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Smart cities and digital transformation will drive the Internet of Things (IoT) spending worldwide and may reach $1.2 trillion in 2022. This is the latest forecast of technology industry analyst International Data Corp. (IDC) when it released its “Worldwide Semiannual Internet of Things Spending Guide.”

Living the IoT life means billions of connected devices from personal to home to work and even transportation, which would also require sophisticated software, cloud technology, and lightning speed internet connectivity.

“The IoT market is at a turning point — projects are moving from proof of concept into commercial deployments,” said Carrie MacGillivray, group vice president, Internet of Things and Mobility. “Organizations are looking to extend their investment as they scale their projects, driving spending for the hardware, software, services, and connectivity required to enable IoT solutions.”

The spending will have a compound annual growth (CAGR) of 13.6 percent during the 2017-2022 forecast period.

IDC also sees that the consumer sector will dominate the spending growth and expects a worldwide CAGR of 19 percent. It is followed by the health insurance and healthcare provider industries.

According to the report: “From a total spending perspective, discrete manufacturing and transportation will each exceed $150 billion in spending in 2022, making these the two largest industries for IoT spending. From an enterprise use case perspective, vehicle-to-vehicle (V2V) and vehicle-to-infrastructure (V2I) solutions will experience the fastest spending growth (29 percent CAGR) over the forecast period, followed by traffic management and connected vehicle security.”

IDC looked into 14 technologies in vertical industries in nine regions and 53 countries. The regions include Asia-Pacific, Africa, Canada, Central and Eastern Europe, Japan, Latin America, Middle East, and the United States.

To fully experience IoT, companies are seen to spend on modules or sensors, servers, storage, and security hardware. On the software side, vendors of analytics software, application software, IoT purpose-built platforms (horizontal and vertical industry), and security software are expected to gain from the full experience of IoT.

Aside from discrete manufacturing and transportation, other industries that would contribute to the spending include banking, construction, education, government, healthcare provider, insurance, process manufacturing, resource industries, retail, telecommunications, transportation, and more.

“The latest IoT Spending Guide release fully aligns to IDC’s Industry Taxonomy. We now forecast all 20 standard IDC Industries,” said Marcus Torchia, research director, Customer Insights & Analysis. “As a result, we are proactively mapping IoT use cases that have segmentations in shared domains, such as in Smart Cities and Digital Transformation investment areas. As a part of these improvements, IoT supports spending forecasts for 100 use cases.”