Analyst firm IDC this week updated its forecast on global spending on robotics systems and drones, forecasting that spending will total $115.7 billion next year, a 17.6% increase over 2018 spending. In addition, IDC said it expects spending to reach $210.3 billion by 2022, with a compound annual growth rate of 20.2%.

Between the two categories, robotics systems will have a larger share of spending compared with aerial drones throughout the five-year forecast period. In the drone space, spending will be $12.3 billion next year, but the growth rate (30.6% CAGR) will be higher than robotics systems (18.9% CAGR).

Most of the spending in robotics will be dominated by hardware, with nearly two-thirds going towards systems, after-market robotics hardware, and system hardware, IDC said. Industrial robots and service robots will take almost 30% of the spending share within this category.

On the software side, spending will go mainly to command and control applications, and robotics-specific applications. This includes systems integration, application management, and hardware deployment and support. With a 21.7% CAGR, software spending is predicted to grow slightly faster than services (19%) or hardware spending (18.2%).

In vertical industries, discrete manufacturing will account for almost half of all robotics systems spending next year, with an estimate of $50.2 billion in revenues. Other industries expecting to spend on robotics include process manufacturing, resource industries, healthcare, and consumers. Growth rate leaders between now and 2022 include wholesale (31.4% CAGR), retail (29.6% CAGR), and construction (28.1% CAGR). By the end of the period, IDC said it expects to see retail spending on robotics to overtake consumer spending.

“Industrial robotics continues to top the technology investment priorities of manufacturing organizations across all major markets surveyed by IDC in 2018,” said Dr. Jing Bing Zhang, research director, Worldwide Robotics. “While the looming trade war between the United States and China is likely to dampen the market growth slightly in the near term, we expect the growth trend to pick up from 2020 onward.”

“The worldwide market for commercial service robotics will continue to grow at a rate of 20% per year for the coming five years,” said John Santagate, research director for Commercial Service Robotics at IDC. “This growth is due to continued innovation in ease of use as well as the drive for flexible automation across industries. We expect to see growth driven by increased adoption of autonomous mobile robots and collaborative robots being deployed as a means to deliver improvements in capacity, productivity, and efficiency.”

Hardware dominates in drone market

In the drone space, IDC said hardware purchases will dominate the category, with about 90% of this category spent on hardware and after-market hardware. Consumer drones will account for 40% of the spending total ($5.1 billion in 2019), with service drones delivering another 18%.

On the software spending side, most spending will go to command and control applications, and drone-specific applications, IDC said. Spending on services will be led by education and training, which will also see the fastest growth rate (35.9%) over the next five years.

Industry spending on drones next year will be led by the utilities market ($1.4 billion), followed by construction ($1.05 billion), and discrete manufacturing ($913 million). The fastest growth in drone spending will be in the government space (56% CAGR), education (51% CAGR), and retail (42.01% CAGR). By the end of 2022, IDC said it expects the resource industry to surpass construction and discrete manufacturing on drone spending.

“The market is working to simplify the use and integration of drones with efforts ranging from enabling new drone applications through improved technological capabilities to understanding the regulatory implications of drones and the viability of these applications,” said Stacey Soohoo, research manager, customer insights & analysis, at IDC. “Drones are developing new skills, coupling 3D mapping and fully autonomous navigation capabilities with rapid improvements in battery performance and air-traffic management systems.”

China spends most on robots, U.S. spends most on drones

Geographically, China will be the largest region for spending on drones and robotics systems ($38.5 billion in 2019), but most of that will be in robotics systems ($36.1 billion). The U.S. will spend $17.2 billion on robotics systems and drones, with $4.8 billion spent on drones, IDC said.

Following China, the rest of Asia-Pacific (except Japan) will spend $23.3 billion on drones and robotics systems, and Western Europe will spend $13 billion in 2019. China will also see the fastest spending growth in both categories, with a 24.6% CAGR in robotics systems, and 63.5% CAGR in the drones space.

IDC’s Worldwide Semiannual Robotics and Drones Spending Guide breaks down spending across 20 industries in nine regions, with data available for 18 robotics systems technologies and 16 drone systems technologies. More details are available here.

In October, the International Federation of Robotics (IFR) announced that a record high 381,000 industrial robots shipped globally in 2017, with a prediction of 630,000 industrial robot units shipping by 2021. Similar to the IDC report on geographic locations, the IFR report said five major markets dominate sales volume for robotics: China, Japan, South Korea, the U.S., and Germany. For service robotics (non-industrial), the IFR said 2017 saw $6.6 billion in sales volume, with the strongest demand in the logistics space.