A third (34%) of businesses say poor IoT connectivity is a barrier to AI adoption, as new research shows just 2% of deployments are reliable enough for success.

Poor connectivity from Internet of Things (IoT) devices is hindering the adoption of Artificial Intelligence (AI) in a third of businesses (34%), according to the new 2025 State of IoT report from global IoT firm Eseye.

The research, which surveyed 1,200 senior IoT decision-makers, warns that these unreliable data streams are putting corporate AI strategies at risk, with findings showing only two per cent of firms achieve the high levels of connectivity required.

This performance gap exists despite the majority of business leaders stating that high connectivity performance is essential for device uptime. The research found that about three quarters of businesses (74%) agreed that achieving near 100% global connectivity is crucial to their business cases.

More than a third of businesses cited an inability to gather timely and accurate data due to device downtime, leading to poor business decisions (36%) and damage to their company’s reputation (36%) as key risks they face.

A similar number pointed to a ‘Loss of operational efficiency and increased costs due to unreliable connections’ (35%).

The research also found that size matters when it comes to IoT investment. Large enterprises are more likely to plan budget increases (52%), when it comes to IoT, where as small and medium firms were much more likely to cut IoT budgets (37%).

In the UK, confidence in business budgets has halved since last year, from 69% to 33%. Still, 66% of businesses plan to expand their device estates, with 47% intending to increase their budgets to achieve this.

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“We all hear about the incredible promise of AI to help us solve major global challenges, from creating smarter healthcare and more sustainable cities, to managing our energy and water resources,” Paul Marshall, co-founder and chief customer officer at Eseye said. “But what’s often missed is that these revolutionary AI models are completely dependent on a constant stream of real-world data from a vast network of IoT sensors.”

“Our research reveals a critical flaw in this foundation. We found that only 2% of these IoT deployments are achieving the near-100% connectivity they need. This means we may be building our transformative AI ambitions on a network that isn’t yet consistently dependable. This isn’t just a risk to business ROI, it’s a risk to the evolution of AI applications.”

“In mission-critical IoT scenarios, failure isn’t just inconvenient – it’s life-threatening. Imagine a life-saving medical sensor detecting a dangerous drop in a patient’s oxygen levels. If that data point can’t be transmitted and then analysed by AI applications due to a failed connection, the alert never reaches clinicians in time.

“The result? A missed opportunity to intervene, and potentially a preventable fatality. To make the promise of AI a reality for everyone, we must first solve this foundational IoT connectivity challenge.”