By 2033, the number of IoT devices worldwide is expected to double, surpassing 40 billion. That's an average of 14 connected devices per household, not including the growing IoT footprint across factories, agriculture, hospitals, and supply chains that dominate the global economic infrastructure.
As IoT adoption accelerates, so do the stakes for security, operations, and innovation. The decisions made over the next two years will determine whether organizations build competitive advantages or face operational risks. Product design, connectivity models, and global deployment strategies must adapt to an increasingly fragmented and complex landscape.
Here are four technology trends that will define IoT in 2026.
2026 marks the inflection point when IoT original equipment manufacturers (OEMs) scale from early pilots to broad portfolio refreshes marketed as edge AI-enabled devices. The demand for local inference has been rising to improve latency, resilience, bandwidth efficiency, and privacy. Yet, the majority of today's 21 billion deployed IoT devices still rely on external processing or simple rule-based logic. The gap between local processing demand and capability will narrow significantly in 2026.
New IoT system-on-chips (SoCs) are being designed with lightweight neural processing units (NPUs), vector extensions, and DSP-like AI cores to support tasks such as anomaly detection, small-model vision, local audio intelligence, and condition monitoring directly on the device. At the edge, IoT is becoming more intelligent, handling immediate reactions, while the cloud plays a more strategic role for analytics and long-term storage.
For OEMs, AI components require ongoing management, updates, and monitoring throughout a product's lifecycle. As devices grow more autonomous, the stakes for security and reliability increase proportionally. Each AI model deployed to the edge becomes another component that must be versioned, validated, and maintained over time.
The push toward edge AI and increasingly sophisticated connected products is driving a significant rise in hardware requirements across the IoT ecosystem. The global edge AI market is projected to grow from approximately $25 billion USD in 2025 to nearly $120 billion USD by 2033, reflecting the manufacturing sector's increasing focus on automation, connectivity, and data-driven decision-making. These Industry 4.0 practices aim to intelligently increase productivity and customization in supply chains.
Throughout 2024 and 2025, the industry has been shifting away from monolithic SoCs toward partitioned, modular designs using chiplets. The modular approach reduces engineering effort, shortens development cycles, and lowers non-recurring engineering costs. Meanwhile, open instruction set architectures like RISC-V accelerated quickly in IoT as vendors seek flexibility, lower licensing costs, and the ability to customize CPUs for specialized devices.
For product teams, greater hardware sophistication introduces new challenges in managing firmware updates, ensuring compatibility across hardware revisions, and maintaining consistent security postures. The dependencies between hardware and software components demand a robust update process that accounts for constraints and differences in capabilities and connectivity.
The use of multiple operating systems remains common in IoT development, reflecting the range of products from simple embedded systems to more advanced, software-driven devices. While Linux and Yocto-based systems remain dominant for more powerful devices, real-time operating systems (RTOS) such as FreeRTOS and Zephyr continue gaining traction for lightweight devices focused on speed.
The Zephyr project has rapidly grown in adoption for secure, connected, and low-power embedded devices. Its contributor base has grown five times since 2017.
The heightened popularity of RTOS signals the increasing breadth and usage of IoT technology in products. Offering simpler, smaller, and less expensive capabilities, real-time operating systems naturally align with a class of products where Linux alternatives are overkill for the application, such as temperature sensors or smart door locks. The real-time processing abilities also make them more suitable for safety-critical and time-sensitive applications in vehicles or manufacturing environments.
For OEMs managing heterogeneous device fleets, from Linux-based gateways to resource-constrained microcontrollers, this diversity introduces complexity. A robust over-the-air (OTA) update platform should seamlessly support Zephyr RTOS and embedded Linux device updates within a unified framework. Without this capability, managing diverse operating systems becomes operationally unsustainable.
As software becomes central to product value, OEMs’ revenue generation is increasingly focused on recurring subscription costs rather than one-time hardware sales. The evolution towards subscription-based business models brings new pressure on operations, development teams, and customer support to continually deliver recurring value to customers.
Companies are increasingly integrating AI capabilities to justify recurring subscription fees, whether for predictive maintenance, edge analytics, or autonomous decision-making. AI-enhanced features require the ability to deliver continuous updates to devices in the field. AI models improve over time, vulnerabilities must be patched, and new capabilities must be deployed to justify ongoing subscription costs. Customers paying recurring fees expect continuous improvement, and that expectation can only be met when devices can be updated reliably, securely, and at scale.
Without robust OTA update mechanisms, the subscription model simply cannot function.
IoT over the next decade will be largely defined by increased AI integration, enhanced security frameworks, and stronger cross-industry collaboration. Success hinges on software-centric thinking, secure lifecycle management, and the ability to evolve alongside customer needs and security demands. Managing smart products seamlessly across the entire lifecycle, from design to decommissioning, becomes a key differentiator. In a crowded market, the winning products can adapt, improve, and stay secure over time.
As OEMs embrace a more software-driven, AI-enhanced IoT ecosystem, those proactively addressing security, scalability, and integration challenges will emerge as market leaders. OEMs that wisely invest today will define the future of IoT in a secure and connected world tomorrow.