The global smart cities market to forecast to reach a value of around $1.03 trillion by the year 2017, growing at a CAGR growth rate of 15% between 2012 and 2017. The smart cities market has eight component sectors, namely smart homes, smart buildings, smart grid, smart industry automation, smart healthcare, smart education, smart transportation and smart security, which will all witness huge growth due to increasing urbanization and government regulations to promote the concept of smart cities concept.
The smart security market had a revenue share of 24.9% or $110.7 billion in 2011, and will grow to constitute 29.2% or $298.3 billion of the global smart cities market by 2017. This is due to the growing level of complexity in terms of data management and threats in terms of viruses and malware along with technological development. Since each of the smart segments is interconnected, a disturbance in one would impact the efficiency of all other segments. Hence, maintaining a high level of security is of high importance. At the same time, the revenue share of smart industry automation will decrease, from 24.4% in 2011 to 16.9% in 2017. This is due to the lesser scope for growth in this sector compared to the other seven segments of the smart cities market, as the industrial automation markets in America and Europe are already reaching maturity, which is not the case for the other market sectors.
The smart building sector, with a revenue share of 16.9% in 2011, will have a revenue share of 10.7% in 2017. Smart education will have a revenue share of 19.3% in 2017, compared to its 14.2% share in 2011. Smart grids will reach a revenue share of 7.2% in 2017, compared to 7.1% in 2011. Smart healthcare has a revenue share of 6.4% currently, and will reach 7.5% in 2017, while smart transportation will increase from its share of 4.5% in 2011 to reach 8.1% in 2017. The smart homes market will grow to a share of 1.3% in 2017, from 1.2% in 2011.
Interoperability standards will play a key role in establishing smart cities and will have a significant impact on the transformation of the systems deployed in cities by providing them a common understanding of smart city concepts. Standards will help promote the interoperability of such systems, which will create new opportunities for innovation. The open environment created by such interoperability will also lower the barriers of entry and help promote competition, further promoting innovation.
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