By Matt Hatton, Founding Partner, Transforma Insights
The Internet of Things (IoT) in 2025 is set to see significant advancements in technology, shifting market dynamics, and evolving regulatory landscapes. Technology analyst firm Transforma Insights has identified ten critical ‘Transition Topics’ that will define the IoT environment in the coming year, particularly related to IoT connectivity. These themes explore the integration of artificial intelligence (AI), developments in connectivity technologies, regulatory compliance challenges, and the strategic evolution required to sustain market growth.
1. The rise of AIoT
Artificial intelligence (AI) is becoming a fundamental element of IoT innovation, giving rise to the concept of ‘AIoT’. This refers to IoT devices integrated with AI capabilities to enhance functionality and deliver value-added services. From predictive maintenance to autonomous decision-making, embedding AI into devices is transitioning from a theoretical ideal to a market reality. Businesses are now realigning product roadmaps and system architectures to cater to the growing demand for smarter, self-learning IoT devices. AIoT is transforming not only IoT’s technological capabilities but also its market potential, which Transforma Insights will continue to quantify in its research.
2. Managing distributed AI
As AI adoption grows, managing its distribution across devices, Edge gateways, Cloud platforms, and other points, is becoming an increasing challenge. IoT systems require sophisticated solutions to orchestrate AI workloads, ensuring seamless transitions between computing and storage across network layers. Innovations in distributed AI
management will enable smoother updates, increased reliability, and optimised performance of IoT applications. As this ecosystem grows in complexity, advanced architectures and orchestration capabilities will be needed.
3. eSIM orchestration and market fragmentation
The introduction of the SGP.32 standard for remote SIM provisioning, which will arrive properly in early 2025, is redefining IoT connectivity. This evolution is fragmenting the roles of IoT connectivity providers into network operators, resellers, and eSIM orchestrators. The latter in particular is emerging as a pivotal role in managing connectivity profiles and providing unified management interfaces. Connectivity providers will need to adapt to these new roles, rethinking connectivity strategies and addressing the resulting competitive dynamics.
4. Monetising 5G through IoT
Mobile Network Operators are increasingly focusing on how to monetise 5G networks, and specifically the upgrade to 5G standalone (5G SA). There are numerous features of 5G, such as ultra-low latency, network slicing, and increased reliability, that are applicable to IoT use cases. There challenge will come in identifying and packaging these capabilities into propositions for which there is market demand.
5. Decisions on LTE, NB-IoT, and public LoRaWAN
While 5G deployments might be an increasing focus, the counter is that the future of older connectivity technologies like LTE, NB-IoT, and public LoRaWAN are coming into doubt. MNOs face the dual challenge of phasing out LTE networks while evaluating the relevance of NB-IoT and LoRaWAN in IoT deployments. The prevailing trend favours leveraging existing mobile networks rather than dedicated public networks tailored for IoT. The decisions made in 2025 will likely shape the long-term trajectory of these technologies.
6. Satellite IoT and non-terrestrial networks
Satellite IoT, particularly the emerging non-terrestrial network (NTN) technology, gained significant attention in 2024 and will remain a key topic in 2025. This technology combines satellite and cellular capabilities to offer expansive connectivity options. However, questions remain about whether NTNs will augment existing cellular markets or disrupt them. Transforma Insights will explore how cellular and satellite providers can navigate these developments, balancing opportunities and mitigating potential threats.
7. Regulatory impacts on IoT
The regulatory landscape for IoT is becoming increasingly complex, driven by new requirements for security, data sovereignty, and national resilience. Key legislation, such as the EU’s Data Act, the UK’s PSTI Act, and equivalent measures in the US, is reshaping how IoT solutions are developed and deployed. Companies must adapt to stricter compliance requirements, covering areas such as roaming, data management, and device resilience.
8. Geopolitics and market polarisation
Global geopolitical tensions are introducing new challenges for IoT markets. Supply chain restrictions, trade regulations, and software component scrutiny are driving greater polarisation in vendor selection and market dynamics. This trend is exacerbated by regulations such as the EU’s NIS2 Directive and increasing trade friction between the US and China. Companies must carefully navigate these changes, balancing innovation, compliance, and risk management.
9. Verticalisation of IoT
All IoT is vertical. The horizontal approach to IoT is giving way to a more verticalised model, reflecting the specificity of use cases such as smart grids, fleet management, and building automation. Vendors that can adapt their offerings to align with vertical industry needs will be better positioned to succeed. This shift will require specialised go-to-market strategies, ensuring that solutions cater to industry-specific requirements and purchasing behaviours.
10. Optimising market segmentation and channels
With IoT vendors facing increasing pressure on margins, refining market segmentation and sales strategies is becoming critical. Identifying target customer segments and optimising partnerships with distributors, resellers, and other channels will be key to sustaining growth. In 2025, Transforma Insights anticipates a growing emphasis on ecosystem development and collaboration to improve efficiency and expand market reach.
Conclusion
The IoT landscape is evolving rapidly, driven by advances in AI, connectivity, regulatory demands, and market strategies. 2025 promises to be a pivotal year, bringing new opportunities and challenges for businesses and vendors alike. The key issues will be the ways in which AI can be integrated and orchestrated, and how the increasingly strict regulatory landscape will affect market dynamics and create friction for IoT rollouts.
This article originally appeared in the February 25 magazine issue of IoT Insider.
