Rapidly declining technology costs. Even as capabilities are climbing, technology costs are plummeting. Hardware costs are declining at a steady pace. But it is software costs that have plunged the most, thanks to four trends.
The first trend is the advent of inexpensive mobile apps and information services viewable by mobile phones. Those phones are so popular that millions of developers have turned their attention to building applications, many of which cost only a few dollars. Mobile technology has allowed citizens of developing countries to essentially leapfrog into 21st century expectations – and cities have to find ways to address them.
The second trend is the arrival of social media. Applications such as Facebook and Twitter act as free “platforms” to deliver alerts, updates or even small-scale apps. They also act as “listening posts” that help cities monitor citizen needs and preferences. In fact, companies such as IBM and Microsoft now have the capability to use machine intelligence to monitor social media and derive trends.
The third trend is the maturation of cloud computing. Cloud computing delivers powerful solutions via the Internet. Suppliers save money because they can build one solution and sell it to many different users, gaining tremendous economies of scale. Users save money because they don’t have to buy and maintain giant data centers or hire and train large IT staffs. Only a few years ago, advanced applications were available only to the very biggest agencies and corporations. Today – thanks to cloud computing – they are not out of reach for even the smallest township. And they are available without a giant upfront investment, simply by paying a monthly fee.
The fourth trend is about the data. From an analytics perspective, we can now cost effectively handle the high volume, velocity and variety of data – e.g. Big Data.
And there’s much more to come. The smart city is part of an even larger trend – the “Internet of Things” or “Internet of Everything.” Technology provider Cisco estimates there were 200 million devices connected to the Internet in the year 2000. By 2012, that number had increased to 10 billion. A 2015 report from Cisco and DHL predicts there will be 50 billion devices connected to the Internet by 2020.
Clearly we are entering a remarkable new phase. Research firm IDC predicted in 2012 that the smart city market would grow by 27% year over year. Meanwhile, Navigant Research said it would hit $20 billion in worldwide sales by 2020. And a 2014 Cisco study predicted the Internet of Everything will be a $19 trillion global opportunity over the next decade: Private-sector firms can create as much as $14.4 trillion of value while cities, governments and other public-sector organizations can create $4.6 trillion.
No surprise the world’s biggest corporations and brightest entrepreneurs are racing to bring their best ideas to this market. And the fierce competition is raising capabilities, increasing choice and lowering costs at a rapid pace, making smart cities more viable every day.