The potential of the IoT market has been overblown and will account for just seven percent of global IT spend in 2025, new research has forecast.

Strategy Analytics said claims that the IoT had become mainstream were wide of the mark and that the market had “ a credibility problem”.

The IoT accounted for 3.8 percent of global IT spend in 2015, the research said, and will grow to 7.1 percent by 2025.

Strategy Analytics based its figures on interviews with “IT decision makers” across nine vertical markets in the US, the UK, France, and Germany.

It found that 35 percent of firms with IoT deployments had fewer than 100 devices connected.

In the US, two-thirds of businesses spent less than $100,000 on IoT projects, it said.

Last year, Machina Research said IoT revenues were set to top $3 trillion in 2025, up from $750 billion in 2015.

Harvey Cohen, President of Strategy Analytics, said: "Estimates that put the IoT market value at $3 trillion or more have a credibility problem.

“Can [the] IoT really be bigger than the entire IT industry?

“The economic value potential of [the] IoT is indeed huge, but the opportunity for suppliers of products and services is likely to be measured in $US billions not trillions.”

Machina, now owned by Gartner, declined to comment.

Strategy Analytics also took issue with the likes of Vodafone, which said last year that the IoT market had “entered the mainstream”.

[Read more: Vodafone hails 50 million IoT connections]

David Kerr, a VP at Strategy Analytics, commented: "Claims that the IoT market has progressed from experimental to mainstream are just not supported by Strategy Analytics voice of the buyer data yet.

“[The] IoT must compete for a share of the total IT budget; businesses and public entities move slowly and are not easily convinced by vague claims of future economic benefit."

Services will continue to be the biggest revenue opportunity accounting for 64 percent of global IoT revenue by 2025, Strategy Analytics said.

The challenges for providers, notably security, integration with legacy systems, proliferation of standards, privacy concerns, compliance issues, and the skill sets needed to extract value from the huge volume of data produced, are myriad.

As such, partnerships and alliances will be critical, as no one company can serve every IoT requirement.

More News

EE TV adds voice commands through Amazon Alexa EE TV adds voice commands through Amazon Alexa EE TV customers will be able to control their set-top boxes through voice commands after the UK operator added support for the Amazon Alexa virtual assistant. More detail
Swisscom toasts profitable second quarter Swisscom toasts profitable second quarter Swisscom reported a 10 percent rise in net profits in the second quarter and upped its EBITDA guidance for the year. More detail
KPN buys IT firm in healthcare push KPN buys IT firm in healthcare push KPN has acquired an IT services provider as it looks to strengthen its offering to the healthcare and public sector markets in the Netherlands. More detail
“Considerable anger” at Telit as CEO resigns over fraud charges “Considerable anger” at Telit as CEO resigns over fraud charges Telit CEO Oozi Cats has formally departed the company after it emerged that he concealed historical criminal charges. More detail
Manx Telecom suspends CFO over alleged drug offences Manx Telecom suspends CFO over alleged drug offences Manx Telecom has suspended its CFO after he was charged with drug smuggling offences. More detail
    

@eurocomms