IoT Platform Value: From Fragmentation to Application-Driven Consolidation

Over the last five years, the Internet of Things (IoT) platform market has seen disruption, divergence and domination, leaving product managers developing their IoT technology roadmap for the next two to five years, wondering, "Where is the IoT Platform value at?"

IoT platforms are the critical link between connected edge devices and cloud capabilities. These software platforms serve as a middleware layer between connected hardware and IoT applications, collecting and processing data and managing devices and the operation of IoT applications.

As IoT platform value evolves, so do the business cases for operational efficiency, predictive maintenance and servitization models. Product managers should revisit where your own IoT business value is currently and where it needs to go.

Let's follow the IoT platform value evolution using market research insights from IoT Analytics:

What was once a market filled with a plethora of IoT platform possibilities has consolidated around a few dominant hyperscalers. Hyperscalers have the advantage of large service ecosystems, comprehensive pre-built tools and inherently scalable infrastructure.

According to the IoT Analytics 2024 report, the top five hyperscalers (Microsoft, AWS, Huawei, Alibaba and Oracle) held 60% of the total agnostic IoT Platform market, which shows the significant shift of the IoT infrastructure stack in favor of hyperscalers.

If your organization has built your own IoT products and services with legacy IoT platform providers, you should re-evaluate your IoT technology stack as the market consolidation continues and the value of your IoT data becomes more accessible to AI applications through an enterprise modern data platform such as Databricks, Snowflake and Azure.

IoT Platform value isn't dead. Instead, the market offerings have converged to enable better edge-cloud consistency with cloud-native developer tools and vertical-specific Software as a Service (SaaS). The next phase of IoT platforms will leverage cloud for scale, edge for intelligence and IT/OT converged management experience across both.

Hyperscalers are continuing to invest in capabilities to integrate IT and operational technology (OT) converged management experiences. Through initiatives such as Azure IoT Operations, the bridge between operational technology (OT) and IT helps "turn data into intelligence and intelligence into action."

Across industries, IoT platform value is increasingly defined by edge-to-cloud collaboration that creates an IoT data foundation for intelligent systems to sense, reason and act in the physical world with speed, safety and precision.

Product managers should assess their IoT data needs for an agentic, autonomous future and define a portfolio of industry-specific application services that an IoT platform will need to support over the next two years and beyond.

As the evolution of IoT value continues to shift from the platform layer to the application layer, the business value of IoT data from those connected devices will also shift into greater accessibility and contribution to business outcomes across the organization.