58% of manufacturers report that IoT is crucial for digital transformation and increasing efficiency, while Industrial IoT revenue is projected to surge from $439 billion in 2024 to over $2.1 trillion by 2034. That's nearly a 5x increase in less than a decade—yet most industrial OEMs are still selling the same "dumb" products they've made for decades.
This staggering growth reflects a fundamental shift in how industrial manufacturers must think about their products and business models. The Internet of Things (IoT) has emerged as the transformative force behind this change, enabling traditional manufacturers to reimagine their product offerings from simple equipment into intelligent, connected platforms. For industrial OEMs facing unprecedented opportunities and challenges in today's rapidly evolving technological landscape, the choice is becoming clear: evolve into connected products or risk obsolescence.
This transformation isn't just about adding sensors to existing equipment—it's about creating entirely new revenue streams, enhancing customer value propositions, and establishing competitive differentiation in an increasingly digital marketplace.
One of the largest business opportunities in IoT today is for organizations to sell turnkey connected products and services. This is especially true for OEMs with existing product lines. By transforming conventional equipment into enterprise-connected products, manufacturers can create new recurring revenue streams while significantly differentiating themselves from competitors who remain tied to traditional product-only business models.
Consider the industrial equipment sector: historically, manufacturers designed, built, and sold physical assets with limited post-sale engagement beyond maintenance and spare parts. Today, forward-thinking OEMs are embedding sensors, connectivity, and intelligence into these same products, transforming them into platforms for ongoing service delivery, remote monitoring, and data-driven optimization.
The business impact of this transformation cannot be overstated. According to industry research, connected product initiatives can increase product revenues by 13% on average, while creating entirely new service-based revenue streams that often deliver higher margins than the original hardware. For industrial OEMs operating in mature markets with slowing hardware growth, these connected services represent a critical path to sustained profitability and relevance.
While the opportunity is compelling, building customer-facing connected products presents significant challenges. A truly effective connected product solution requires:
For many industrial OEMs, these technical requirements represent unfamiliar territory. Manufacturing organizations typically excel at hardware engineering but may lack the software development expertise needed to build sophisticated connected product platforms from scratch. This capability gap has historically slowed adoption, with many manufacturers struggling to move beyond basic connectivity to truly value-adding connected product offerings.
The window of opportunity remains open, but it won't stay open indefinitely. Industrial OEMs that move decisively to embrace connected product strategies will establish competitive advantages that late movers will struggle to overcome. But how do you actually overcome these technical hurdles without breaking the bank or spending years building custom solutions?
Losant's IoT platform helps organizations of all sizes get their solution into market faster. Whether it's a new IoT application or to migrate an existing application, Losant is here to help. If you'd like to learn more, please contact us.