Global spending on mobile hardware, software and services will rise this year by 3.2% to more than US$1.6 trillion, pushed by developments such as augmented reality (AR), artificial intelligence (A.I.) and 5G, according to a new report from IDC.
"Overall, businesses will invest more in new devices and apps that enable A.I. and AR use cases for the business," Phil Hochmuth, IDG's program director of Enterprise Mobility, said via email. "On AR, businesses will spend on new mobile devices [and] hardware to help support enterprise use cases, such as medical AR, real-time data/schematic integration in industrial scenarios, etc."
Spending on AR headsets and smart glasses will also be a part of the spending.
And, when 5G finally becomes a reality, "there will be big device upgrade waves to take advantage of increased bandwidth, security and functionality of 5G," Hochmuth said.
With its launch of iOS 11 last year, Apple introduced native augmented reality (AR) through its ARKit SDK.
Allowing businesses to leverage AR with devices they have already bought and deployed – namely iPhones and iPads – will only add to AR's growth in the enterprise.
Various industries have already seen AR's possibilities through the Windows HoloLens ecosystem and early on with ARKit brands, such as Ikea and Kohl's, said Carolina Milanesi, an analyst with Creative Strategies. Both retailers use ARKit to allow consumers to fit furniture or other items in their home before purchasing them.
Augmented reality also enables assembly line workers, utility field workers and remote employees to call up schematics and get guidance from home offices via video and chat services.
Among the many areas that will see increased spending: mobility services, which will account for nearly 60% of mobile-related spending during the 2016-2021 period forecast by IDC, according to IDC's Worldwide Semiannual Mobility Spending Guide. IDC expects mobility services spending to pass $1 trillion in 2021. That category will be dominated by telecom investments in mobile connectivity; telecoms are expected to account for more than 90% of the money spent.
The U.S. and China will lead the way in mobility spending, each accounting for around 20% of the market share. Western Europe and Asia/Pacific (excluding China and Japan) will be the next largest regions in terms of mobility spending, and will see the fastest growth rates.
Consumers will shell out 70% of total mobility spending, with more than $1 trillion a year going to mobile connectivity services and the purchase of smartphones through 2021. That spending is forecast to slow considerably starting next year when annual growth rates dip below 1%, contributing to a five-year CAGR of 1.6%.
While a smaller part of the spending pie, enterprise mobility services will account for a vastly greater percentage of spending, with a five-year combined annual growth rate of 15%. That spending will focus on planning, implementation, operation, and maintenance and support of mobile strategies, apps and devices or the consumption of services through a mobile device.
Managed mobility and managed workspace, which combine devices, applications and identity, will be big drivers of the enterprise mobility services over the next three years, according to Hochmuth.
In addition, the new "Device-as-a-Service" procurement/management model where mobile devices and laptops are used as a service, instead of being bought outright, will also drive spending.
Device-as-a-Service will allow for more flexible upgrades, including new hardware features and models, as well as device provisioning that mirror staff levels, "i.e. not having to buy a bunch of new hardware if hiring is up, or being stuck with unused hardware that must be sold if a large layoff happens," Hochmuth said.
Within the enterprise market, professional services is expected to lead all other industries in spending on mobility solutions with $45 billion; that will be followed by banking ($43 billion), discrete manufacturing ($38 billion) and retail ($32 billion).
"In all four cases, a majority of the spending will go to mobile connectivity services and devices, primarily smartphones and notebook PCs," the report said. "Enterprise mobility services will also be a significant spending category as these industries implement and execute their mobile strategies."
Banks and manufacturers are expected to invest more than $1 billion in mobile enterprise apps and mobile app development platforms this year. Again, the professional services industry will experience the fastest spending growth over the next five three years with a 7% CAGR, followed by the telecommunications and utilities industries, each with 6.9% CAGR.
"Even smaller-scale mobility solutions are expanding from their initial single-function footprint to empower and enable workers across the enterprise," Jessica Goepfert, program vice president of IDC's customer Insights & Analysis, said in a statement.
In transportation, for example, airplane pilots may have been the initial target users of mobile devices and applications. But mobile devices are now also widely used by customer service agents, baggage handlers, mechanics and other transportation employees.
"So long as organizations strive to gain efficiencies and deliver a superior customer experience, we expect to see continued interest, adoption, spending, and growth of mobility solutions," Goepfert said.
From a company size perspective:
- Large and very large businesses – those with 500-999 employees and 1000-plus employees, respectively – will account for nearly $190 billion in mobility spending in 2018, with that figure rising to nearly $230 billion in 2021.
- Medium-sized businesses – from 100 to 499 employees – will surpass $90 billion in 2021.
- The small business sector – companies with 10 to 99 employees – will grow account for more than $100 billion in 2021.
- And the small office market – firms with up to nine employees – will invest $78 billion in mobility solutions in 2021.
Despite being the smallest tech category, software will see strong spending growth with 14.7% CAGR over the five-year forecast. Mobile enterprise applications will be the largest segment of mobile software spending, growing to $7.1 billion in 2021.
Businesses are also expected to increase their development efforts with mobile application development platforms seeing a five-year CAGR of 19.5%. All four software segments, including mobile enterprise security and enterprise mobility management, are forecast to deliver double-digit five-year CAGRs.
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