more sustainable and efficient.

Amsterdam, for instance, has been working on smart city initiatives since 2009, ranging from real-time traffic flow to waste management. The city has already implemented a smart traffic monitoring system that allows the city to broadcast real-time data about the best routes to take at any given moment, as well as a smart carpooling system that matches drivers with riders based on workplace and home location. The city has also implemented systems to reduce unnecessary trips for recycling trucks to decrease congestion and improve efficiency. Additionally, Amsterdam used smart city technology to decrease congestion by improving the systems for finding parking (30% of city traffic is devoted purely to finding parking) so that the average time to find a spot decreased by 43%. These are just a few of the programs and pilots that the city has invested in through its collaborative platform, Amsterdam Smart City.

Some U.S. cities, including New York, San Francisco, and Chicago, have also implemented smart city infrastructure. San Francisco focused on smart traffic lights to reduce congestion and improve safety, with funding help from the U.S. Department of Transportation. Chicago has launched a program to replace 270,000 city lights with intelligent light bulbs, in order to save the city $10M per year in excess energy costs. New York City, on the other hand, has implemented smart trash cans and recycling bins that have built-in compaction and fullness sensors to alert collection trucks when they’re full. The city says this has resulted in a 50% reduction in collections per week, as well as a 40% improvement in proper recycling.

Similarly, Santander, Spain has outfitted the city with thousands of IoT devices to get data on the locations and fullness levels of garbage cans. The city then uses analytics and GPS tracking to optimize waste collection. Other Spanish cities have followed suit: Castellon uses smart water meters to optimize resources and reduce costs, while Barcelona has used smart transportation technology to build a more efficient bus system.

The Companies That Are Already Smart: The Tech Giants Investing In Smart Cities

Tech giants from SAP, to IBM, to Microsoft have invested billions in building products and platforms for smart cities. Microsoft announced last year that it plans to invest $5B in IoT technology for smart cities between 2018 and 2022. In 2017, Cisco invested $1B into building smart cities through its Kinetic Cities platform and its City Infrastructure Financing Acceleration Program — a system that makes it more affordable for cities to invest in smart technology. Even Amazon Web Services has developed a suite of products for smart cities, including analytics, sensors and devices, and storage capabilities.

With smart cities set to become a multi trillion dollar market, tech giants are highly alert to the opportunity. The Chinese conglomerate, Huawei, has been a leader in the space with its full smart city platform, aptly named Smart City Solution. The platform is already operational in over 160 cities in 40 countries throughout Asia and Europe. Unlike other capability-specific smart city tools, Huawei’s platform can analyze data in real-time for a variety of factors, including traffic and pollution, and also offers predictive insights so that city planners can anticipate and prevent future issues.

With the biggest tech giants in the world rolling out comprehensive smart city solutions, the question isn’t when the technology will be ready, rather, when cities will be ready to make the necessary infrastructure changes to implement it. The companies that require the least amount of upfront investment on behalf of the city are the ones that will likely gain the largest market share.  



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Germain Chastel is the CEO and Founder of NewtonX.

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