According to IoT Analytics, the world will be home to over 27 billion connected devices by 2025 – more than three for every person on the planet. From smart homes and wearable tech to industrial machinery and urban infrastructure, the Internet of Things (IoT) is no longer an emerging trend. It’s a global force reshaping business models, customer expectations, and competitive dynamics.
For Original Equipment Manufacturers (OEMs), this shift is profound. IoT is not just adding connectivity to machines – it’s redefining what products are, how they generate value, and how companies generate revenue. A connected product now comes with a software layer, a data strategy, and a business model that often looks nothing like its traditional predecessor. Ten years ago, most OEMs were asking, “Should we build smart, connected products?” Today, that question has evolved into something far more urgent: “How do we scale our smart product business – and monetize it effectively?”
This evolution is happening across industries. BMW has more than 20 million connected vehicles on the road. John Deere operates over 500,000 connected agricultural machines. Even smaller OEMs like Italy’s UNOX have leveraged IoT to transform – from connecting 30,000+ professional ovens to unlocking recurring revenue through software services. And industrial giants like Caterpillar are targeting $28 billion in services revenue by 2026, powered largely by insights from their 1.4 million connected assets.
Yet, not every OEM is succeeding at scale. While some have found repeatable paths to monetize IoT and deliver real value to customers, others are struggling with long development cycles, unclear business models, or customer resistance.
So, what separates the winners from the rest?
IoT Analytics’ IoT Commercialization & Business Model Adoption Report 2024 dives deep into the strategies of 100 OEMs across the globe. The findings highlight the playbooks of the most successful companies and the blind spots of the laggards.
This article distills those insights into four practical steps for creating a scalable, profitable IoT business model. Whether you’re just launching your smart product strategy or looking to take it to the next level, these lessons can help you align technology, business, and customer value.
Connected Products Are the New Normal
The shift to connected products is no longer optional for OEMs – it’s becoming standard. By 2026, more than half of all products sold by OEMs will be IoT-enabled, up from 40% in 2023, according to IoT Analytics. Leading OEMs are no longer experimenting with connectivity – they’re building entire service ecosystems around it.
But success isn’t just about adding sensors or enabling cloud access. The real value lies in what companies do with the data these products generate. 67% of OEMs in the IoT Analytics study said the top benefit of connected products is gaining deep insights into customer usage. These insights go far beyond maintenance schedules. They reveal how products are used, where inefficiencies lie, and what features drive the most value – enabling product teams to prioritize development and service teams to respond more proactively.
A clear example is König & Bauer, a German printing press manufacturer. By collecting machine data globally, they can track usage patterns by region and application. “Machine data helps us understand what is going on… and helps us focus our company on what is most important for our customers,” says Thomas Göcke, Head of Digitalization. This shift enables OEMs to act not just as suppliers, but as strategic partners in their customers’ operations.
Moreover, 61% of OEMs said connected products helped them manage customer needs more effectively. This ability to anticipate and address problems before they arise isn’t just a customer service win – it’s a competitive advantage. Yet, this transition brings trade-offs. OEMs must now make strategic decisions about monetization models, pricing structures, and tech stack investments. Simply having a connected product is no longer impressive – how it creates value, and how well that value is communicated to the customer, is what separates leaders from laggards.
The bottom line? IoT success is not about technology alone. It’s about using that technology to deepen customer relationships, unlock recurring revenue, and build future-proof business models.
Building and Launching Smart IoT Solutions
Developing a connected product is not a sprint – it’s a long, resource-intensive journey. According to IoT Analytics, the average OEM needs 41 months from project kickoff to first sale. For automotive OEMs, the average stretches to 53 months, while electrical equipment makers typically move faster, averaging 33 months.
That timeline reflects a growing complexity: connected products require not just hardware, but cloud infrastructure, software platforms, security protocols, and integration with backend systems. OEMs must balance in-house development with outsourced technology. In the 2024 survey, 150 unique vendors were mentioned across various parts of the IoT tech stack.
The most commonly relied-upon partners? Microsoft, AWS, and Cisco – appearing in nearly every tech category, from cloud hosting to connectivity services. This suggests a trend toward leveraging best-in-class infrastructure to reduce complexity and accelerate development.
Still, delays and scope creep remain major risks. IoT projects often start as technical experiments but quickly demand business model clarity. Which features will drive customer value? Should data be monetized, or simply used to improve service? Will customers pay per use, per month, or per performance outcome? Companies that fail to answer these questions early often find themselves stuck in endless pilot phases.
To avoid this, leading OEMs are increasingly applying agile development and cross-functional teams – bringing together R&D, product management, and commercial leaders from the outset. The goal: compress development cycles, reduce uncertainty, and ensure that the end product aligns with a real market need. The complexity of launching connected products can’t be underestimated – but it can be managed. Successful OEMs treat IoT product development not just as a technical endeavor, but as a strategic business initiative from day one.
What the Best OEMs Are Doing Differently
What sets the top IoT performers apart? Beyond solid tech, the answer lies in three core capabilities: data insight monetization, customer relationship integration, and strategic collaboration.
Monetize unique insights
67% of successful OEMs highlight AI-powered predictive maintenance as a key revenue driver, compared to only 40% of less successful companies. By transforming raw usage data into actionable insights, these companies aren’t just reducing downtime – they’re opening new revenue streams via premium analytics, predictive service plans, or custom software offerings.
Integrate IoT with CRM and ERP
Leading OEMs are embedding IoT data into their core business systems to deliver a seamless customer experience. In the study, 62% of successful companies had CRM systems integrated with IoT usage data, and 57% had ERP access. This allows for personalized service, proactive upselling, and more accurate demand forecasting. Less successful OEMs lag significantly, with only 42% reporting similar integration.
Forge strategic partnerships
Innovation in IoT doesn’t happen in isolation. Top OEMs are leveraging partnerships with cloud providers, research labs, and even customers to co-develop features and accelerate time-to-market. These alliances bring not just technology, but also insight into customer pain points that help shape better product-market fit.
This collaborative, integrated, and insight-driven approach is helping successful OEMs navigate the complexity of IoT without losing sight of what matters most: customer value.
The takeaway? Winning in IoT isn’t just about connecting devices – it’s about connecting the dots between technology, insight, and service innovation.
Turning Smart Products into Smart Revenue
The path from connected product to profitable IoT business isn’t easy – but the roadmap is becoming clearer. Based on the latest data, the OEMs that are thriving in the connected world are those that align three core pillars: customer-centricity, monetization strategy, and execution at scale.
Still, many OEMs face obstacles. Development timelines are long. Customers are wary of data security. Regulatory constraints, especially in Europe, continue to limit the full potential of data monetization. And in many cases, the software revenue is still dwarfed by the value of the equipment itself.
So how do you make the business case for connected products meaningful?
For some, the answer lies in Equipment-as-a-Service (EaaS) – charging customers based on usage or outcomes rather than ownership. It’s a complex model, yes – but it also forces OEMs to stay accountable for performance, creating stickier relationships and more stable revenue. And it’s gaining traction: IoT Analytics will release a dedicated EaaS market report soon, building on the 2024 commercialization findings.
For others, success comes from simply getting better at communicating value. Despite all the technology investment, few OEMs have websites or go-to-market messaging that clearly articulates how their IoT offering solves real customer problems. At the end of the day, this is where the winners separate themselves. The best OEMs are using IoT not just to connect machines – but to connect with customers. They’re turning insights into outcomes, outcomes into revenue, and revenue into long-term strategy.
As your organization scales its IoT ambitions, consider these seven key questions:
- Are we truly leveraging usage data to improve customer experience?
- Are we optimizing workflows – not just machines?
- Have we aligned pricing models with how customers use our products?
- Are our CRM and ERP systems benefiting from IoT data?
- Can we clearly explain our IoT value proposition in customer terms?
- Is EaaS viable for our product line?
- Are we set up to scale, or stuck in pilot mode?
The OEMs that can answer “yes” to most of these will lead the next chapter of IoT. The rest risk becoming smart – but not successful.
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