Why IoT Solutions Struggle to Profit: Analyzing Supply, Demand, and Value Layers

IoT Item Supply

Communication networks include fixed (WLAN, short‑range) and mobile networks, as well as enterprise IT. After more than 30 years of rapid development, resources, technology, and markets are largely mature, and relying solely on technology upgrades can no longer drive industry growth; new market areas such as IoT are urgently needed.

IoT is regarded as a new continent with massive market potential, spawning vertical markets like smart home, industrial IoT, smart grid, smart building, and smart healthcare. Gartner predicts 26 billion IoT connections in 2020 and a contribution of $600 billion‑$1.3 trillion to the U.S. economy by 2025. From a product‑supply perspective, the IoT supply chain can be divided into five parts:

1) Devices : sensors, endpoints, terminals, controllers.

2) Network Connectivity : connections between terminals, between terminals and platforms, and between platforms and the cloud.

3) Applications : backend interfaces or client apps (e.g., UE App).

4) IoT Platforms and Cloud : data storage, analytics, security, privacy.

5) Services and Open APIs : cloud interfaces, data/service support, ecosystems.

IoT Demand Hierarchy

Referencing Maslow’s hierarchy, safety is a basic need; in smart‑home scenarios, safety‑related sensors (motion, infrared, alarm, camera, temperature, humidity, smoke, gas, PM2.5) fulfill this demand. Physiological needs also exist but are currently less emphasized in smart‑home solutions.

IoT Value Hierarchy

Most existing IoT solutions are immature. Value analysis returns to product value across five layers, illustrated with smart‑home examples:

1) Smart Device Value : embedding sensors and connectivity dramatically raises product price (e.g., a $2 bulb becomes $60 after adding Bluetooth, Wi‑Fi, and sensors).

2) Network Connectivity Value : secure, scalable access for many smart terminals significantly increases network worth.

3) Strategy Control Value : optional in smart‑home, essential in industrial IoT for custom routing and private‑cloud integration.

4) Ecosystem Value : partnerships and open ecosystems amplify hidden value; a broader IoT ecosystem yields greater overall solution value.

5) API Value : platforms and cloud services generate value only when applications consume the data; without active app usage, IoT platforms have little intrinsic worth.

The next episode will discuss value transfer and solution strategies for IoT.