The Hidden Challenges Of IoT Product Development: What PMs Should Know
Amogh Tayade
Senior Product Manager | IoT, AI & XR | CSPO | “I help enterprises drive innovation, automation, cost savings, and operational efficiency through cutting-edge technology.”
Many Product Managers mistakenly think that adding IoT features is a product strategy in itself. The truth is, IoT is just an enabler—a powerful tool that supports a broader strategy. Without a well-defined problem, IoT is just a flood of data with no clear purpose.
The IoT Trap: Focusing on Technology Instead of Strategy
IoT is complex. As PMs, we must understand:
What data are we collecting?
How are we receiving it?
When are we receiving it?
Most importantly: WHY do we need this data?
Early in my career, I made this mistake—I worked with the dev team to integrate with multiple IoT providers, hoping that exposing users to more data would magically reveal a problem to solve. It didn’t. The data was just noise without a clear strategy.
I quickly went back to basics, conducted a 5 Whys analysis, and worked closely with users to understand what real problem we needed to solve. Once we had clarity, IoT became an enabler—not the strategy itself.
The Tesla Case Study: Using IoT as an Enabler, Not the Strategy
One of the best examples of IoT-powered strategy done right is Tesla’s Over-the-Air (OTA) Software Updates.
The Problem: Before Tesla, cars were static products—the features and performance you got at the time of purchase remained the same throughout the car’s life. Fixing software bugs or improving performance required physical service visits.
How Tesla Solved It: Tesla leveraged IoT and cloud connectivity to enable remote software updates, just like a smartphone.
Results:
? Tesla cars improve after purchase, with new features, performance boosts, and bug fixes.
? IoT data from sensors and logs helps identify potential issues before they become serious problems.
? Customers love the experience, and Tesla builds a moat against traditional automakers who struggle with software-driven innovation.
Key Lesson for PMs: Tesla didn’t just add IoT for the sake of it. They used IoT as an enabler for a game-changing customer experience.
??Common Pitfalls PMs Make in IoT Product Development
1. Collecting data without a clear purpose: Just because we can collect data doesn’t mean we should. Ask: How does this data drive a real business or user outcome?
2. Underestimating the cost of IoT data processing: IoT generates massive amounts of data. Without proper filtering and edge processing, cloud costs can skyrocket.
3. Overlooking security and compliance risks: IoT introduces security challenges: device hacking, data breaches, regulatory compliance (GDPR, HIPAA, etc.). PMs must ensure robust security from Day 1.
4. Rushing into partnerships with IoT providers without strategic alignment: Not all IoT vendors are created equal. Always evaluate: Does this vendor align with our long-term product vision?
A Practical Framework for IoT-Driven Product Development
Use this step-by-step structure to avoid IoT pitfalls and build a solid product strategy:
Final Thoughts: The 80/20 Rule for IoT PM Success
?? Don’t start with IoT—start with the problem.
?? IoT is a tool, not a strategy.
?? Validate the problem before collecting data.
?? Optimize data usage—more data ≠ better insights.
By shifting your mindset from “How do we use IoT?” to “How do we solve a real user problem?”, you will be on the path to building truly impactful IoT products. ??
What do you think? Would love to hear your thoughts—drop a comment below! ??
*this article is proofread using AI