IoT industry in the UK to grow at 20% until 2025

The UK is mostly focused on the ‘smart city’ vertical of IoT where public infrastructure and services are being greatly transformed through large scale IoT deployments. As of 2016, there were approximately 8.4 million connected devices which is forecasted to reach 20.3 million by 2020.

  • Definition / Scope
  • Market Overview
  • Key Metrics
  • Market Risks
  • Market Trends
  • Industry Challenges
  • Technology Trends
  • Regulatory Trends
  • Market Size and Forecast
  • Market Outlook
  • Technology Roadmap
  • Competitive Landscape
  • Competitive Factors
  • Key Market Players
  • Strategic Conclusion
  • References
  • Appendix

Definition / Scope

IoT also known as internet of things is a network of unified and organized devices that use sensors to collect data and communicate with each other through the medium of internet.

Some of the general terms used in IoT technology include:

  • Interconnected devices: These are products or business assets which communicate to one another over internet. For instance, surveillance cameras. Sensors are attached in the devices which send back the data to the manufacturer.
  • Cloud: cloud is a place where data collected from the smart devices are stored. With the help of algorithms and AI, the information is further analysed to improve efficiency in business.
  • Network: Some of the common networks include, Wi-Fi, cellular (4G and 5G) and fixed line connections are the mostly used to transfer data and connect devices in IoT.
  • Router: It is a physical device which aids connected point between cloud, sensors and AI enabled devices. One benefit of the gateway is that it can provide additional security.
  • Sensors: They are part of intelligent device which communicate data to cloud.

Some of the industrial verticals where IoT applications are being applied include,

  • Energy: Some of the common applications include, energy smart meters, smart street lighting
  • Waste: Wastes around the cities are being managed via Big Belly Solar connected bins, waste vehicle tracking combined with bin sensors and route optimisation 
  • Transport: Most common applications include, congestion sensors, traffic management solutions, bus prioritisation solutions, smart parking solutions, public transport fleet tracking solutions
  • Health: Some of the most common applications include, movement and activity sensors for elderly, vulnerable and disabled people health statistic monitoring for people suffering with chronic illnesses
  • Environment: Several air quality sensors have been deployed while other applications include, flooding sensors, soil moisture sensors, ground temperature sensors (to inform when roads require gritting)
  •  Buildings: Building management solutions that integrates aspects of electricity and heat monitoring, connected safety devices and space usage monitoring.

Market Overview

As of 2019, in the UK, 29% organizations across all industry verticals have already adopted and deployed IoT technology.

The companies that have invested in the technology have cited that they have realized a return on their investment and 75% of the companies that have invested in IoT agree that the digital transformation is not quite possible without technologies such as IoT.

The adoption of IoT across several sectors in the UK is a common thing at present however, number of obstacles remain to be solved and IoT is not fully accepted as an important component for any organization. Every 1 in 10 adopters believe insufficient resources and skills gap as major barriers.

Across the several industry verticals:

  • As of 2019, 82% of the adopters in the automotive industry have cited that they are using IoT connections more than 12 months ago.
  • Similarly, 90% of the retail sector adopters claimed that they are engaged in live IoT projects more at present than they were a year ago.
  • 46% of the transport & logistics companies were found to be using IoT to support large-scale business transformation and
  • 53% healthcare organizations were found to be using IoT to increase the efficiency in their working ways.
  • 35% of the companies in energy sector are using IoT technology and more than 50% of the adopters have around 1000 connected devices.

51% of the companies from all sectors utilizing IoT believe that IoT is increasing revenue and opening up multiple streams of revenues to them. In addition, 20% companies have also cited reductions in costs due to IoT.

In addition, 49% of the companies are also utilizing IoT along with data analytics to improve their business outcomes

The expected amount of connected devices in the UK by 2020 is around 20.3 billion up from 8.4 billion devices in 2016.

Market Risks

At present, the attack surface of the smart city is open and broad. The technology which the city uses is vulnerable to cyber-attacks. More smart the city, more increased chances of being exposed to such risks

As IoT applications across public sector i.e. smart cities is increasing and becoming more centralized and cloud based, it is becoming an easy target for the hackers as IoT has the potential to create large base of data which hackers possibly want.

In line with that, smart city applications also contain extended personal information and household level data on citizens, their location and movement and activities.

Systems then link the several databases and create a unified database to lead more informed decision. Thus, if this confidential data is lost, organizations are subject to not just financial compensation but are also likely to suffer from reputation loss.

As a matter of fact, in 2019, 66% of the networks have claimed that they have suffered from IoT related security breach. If the breach happens often and across several IoT applications, this could cause lack of confidence among mass consumers which could spread across entire suite of IoT solutions.

Top Market Opportunities

  • Value addition

The IoT technology holds the potential to add of about $4.6 trillion in value to the worldwide economy in next 10 years of course. 70% of the public sector will come from the public sector value is likely to be derived from department-specific implementations while 30% will derive from cross-department adoption of IoT.

In the UK, however, businesses & consumers did not feel IoT was causing a notable disruption at present. The main reason behind this perception is because IoT technology is at an early stage of deployment.

In contrast, while considering the future, local authorities believe that IoT has the potential to cause significant disruption to public sector. In medium term, they believed in not just IoT but the large amounts of data that the technology creates which could be analysed and that in turn could lead to improved decision making.

Finally, in long term, authorities stated the potential of IoT to have a transformational impact across first, several industry verticals via collaboration of automation and IoT that could enable large scale production and second, the way services could be designed to meet the needs of citizens.

  • Economic growth potential

Multiple authorities in the UK have acknowledged potential benefits that the IoT can deliver. For instance, as of 2019, 65% of the authorities believed that IoT holds the key to activate economic growth and this is the major enabler of IoT adoption.

Market Trends

Programs and initiatives: In the UK, the government is promoting the broad implementation of IoT by dedicating around $50 million annually to R&D activities related to IoT applications.

In addition, European Union is also looking forward to extend the use of IoT by funding research associated with developing new IoT systems for the public good.

These initiatives and programs are further supported by national strategies, economic development plans, single-sector transformation programs, competitions and simulating innovations.

Prospect of improving efficiency of services: 50% of the authorities in the UK have rated this factor as a major driver of IoT adoption. At present, the inefficiencies in services & infrastructure is costing billions of dollars to the government.

Government is able to save up to $4 billion every year if physical infrastructures were more robust. Thus, this is another reason, government is actively supporting the development & deployment of IoT.

Reduction of cost: 45% of the authorities in the UK have cited cost efficiency as major driver of IoT. Most of the state level authorities are working under budget constraints and limited staffs and in addition they have task of delivering high quality services to increasing number of people.

As IoT offers authorities a way to cut expenditure in number of areas such as, in healthcare vertical, wearable devices, portable monitors allow reduction in labour costs and saves considerable amount of time as well.

Lack of Funding: 95% of the authorities in UK have cited lack of funding as the major barrier to adoption of IoT. Local authorities lack the means to reduce costs and invest in large-scale IoT applications. In addition, funding occasions are also limited.

Although, authorities are already using funding channels such as the European Regional Development Fund, Horizon 2020, Economic and Social Research Board and InnovateUK. 

However, moist projects initiated through this route are set up as R&D projects and are funded on this basis. There is need of small-scale demonstrator projects that can be deployed area-wide or city wide.

Lack of compelling business case: Another major barrier that exists on the way of IoT adoption in UK is lack of compelling business case where 30% of the authorities have rated this as the second biggest barrier and further 25% as the major barrier.

The IoT applications that have been developed so far, are innovative but may not have good return for value (financially) which is creating difficulties for attracting investment for such applications.

Most of the business models associated with the IoT innovations in the country create some value addition however, they don’t have a good prospect to generate cashable efficiencies.

Thus, there is need of putting together financially viable business cases for IoT rather than just focusing on innovation.

Industry Challenges

Some of the major challenges for the IoT businesses in UK are as follows:

Security concerns

As the IoT domain matures and the level of adoption rises, most important concerns are also likely to emerge i.e. security concerns. The proliferated explosion of interconnected devices in the landscape will produce unidentified risks such as data privacy and security challenges.

The repercussions are so huge that the centralized IoT system could be hacked cause failure of the entire smart city domain.

Firstly, in the urban IoT landscape, there will be huge amounts of data collected from the citizens using interconnected devices in their day-to-day lives.

Any breach that would lead to loss of information could be costly for businesses as it would harm their reputation and also they could be obliged to financial compensation.

In long term, it could erode customers; trust upon the technology. Secondly, as IoT becomes more deeply rooted into the city’s infrastructure and service systems, the consequence of breach would mean public security and safety compromised.

Finally, public infrastructure means a highly attractive target for adversaries and integrating digitally connected systems into city infrastructure only creates new ways for adversaries to exploit.

Given the consequences, the ‘IoT developments’ are still at a very early stages and security in IoT is not hugely demanded or considered by both businesses and customers. Thus, it will be a great challenge to secure IoT. Some of the security challenges that must be addressed include:


The number of connected devices are likely to grow by orders of magnitude, stretching the capabilities of existing security products.

Complexity: The wide range of technologies, with their varied hardware, firmware, operating systems, communication protocols and management methods, are also likely to lead to new levels of security complexity.

IoT is also comprised of multiple technologies such as sensors, public data, mobile applications, cloud and SaaS solutions, cameras, location-based services, smart grid solutions, public transportation, traffic control systems, city management systems and social media which could easily become attack surface for hackers.

Extended Perimeters: IoT endpoints will go beyond traditional network perimeters to externally controlled appliances, devices and sensors.

Technology Trends

Some of the major IoT innovations and technology aspects that are currently in consideration include:

Launch of 5G: IoT technology will be utilized to its fullest capabilities only after it is backed by a high-speed, low latency digital connection, able to support heavy data load.

In that case, deployment of 5G is becoming the most anticipated technology which is set to support further innovations in the IoT sector as well as has the potential to offer a digital connection solution capable of handling bandwidth of technologies such as autonomous systems.

Investment in Privacy: As IoT networks become more important to smart city life, the investment in cybersecurity also becomes pressing. As IoT handles sensitive data, they are more vulnerable to cyber-attacks.

To ensure the privacy of public data in IoT system, companies providing IoT solutions are considering cybersecurity or more supportive defence systems which can help ease the vulnerabilities and reduce chances of data breach.

Edge computing: Until now, IoT devices in general operated by transferring data and control to a central cloud network. However, next-generation connected technologies such as autonomous vehicles, require quicker response times and more human-like reaction, especially for safety purposes.

Thus, to make the process more efficient edge computing is being considered where the technology would enable IoT sensors to operate at highest level possible and make decisions for themselves. Thus, in 2019 and beyond the ability to process data on device and make-on demand decisions in IoT is likely to become the mainstream.

Regulatory Trends

As of July 2018, the UK government released an announcement of national broadband strategy which aims to cover full fibre to every home by 2033.

The goal has been further supported by government’s pledge of up to $5.5 billion subsidies to underwire fibre rollouts in deprived areas. In case, the plan is successful, UK will have the network capable of handling massive data expected to come from 5G networks.

As a part of its broadband plan, the government has also announced that Salisbury will be the first location to complete the infrastructure in addition with 25 locations where similar rollouts are in progress.

For the IoT community, the early results showcase that UK will be a fertile ground to developers and hardware designers in coming years. Thus, it is a perfect time for IoT entrepreneurs to look to the UK to form a base for future operations.

As of May 2019, the UK government has also announced plans to introduce new security for IoT laws. The policy was launched by Digital Minister Margot James to determine the level of security of an internet-enabled device, similar to European energy efficiency labelling system for appliances which could forbid the sales of items that don’t conform the IoT security standards.

In addition, the government has also introduced a code of practice called ‘Secure by design’ in October 2018 which is also dedicated for ensuring a safe IoT ecosystem in UK.

Some of the security requirements for IoT device manufacturers include, devices must have unique passwords, they must provide public point of contact as a part of ‘vulnerability disclosure policy’ and they must state the minimum length of time the device will continue to receive security updates as a part of an ‘end of life policy’.

Thus, initiation of such regulation suggests that government is aware of challenges faced in IoT landscape.

Market Size and Forecast

As of 2019, the global market value of the IoT industry was recorded at $212 billion. The forecasts suggests that by 2025, the market size of the technology is expected to reach $1.6 trillion. Between 2019-2025 periods, the market is rising at CAGR of 39.2% respectively.

As of 2019, the European IoT market size is estimated to be around $171 billion accounting the highest market size among all regions. The market size of the region is also increasing at 19.8% y-o-y.

During the 2019-2022 period, the total spending on IoT solutions is also expected to encounter double-digit annual growth rate and market size is forecasted to reach $241 billion by 2022.

Within the European region, Germany is expected to lead in 2019 in terms of market size with approximately $35 billion followed by UK whose market size is at $25 billion. Further, the market size of UK is expected to rise at CAGR of 20% between 2019-2025 respectively.

Within the UK, the leading sectors include, telecommunications at 72% adoption rate followed by manufacturing at 57% respectively. By 2020, the overall implementation of IoT is expected to reach 49% in the country.

Market Outlook

Some of the predictions for the IoT in UK in the course of next five years (2023) include:

Low powered IoT technologies such as LP-WAN will drive the IoT 2.0 or second wave of IoT technology. LP-WAN will also lead to increased network coverage and more cost efficiency.

In addition, tiny low powered devices which use narrow-band IoT (NB-IoT) will also become a commonplace. These devices are likely to become important for infrastructures such as roads and bridges.

Partnerships will be important. IoT entrepreneurs are also likely to collaborate with businesses that are operating in area of artificial intelligence and machine learning by allowing data collected in the IoT systems to be analysed.

Both AI and IoT combined will make digital supply chain more transparent. For instance, IoT sensors will be able to locate any item at any time and AI will predict if external factors (for e.g., weather conditions) will delay deliveries.

72% of the IoT adopters in the country expect security and privacy concerns to be reduced greatly due to government policies and make IoT landscape more open and utilized.

Technology Roadmap

The combination of IoT, 5G and AI will lead to autonomous trucks and vans across the UK roads. They will also become major means of transporting goods between factory warehouse and end-user or customer.

Smart cities will become more prominent and developed where every device or infrastructure will be sensor based ranging from street traffic to drainage systems and waste collection.

Green spaces will be established with vertical gardening concept on roofs of skyscrapers. This will lead to improved air quality in cities and also support urban agriculture.

Competitive Landscape

In UK, majority of the universities i.e. 81% are involved in some kind of IoT activity. Most of them have partnered with new research programmes, products and services. Only few universities are present that are not engaged with IoT technology and don’t have any focus in Science and Technology overall.

UK also has some active programs in IoT one of which is the PETRAS programme, which connects nine UK Universities with industry partners, is a good example of the collaboration that exists between academia and industry.

PETRAS has also Cybersecurity of the Internet of Things Research Hub that sightsees critical issues in Privacy, Ethics, Trust, Reliability, Acceptability, and Security. The public funding of about $10.7 million is dedicated to the hub. Besides universities, PETRAS also has number of industry partnerships i.e. over 1100 limited companies in UK are connected with the project.

Other projects include:

  • IoT Tribe

IoT tribe which brings start-ups and corporates together to innovate with IoT technology. Most of the SME’s are involved in the project and giant companies such as Rolls Royce, Sage, Innovate UK and Capital Enterprise among others are collaborating with them by funding the project and running accelerator programs.

The SME’s in turn help big corporations to improve their IoT strategies. IoT tribe project also help bring industry experts who help IoT start-ups with product development, supply chain management, UX, market testing, investment willingness and more through a programme of activities which includes workshops and consulting.

  • City Verve

It is the UK’s smart city demonstrator and is also supported by the IoTUK Programme. The City Varve project aims to bring together latest IoT technologies deployed at a city scale to lead a transformation breakthrough in the area of IoT in cities.

The project further intends to create endless possibilities across sectors- healthcare, transport and education; and more engaged and empowered citizens.

The project is made up of 20 organizations including Manchester City Council, Manchester Science Partnerships, the University of Manchester, Cisco, and BT.

RegionInvolved in IOTNot Involved in IOTInvolvement %
Northern Ireland20100%

Competitive Factors

Firstly, the overall growth of IoT is huge in the country UK where the number of IoT entrepreneurs’ in the country are increasing at 49% y-o-y. Almost 28% of the companies in the market have been able to become a global brand and 6 of them have been acquired by the larger companies. However, 9% have also gone out of business.

Some of the biggest growth sectors are health and transport while involvement of IoT across agriculture, oil & gas industries remain relatively low. One of the sub-segments within the healthcare is digital health where IoT applications are emerging the most.

Some sectors are inherently moving faster than others as the UK government has launched a three year $45 million funding plan in 2018 which is likely to drive innovation in the IoT market in next few years. Tech hubs have been established for the same in areas such as London and Dublin where greater amount of IoT activities are happening.

Considering other cities such as Manchester, the growth is significant in the region as it recently won $15 million grant from the government to become the first IoT city demonstrator. The project will be conducted via public-private consortium in which Cisco seems to be the industry lead. Considering this, the Manchester is set to become the world leader in smart city technology deployment.

Key Market Players

Some of the major players in the industrial robotics landscape of China are as follows:

  • Drayson Technologies: It is an IoT platform company using innovative wireless charging technology and machine learning software to create smart sensor
  • EVRYTHNG: It is a smart product platform which consumer products to the internet and ensures real time data in the cloud to drive applications.
  • PureLiFi: The technology is focused on R&D of Li to Fi (light fidelity) and visible light communications technologies.
  • D3O: It is a smart materials company specialised in impact protection and shock captivation.
  • Synthace: The Company aims to increase universal bioscience productivity, enabling people to better engineer biology for health, food, energy and manufacturing.
  • Eseye: It is a leading provider of global cellular internet connectivity for IoT devices, delivering Machine to Machine (M2M) solutions to businesses serving key areas of connected home, connected enterprises and connected cities.
  • Intamac Systems Limited: It provides internet to accessed monitoring and control services to the home and business markets.
  • eLogistics: The company offers to harness the power of web technology to bring new efficiency to freight transport operators.
  • PragmatIC Printing: It offers products such as ultra to thin and low to cost flexible microcircuits, incorporated into mass to market objects and packaging.
  • Tictrac: It is a connected health platform that engages people in their health through their data.

Some of the other noteworthy players in the market include:

  • GeoSpock
  • FloLive
  • SAM Labs
  • Den
  • Geely
  • GraphCore
CompanyLocationFounded inEmployeesTotal Funding (2019)
Drayson Technologies GroupLondon200711-50$56,297,952
Intamac SystemsNorthhampton200051-100$11,300,000
PragmatIC PrintingCambridge200611-50$8,100,000

Strategic Conclusion

Looking at the future, the vertical based approach is being reconsidered in regard to IoT in the UK. Majority of IoT applications being developed by the companies are being catered as a point of solution for small day-to-day needs of people.

In addition, the stakeholders of IoT technology are also counting on data generated by the connected devices and the value addition it could cause when combined with the data from another application.

For realising the fullest potential of IoT technology, cities and their local authorities need to work on R&D of the technology, bolster a competitive and M&A activities into the market.

The government must invest in central smart city platforms and control multiple application which allow data to be shared between them, only in that case, UK could predominate other county markets in IoT.




  • IoT- Internet of Things
  • LP-WAN- Low Powered Wide Area Network
  • NB-IoT- Narrow Bandwidth Internet of Things
  • 5G- 5th Generation

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