No.2551
10/26/2020

Smart City Market in Japan: Key Research Findings 2020

Yano Research Institute (the President, Takashi Mizukoshi) carried out a survey on the domestic smart city market and found out the trends of regulations/legislations, data coordination platform, and spread of city OS, the strategies for data coordination platform by IT vendors, and future perspectives. This press release forecasts the number of City OS implementations and discloses the spread scenario.


Forecast of Number of City OS Implementations and Spread Scenario
Forecast of Number of City OS Implementations and Spread Scenario

Market Overview

This research focuses on data coordination platform, especially “city OS” to be implemented for achieving “smart city” projects. Implementation of city OS in this research is defined as meeting the following all three characteristics, i.e. mutual operation, data distribution and easy scalability, while, at the same time, contributing as an IT solution that have all the following eight functions, i.e. service coordination, certification, service management, data management, asset management, external data coordination, security, and operation.

The number of city OS implementation cases to press ahead with smart city projects was none in FY2019, but forecasted to reach 9 cases in FY2020 and 60 cases by FY2025, making the adoption rate to be 3.0%* by then. By FY2030, the number of implementation cases is expected to achieve 335 in total throughout the years, with the adoption rate 16.8%.

* The adoption rate is calculated by assuming the numerator to be the number of districts or municipalities having implemented city OS, and the denominator as 2,000 which includes not only the number of municipalities but also the narrower or wider framework than municipality bodies.

When observing how the implementations spread as time goes by, until FY2025 city OS implementations are likely to be chiefly by the government-led business*, resulting in annual 10 or more cases of implementations which include both of those taken initiative by the government and by the autonomous business*, with the adoption rate projected to remain at 3% or less. Therefore, city OS implementations are likely to be in progress in a gradual manner until FY2025.

*The government-led business refers to the verification projects that the government has publicly invited.
*The autonomous business refers to the business voluntarily budgeted by the municipalities and specific districts to operate implementation of city OS for achieving the smart city projects.

In such a situation, however, announcement of the Super City Initiative planned in FY2023 is projected to change the status. Generation of successful cases and establishment of monetizing structure are expected to encourage municipalities and specific districts to voluntarily secure the budget for operating autonomous business to implement city OS, which increases the city OS implementations taken the lead by autonomous business after FY2024. In addition, the Osaka Smart City Strategy taking opportunity of Osaka Kansai Expo in FY2025 may increase the cases of and diversify the smart city projects, improving the awareness of smart cities. After experiencing the turning points twice in FY2023 and FY2025, city OS implementations by autonomous business are likely to accelerate after FY2026.

Noteworthy Topics

Full Attempts Start for Super City Initiatives to Take Shape

In May 2020, the Partial Amendment of the National Strategic Special Zones Act was established, incorporating some system arrangements for the Super City Initiative to take shape. The Super City Initiatives to be addressed at target districts from FY2021 are required to provide more than 5 categories of services among the total 10 categories that include distribution, medical and long-term care. The Partial Amendment helps the government offices to unitedly cope with the challenges, when the existing rules and regulations inhibit the initiatives to be carried out.

Because the Super City Initiative has a structure to propel itself more speedily and comprehensively than the conventional smart city projects, the announcement of what can be achieved is highly expected.

Note that the Super City Initiative is considered in this research as the business generated based on smart city projects but with narrower conditions. Therefore, it is positioned in this research as one of the attempts of smart city projects.

Future Outlook

City OS implementations are likely to accelerate after FY2026, due to announcement of the Super City Initiative in FY2023 and the Osaka Smart City Strategy taking opportunity of Osaka Kansai Expo in FY2025. In particular, establishment of monetization structure is forecasted to encourage municipalities and specific districts to voluntarily budget for city OS implementations rather than to rely on subsidy.

When observing the scenario of implementations to spread, the implementations by autonomous business are likely to increase to 20 by FY2026, 35 by FY2027, and 50 by FY2028. The number of city OS implementation cases in FY2030 alone is expected to be 100, reaching 335 when totaled throughout. The adoption rate is likely to be 16.8% by FY2030.

Research Outline

1.Research Period: April to September 2020
2.Research Object: Providers of data coordination platform, distributed data utilization platform
3.Research Methogology: Face-to-face interviews by the expert researchers, surveys via telephone and email, and literature research

The Smart City Market

What is a Smart City?
A smart city refers to a city or a district where some attempts are carried out such as coordination of various data and utilization of new technologies and ICT, aiming for the residences to experience improved convenience and comfort for living. It is comprised of the following eight categories: user, strategy, organizations, business, services, data coordination platform, asset, and rules.

What is City OS?
City OS, according to Cabinet Office, is a collected name of IT solutions that consolidate various functions commonly available among the districts or the municipalities trying to attain their respective smart city projects, and that facilitate provisions of various services adopted within the smart cities.

This research defines city OS as detailed function sets of a data coordination platform built as a reference architecture. City OS implementation is defined as meeting all three characteristics, i.e. mutual operation, data distribution and easy scalability, while at the same time, contributing as an IT solution that have all the following eight functions, i.e. service coordination, certification, service management, data management, asset management, external data coordination, security, and operation.

Because city OS is only a part of data coordination platform, and there is a possibility of some smart city business that implement a data coordination platform that is not the city OS. Therefore, this research does not cover all the domestic smart cities.

<Products and Services in the Market>

Trend of regulation and legislation, trend of data coordination platform, and spread of city OS, strategies for data coordination platform by IT vendors

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