Over 80 percent of the population in industrialized countries will live in cities by 2050. In developing countries, the figure is estimated to be more than 60 percent. The development of "smart cities" is intended to lead to urbanization in which technological advances help municipalities to optimize resources in order to create maximum value for the population - be it financial, time savings or an improvement in quality of life.

From the city to the "smart city"
But when is a city "smart"? First of all, smart means that more and more objects are connected via the internet and can react to data or events from their surroundings. To achieve this, information and communication technology, or ICT for short, is being integrated into the various areas of urban life. In their study, the analysts from Frost & Sullivan name the following areas in which ICT can make the city "smart":

• Public administration and education: e-government, electronic education, civil protection
• Healthcare: E-health, m-health, connected medical devices
• Building management: building automation in the areas of climate control, lighting, security
• Smart mobility: adaptive traffic control, parking space management, demand-driven (toll) fee management
• Infrastructure: sensor networks
• Digital water and wastewater management
• Communication: 4G network coverage with 5G in preparation, free Wi-Fi offers, ultra-broadband supply
• Energy supply: smart grids, smart meters, intelligent energy storage
• Smart citizen: ecological mobility services, platforms for volunteering, smart lifestyle
• Smart security: surveillance, biometrics, crime prediction
• Artificial intelligence plays a key role in the areas of intelligent parking, smart mobility and smart grids, adaptive signal control and waste management in smart cities. Leading companies such as Google, IBM and Microsoft remain the most important technology innovators and driving forces behind the introduction of AI

"Artificial Intelligence (AI) has been the most heavily funded technology innovation space over the past two years, with heavy investment from independent and corporate venture capital firms," explains Jillian Walker, Principal Consultant at Frost & Sullivan Visionary Innovation Group.

Nine European cities among the top 15
According to the Frost & Sullivan study, a city is considered smart if it can demonstrate activities in at least five of the areas listed above. Frost & Sullivan examined 50 smart cities in a complex evaluation process consisting of qualitative and quantitative factors. The top 15 cities include nine cities from Europe (including Amsterdam, Copenhagen, London and Paris), four US cities (Chicago, Los Angeles, San Francisco and New York) and two cities from Asia (Singapore and Seoul). Berlin is the only German city among the top 15 (and the 50 cities considered). It is somewhat surprising that Asia is only represented by two top cities, although Asia is one of the fastest growing regions until 2025. In turn, half of the smart cities there will be in China.

By 2025, smart cities are expected to generate business opportunities worth over two trillion US dollars. The technological cornerstones from the areas mentioned above that contribute to the "intelligence" of a city include AI, personalized healthcare, robotics, advanced driver assistance systems (ADAS), decentralized energy generation and five other technologies.

Europe is investing the most money
Even though Asia is growing the fastest, North America is hot on its heels with many Tier 2 cities looking to expand their smart city portfolios, such as Denver and Portland. The North American market for smart buildings will grow to a total value of 5.64 billion US dollars by 2020 with intelligent sensors, systems, hardware, controls and software.

Europe, on the other hand, will see the most investment in smart city projects worldwide, triggered by the European Union's commitment to the development of such initiatives.

Frost & Sullivan currently estimates the European market for app-based cab and ride-hailing services to be worth USD 50 billion. It is expected to rise to 120 billion by 2025. The analysts see this as "playing a key role in the development of smart mobility solutions". However, public transportation is not included in the study.

In Latin America, cities such as Mexico City, Guadalajara, Bogotá, Santiago, Buenos Aires and Rio de Janeiro are developing smart city initiatives. In Brazil, smart city projects will generate almost 20 percent of the total turnover of 3.2 billion US dollars in the IoT (Internet of Things) sector by 2021.

"Currently, most smart city models offer solutions in data silos that are not interconnected. The future consists of integrated solutions that unite all verticals on a single platform. IoT is already paving the way for such solutions," adds Vijay Narayanan, Visionary Innovation Senior Research Analyst at Frost & Sullivan.