IoT Italy growth: the market passes 10.9 billion euro

IoT Italy growth reached 10.9 billion euro in 2025, up 12% on the previous year, with 175 million connected objects in circulation, about three for every inhabitant. The number of devices rose 13%, and the expansion outpaced the digital market as a whole, which grew 3.2% over the same period.

The figures come from the Internet of Things Observatory of the School of Management at Politecnico di Milano, presented at the IoT meets AI conference on 16 April 2026. Against 2022, when the market stood at just over 8 billion euro and connected objects at 124 million, the value has grown by about a third and the number of devices by 41% in three years.

Value has moved from devices to services

Services based on IoT are worth 4.5 billion euro, more than 40% of the market. The figure marks a shift in the centre of gravity: the connected object produces data, the data is analysed, the analysis enables a service, and the service supports a decision. A sensor installed on a plant earns its keep when it prevents a fault or schedules an intervention, while transmitting the measurement is only the starting point.

The same shift concerns smart meters. Measuring consumption becomes useful when it supports more reliable readings, remote management, anomaly detection and wider energy services. In manufacturing, connected machinery underpins predictive maintenance and process control, while in mobility vehicles and infrastructure feed safety and traffic services.

The market grows because the ability to turn objects into access points for digital services is expanding. The share of value tied to connectivity alone advances more slowly than the rest.

The fastest-growing sectors

Utilities lead the ranking by revenue, with 1.87 billion euro and 18% growth, driven mainly by water smart metering: one million new meters were installed in 2025, bringing their share of the total fleet to 24%. In electricity and gas, first-generation smart meters continue to be replaced with more advanced devices, and applications for primary and secondary substations, dams and aqueducts add to the result.

Smart Car comes second with 1.76 billion euro and 6% growth: at the end of 2025, 6.5 million vehicles were natively connected through a SIM, 15.8% of the vehicles on the road, while installed GPS devices reached 10.6 million. Smart Building follows with 1.4 billion euro (+2%), Smart Factory with 1.16 billion (+12%) and Smart City with 1.03 billion, flat against 2024. Smart Asset Management (+18%) and smart transport infrastructure (+17%) are among the most dynamic segments.

Who adopts IoT and how it connects to AI

In manufacturing, 71% of large companies have started at least one IoT project, against 59% of medium-sized ones. Investment intentions keep rising: 73% of large companies and 64% of medium-sized ones plan new initiatives. Industrial AI is used by 30% of large companies, 11 points more than in 2024, while medium-sized companies doubled their adoption rate, from 6% to 12%.

The most widespread applications are cybersecurity and image recognition at 55%, followed by predictive maintenance at 49% and production optimisation at 45%. 40% of companies with such projects report measurable returns.

The size gap runs through the whole digital market: the same difference in artificial intelligence adoption separates those who have started from those who lag behind.

Connectivity is changing shape

Applications on cellular networks account for 39% of the market, worth 4.3 billion euro with 7% growth. Alternative technologies cover the remaining 61%, with 6.6 billion euro and 16% growth. Among them, WiFi accounts for 31% of connections (+15%), Bluetooth for 22% (+14%), and LPWA networks, the low-power networks built for devices that send small amounts of data over long distances, passed 10 million connections with 20% growth.

The newest frontier is non-terrestrial networks, which extend 5G connectivity to low-orbit satellites and reach areas that terrestrial infrastructure does not cover. The integration of LPWA networks with satellite constellations is already active in scenarios such as smart metering and environmental monitoring.

The open questions: data, skills and incentives

Connecting objects is the simplest step. Value requires reliable data, integrated processes and skills. Fragmentation is the first obstacle: when the information collected stays locked in separate systems, its contribution runs out. Data quality is the second, because advanced analysis on incomplete foundations produces weak guidance.

As devices multiply, the exposed surface grows, and security enters service design from the start. Organisationally, turning an object into a service requires technical, process and business skills, and a dialogue between functions that often work apart.

On incentives, the research points to the difficulties of the Transizione 5.0 plan: 36% of companies name bureaucratic requirements as the main obstacle, 29% struggled to measure the energy savings the scheme requires, and 21% stayed on the earlier Industria 4.0 plan. 1.5 billion euro of incentives have been requested but not yet allocated, with a waiting list of about 7,000 companies. The Data Act, fully applicable in Italy since 12 September 2025, governs access to and use of data generated by connected products: 32% of large companies are already adapting, 25% plan to do so soon, while among medium-sized companies only 14% are compliant.

Integration is the least visible line of the bill, and the mechanism matches the one behind the hidden costs of digital transformation: the unexpected expense comes from the links between systems rather than from buying the tools.

What it means for a small business

For a small business, the question is which decision to improve, before deciding how many objects to connect. A meter that flags unusual consumption, a sensor that anticipates a fault or a plant managed remotely produces a measurable benefit when it enters a process and a defined responsibility.

The starting point is the need; the available technology comes after. The choice between cellular connectivity and alternatives, between local processing and the cloud, between a supplier platform and an in-house system, follows from there. Maturity is measured by the ability to turn distributed data into useful services, operational decisions and sustainable models over time.

A connected object creates value when the data enters a process and produces a decision. The Italian market passed 10.9 billion euro because a growing number of companies build services on top of that data. For anyone starting an IoT project now, the point of departure is the process to improve, and the measure of success is the service that comes out of it.