Global spending on the Internet of Things will hit $1.29 trillion over the next three years, according to a revised prediction from research firm International Data Corp.

IDC made the new forecast in an update Wednesday to its Worldwide IoT Spending Guide for the 2015-2020 period. In earlier editions of that guide, IDC said IoT spending would total $1.3 trillion, with a compound annual growth rate of 17 percent through 2019. The firm has now reduced its overall spending prediction a notch, while the CAGR forecast has been reduced to 15.6 percent.

Marcus Torchia, IoT research manager for IDC’s Customer Insights and Analysis team, said he expected to see “high-growth IoT use cases” in consumer product and service-oriented industry segments such as healthcare, insurance and retail.

“In some cases, these are green field opportunities with tremendous room to run,” he said.  But other verticals such as manufacturing and transportation are large and thus have more moderate growth prospects.

Breaking down that $1.29 trillion figure, IDC said most of it will be spent on hardware, followed by services, software and connectivity. IoT hardware spending is set to double from 2015 to 2020, but that growth will actually be the slowest out of the four technology segments. The fastest-growing segments will be IoT software and services, with application software likely to represent over half of all IoT software investments. Much of the hardware spending will be on modules and sensors that link end points to networks, the research firm said.

The biggest-spending industries will be manufacturing and transportation, at $178 billion and $78 billion, respectively. Utilities will be the third-biggest at $69 billion.

Regionally, Asia/Pacific (excluding Japan) will see the greatest IoT spending over the forecast period, followed by the United States, Western Europe and Japan. The manufacturing industry will account for about a third of IoT spending in the APeJ region, with utilities and transportation ranking second and third. Manufacturing will also dominate IoT spending in the U.S., although it will account for only 15 percent of overall spending. In Western Europe, consumer IoT spending is expected to come out a close second to manufacturing.

“It is great to see that the Internet of Things will continue to fuel both business transformation and innovation acceleration markets such as robotics, cognitive computing, and virtual reality,” said Venon Truner, IDC’s IoT research fellow and senior vice president of enterprise systems. Investments by China and the United States will account for more than half of IoT spending, he said.

IDC will host a web conference on its Worldwide IoT Spending Guide on Jan. 11.

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