Smart cities

Smart cities

Summary

Smart cities are evolving from connected infrastructure toward more integrated urban operations, where devices, connectivity, data, platforms, applications, and services work together across transport, utilities, buildings, infrastructure, and public services. The report presents this as a progression from using digital technologies mainly for connectivity and visibility toward applying AI, digital twins, real-time analytics, and automation to support prediction, coordination, and faster operational decisions.

The main value lies in connecting previously fragmented systems and using data more effectively across city functions. Alongside new infrastructure, activity is broadening toward modernizing existing assets, improving interoperability, strengthening climate and resource resilience, and supporting deployment through integration and managed services. This is expanding opportunities across sensing and control systems, shared data platforms, cloud and edge infrastructure, cybersecurity, systems integration, and operational support.

Market signals remain active but uneven. Deal value rose sharply in H1 2026 despite lower volumes, hiring eased after peaking in Q2 2025, while patent activity continued to strengthen around connectivity, 5G, IoT, and AI. Adoption, however, remains constrained by fragmented governance, legacy infrastructure, interoperability challenges, cybersecurity and privacy concerns, uncertain returns, skills shortages, and digital inclusion gaps.

Innovation is progressing across mobility, buildings, grids, public safety, infrastructure monitoring, climate resilience, and citizen services, with developments moving from connected sensing toward AI-enabled platforms, digital twins, edge intelligence, predictive operations, and more automated services. Wider adoption will ultimately depend on how effectively these capabilities can be integrated with existing infrastructure, coordinated across stakeholders, secured at scale, and translated into reliable operational and public-service outcomes.

Smart cities are progressing from connected infrastructure toward more integrated urban operations. IoT continues to provide the underlying foundation, while platforms, applications, and services increasingly connect data, systems, and city functions across transport, utilities, buildings, and public services.

Smart city intelligence is moving closer to operational decision making, as AI, digital twins, and real time analytics are used to plan, predict, and optimize responses. Dubai Municipality’s Digital Twin Platform supports urban planning, Tantalus’ TRUGrid Verify improves grid data for utility decisions, and Aeva’s CityOS applies edge AI to traffic optimization, pointing toward city systems that support faster and more coordinated operational decisions.

As smart-city capabilities expand, market activity is broadening toward modernization and integration of existing urban systems. Alongside new infrastructure, cities are focusing on integrating data across systems, improving interoperability, strengthening climate and resource resilience, and supporting deployment through integration and managed services.

Market signals point to sustained innovation despite uneven capital and talent activity. Patent activity has strengthened, hiring has moderated from its 2025 peak, and 2026 deal value has been influenced by large transactions despite lower deal volumes, suggesting that activity is not moving uniformly across indicators.

Enterprise innovation is targeting established urban operations rather than standalone smart city deployments. Siemens’ Asset Performance Advanced applies predictive diagnostics to buildings, ABB’s Ability BuildingPro Suites integrates building and energy systems, and Envelio’s Strategic Grid Planner brings AI into grid planning, pointing toward smart city technologies becoming part of routine urban operations.

Key Highlights

• Smart-city development is progressing from connectivity and visibility toward prediction and adaptation.
• IoT remains the foundation, while AI, digital twins, real-time analytics, and automation are increasingly supporting coordinated planning, forecasting, and operational decisions.
• Modernizing and integrating existing urban systems is becoming a major focus of activity.
• Alongside new infrastructure, cities are retrofitting assets, connecting fragmented data and systems, improving interoperability, and strengthening resilience across transport, utilities, buildings, and public services.
• Value is increasingly being created above the foundational IoT layers.
• Devices and connectivity enable smart-city systems, but platforms, applications, and services are where data, workflows, and city functions are integrated into operational use cases.
• There is no single smart-city deployment model.
• Initiatives vary by development context, geographic scale, and level of system integration, ranging from individual assets and brownfield retrofits to district-wide and cross-domain city platforms.
• Market signals point to sustained but uneven momentum.
• Deal value surged in H1 2026 despite lower deal volumes, hiring moderated after peaking in Q2 2025, while patent activity continued to strengthen around connectivity, 5G, IoT, and AI.
• Scaling depends as much on integration and governance as on technology maturity.
• Legacy systems, fragmented ownership, interoperability, cybersecurity and privacy, funding, skills gaps, and digital inclusion remain important constraints even as the underlying technologies mature.

Scope

• This report examines smart cities as the city-focused segment of the broader IoT landscape, covering how connected technologies, data, and digital systems are applied across transport, utilities, buildings, infrastructure, and public services. It also traces the evolution of smart-city capabilities from basic connectivity toward more integrated, data-driven, and AI-enabled urban operations.
• The technology assessment is structured around an IoT-enabled stack spanning devices, connectivity, data, platforms, applications, and services. It explains how these layers interact and how platforms, applications, and supporting services connect underlying technologies with city operations.
• Coverage also includes different deployment contexts, geographic scales, and levels of system integration, alongside standards supporting governance, interoperability, performance measurement, and continuous improvement. Recent developments in AI, digital twins, autonomous mobility, real-time sensing, urban robotics, and citizen services are also assessed.
• The analysis further evaluates deal, hiring, and patent activity from 2023 through H1 2026, together with the main adoption drivers, challenges, and market opportunities. The innovation section maps recent enterprise activity across the full smart-city value chain, highlighting developments in sensing, connectivity, data analytics, platforms, mobility, buildings, grids, infrastructure monitoring, and managed services.

Reasons to Buy

• Smart cities are evolving from connected infrastructure toward more integrated, data-driven urban operations. By combining IoT, AI, digital twins, real-time analytics, automation, and connected platforms, cities are improving how they monitor infrastructure, coordinate services, optimize resources, and support faster operational decisions.
• This Innovation Radar: Smart Cities report from the analyst provides an overview of the technology stack, market signals, deployment models, adoption factors, and emerging innovations shaping the development of smarter, more connected urban systems.
• Strategic Insights

Understand how smart cities are evolving from connected infrastructure toward integrated, data-driven, and increasingly AI-enabled urban operations, and the implications for city planning, service delivery, and technology adoption.

• Technology Analysis

Gain a structured view of the smart-city technology stack across devices, connectivity, data, platforms, applications, and services, including the standards and integration capabilities needed to connect urban systems.

• Innovation Landscape

Track recent enterprise innovations across sensing, edge infrastructure, data analytics, digital twins, mobility, buildings, grids, infrastructure monitoring, and managed services to identify where technology development is advancing.

• Market Dynamics

Assess market momentum through deal, hiring, and patent activity, alongside the key drivers, barriers, and commercial opportunities influencing smart-city adoption and deployment.

• Deployment & Application Landscape

Compare greenfield, brownfield, and hybrid developments across different geographic scales and levels of integration, while examining applications across transport, utilities, buildings, infrastructure, and public services.