Smart city solutions market: trends and prospects
"Smartening" cities require new solutions
One of the most significant trends in urban development over the past 15 years has been the adoption of "smart" solutions. These solutions offer numerous benefits, including streamlined management of urban infrastructure, enhanced planning and forecasting capabilities, and a more transparent process for obtaining public services. In this article, we will examine the key trends and outlook for the smart city solutions market.
Global and Russian market of smart city solutions: key indicators
According to experts at Global Market Insights, the global market for solutions for "smart cities" reached a volume of almost $560 billion in 2023. If current growth rates, which are estimated at 15-17% annually, are maintained, the market will exceed $2 trillion by 2032. Currently, more than 180 cities can be classified as "smart," and the number of piloted solutions exceeds a thousand.
In terms of regional performance, North America leads the way in the implementation of smart solutions, representing approximately 30% of the total market. Meanwhile, South-East Asian countries, which have become pioneers in the development of "smart cities", are demonstrating the most significant growth.
Two companies, ABB and Honeywell International Inc., account for over 20% of the global market for smart city solutions. Other prominent players in this field include IBM, Cisco Systems Inc., General Electric, Huawei, and Xiaomi.
The Ministry of Construction estimates that the volume of products for smart cities in Russia is approximately 400 billion roubles. By 2025-2026, Maxim Vozhagov, General Director of Opportunities Accelerator LLC, anticipates that it may reach 4 trillion roubles (or $52 billion). Rostelecom is the dominant player in the domestic market of smart city solutions.
Market structure
There are several different ways to segment the market for smart city solutions. In this review, we have collated a selection of these approaches to provide a comprehensive and easily understandable overview of the diverse range of solutions currently available.
Transport management system: It enables real-time monitoring of the transport situation (e.g. road congestion, number of route vehicles on the line) and, if necessary, allows prompt measures to be taken (e.g. adjusting the operation of traffic lights, reversing lanes). Unmanned transport is also a promising direction.
E-government: The system enables citizens to access essential state services in a single location, while streamlining interdepartmental communication and reducing service provision times.
By integrating data from multiple databases, the system personalizes service delivery and considers the specific circumstances of each citizen, such as age, marital status, and benefit eligibility.
Infrastructure management system: The system enables real-time monitoring of the condition of buildings and utility infrastructure facilities, allowing for the quick dispatch of emergency crews and switching facilities to backup sources if necessary. This results in the formation of a comprehensive digital twin of the city, containing information about all buildings and communications. This segment accounts for approximately 30-35% of all smart solutions.
City video surveillance system: Comprised of cameras installed in streets, houses, and public transport the system enables the collection of data on street traffic and traffic congestion, as well as the tracking of offenders, if necessary.
City analytics system: By employing big data analysis and machine learning technologies, it is possible to draw reasonable and unbiased conclusions based on data gathered by other systems, thereby enhancing the quality of decision-making and urban planning.
It should be noted that the majority of solutions are built upon the foundations of IoT (Internet of Things) technology. This allows the formation of a unified structure comprising various elements, from which data can be gathered for subsequent analysis.
The global and Russian markets for smart city solutions face a number of significant challenges.
The key challenge for both the global and Russian sectors is to guarantee the security of information obtained. Databases held by local government bodies present an opportunity for cyber criminals. Once access is gained to such information, it can be used to create a comprehensive profile of the victim, allowing illicit activity. It is therefore vital to implement measures that safeguard this data, including anti-virus software, data encryption systems, firewalls and other solutions.
Another significant challenge is the integration of disparate databases into a unified system. Even within a single city, different authorities may utilize varying formats for information arrays, which complicates the process of their integration, analysis, and interdepartmental interaction (both in addressing city-wide tasks and in providing public services). Therefore, it is essential to either implement universal formats immediately or to develop a solution for integration hubs, which will serve as an intermediate link.
Since 2022, import substitution of digital products and hardware in Russia has presented a significant challenge for the market, with particular implications for the AutoCAD application used in BIM modelling. This allows the creation of a digital twin of a building, offering significant benefits in design and subsequent operation.
An analysis of the global and Russian market for "smart cities"
What are the key areas of development for smart solutions in urban contexts?
The first area is the use of artificial intelligence and big data to enhance the quality of urban planning and forecasting across a range of sectors, including the economy, construction, utilities, and social services. Another benefit of introducing AI in this way is cost reduction, including through optimising the staffing levels of government structures.
The intelligent system of urban transport management is set to become a key focus area. One of the key developments is the introduction of unmanned transport. While unmanned taxis are already a common sight, unmanned trams are set to appear on the streets of Moscow as early as the end of 2024. We can also expect to see unmanned trains on the MCC and in the metro.
In recent years, ESG trends have become increasingly important in the context of the global pandemic and ongoing geopolitical challenges. The implementation of smart solutions will have a positive impact on the environment, enhance social orientation and transparency in city management, reduce costs and identify new revenue streams. For instance, by analysing the existing revenue structure of the city with the help of AI and Big Data, the authorities can give the city economy a new innovative specialisation.
Russia's Ministry of Construction plays a pivotal role in the country's smart city development. From 2021 to 2024, over 28 billion roubles has been earmarked to fund this federal programme.
Why do you need to exhibit at the new ExpoCifra 2025 exhibition?
The government's focus on 'smart' solutions for cities makes this a particularly promising and fast-growing market. The availability of vacant niches provides a great opportunity for new market players, who can demonstrate their solutions for smart cities at the ExpoCifra International Exhibition of Information Technologies and Digital Transformation Solutions.
One of the core sectors of the exhibition will be Smart City. This will provide market participants to showcase their solutions for the transport complex, including "smart" roads, parking, stops and public transport. It will also feature urban planning and modelling, urban infrastructure (including the segment of digital twins) and municipal infrastructure. It is worth noting that 34% of visitors to the IT and digital solutions exposition at the ExpoElectronica 2024 exhibition expressed interest in the Smart City sector.
