Why Did Internet Giants Fail in the IoT Platform Market?

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The Internet of Things (IoT) was once hailed as the key to unlocking a smarter future. Tech giants such as Google, Alibaba, and Baidu entered the IoT platform race with massive investments and ambitious visions of building vast digital ecosystems. Yet over time, these giants have exited the stage, raising an important question: why did they fail, despite the growing IoT market potential?

1. Giants Exit, Market Reality Emerges

Google Cloud IoT Core, launched in 2017, was shut down in 2022. Alibaba’s IoT platform and LinkWAN business also quietly wound down. IBM, Ericsson, and SAP made similar retreats. The underlying reason: general-purpose cloud platforms failed to meet the highly specific and fragmented needs of enterprise IoT (B2B) markets.

2. Enterprise IoT Barriers

  1. Data sovereignty & compliance: Industrial, energy, and government clients demand strict control over data, resisting public cloud storage.
  2. Customization & integration: IoT platforms must integrate deeply with ERP, MES, and SCADA systems, something generic platforms struggle to achieve.
  3. Real-time & edge computing: Industrial IoT requires ultra-low latency. Edge computing near devices often outperforms centralized cloud solutions.
  4. Cost & pricing models: Pay-as-you-go models become prohibitively expensive in large-scale projects, making private deployments more attractive.

3. Rise of Open Source IoT Platforms

Open-source projects like ThingsBoard, Kaa, and OpenIoT disrupted the market by offering:

  • Lower cost: Companies can build platforms without massive R&D expenses.
  • Full control: Source code access enables deep customization and independence from vendors.
  • Compliance & security: Private deployment meets enterprise data sovereignty requirements.
  • Community-driven innovation: Global developers drive continuous improvement and adaptability.

4. Conclusion

The failure of internet giants in IoT platforms stems not from lack of market potential but from misaligned business models, high operational costs, and inability to meet enterprise-specific needs. Open-source and private deployments have reshaped the landscape, empowering enterprises with flexibility and cost efficiency.

Future players must focus on industry-specific solutions, hybrid architectures, and cost optimization to succeed in the competitive IoT platform market.

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