Internet of Things (IoT) start ups will account for half of the industry by 2017 when 50% of IoT offerings are expected to originate from start-ups that are less than three years old.
Most of the IoT applications are likely to fail in the market but the process will lead to growth as larger players consolidate the successful solutions, the report says.
Gartner research vice-president Pete Basiliere said: "It won’t all be smooth sailing. Certainly there is no small number of factors working against makers and startups, whether they have an IoT offering or a more traditional product or service.
"Most small businesses fail within five years, and many of the ‘successful’ ones will be lifestyle companies that barely generate enough revenue to support an individual or family."
According to the report, niche applications developed by makers and startups, and not tech providers, consumer goods companies or enterprises, will drive acceptance, use and growth in the IoT.
Basiliere added: "Conventional wisdom is that the growth of the Internet of Things is driven by large enterprises.
"However Gartner’s Maverick research finds that it is the makers and the startups who are the ones shaping the IoT. Individuals and small companies that span the globe are developing IoT solutions to real-world, often niche problems.
"They are taking advantage of low-cost electronics, traditional manufacturing and 3D printing tools, and open- and closed-source hardware and software to create IoT devices that improve processes and lives."
The study suggests senior managements in big companies to encourage IoT makers within their organizations, closely observe their development and assess the feasibility of absorbing the products within the organization.
Basiliere added: "Managers often assume the IoT is about business-to-business and business-to-consumer opportunities, relying on technologists within their enterprises to develop the necessary systems and connected items.
"However, these firms are slow-moving elephants that cannot react quickly to what is happening underneath their feet. Product development processes within most large enterprises are too ponderous and ROI-driven to produce anything but high-volume, lowest-common-denominator IoT objects."
"The result is the development of a low number of IoT uses that garner high amounts of revenue, while makers, startups and crowdsourcing efforts result in high numbers of low-revenue niche IoT applications."
