Recurring revenue is central to most sustainable IoT business models, because a connected device generates ongoing costs for its vendor: cellular data, cloud hosting, security updates and support. If the only income is the initial sale, every additional active device makes the vendor poorer. Subscriptions for the service layer, device as a service bundles, or usage-based fees align income with those costs.
The model requires capabilities that a hardware company may not have: billing, customer accounts, the technical means to suspend or downgrade a device, and the discipline to keep delivering value so customers do not churn. Buyers in turn should read the terms carefully, since a product whose core function stops when the subscription lapses is a different purchase from one that keeps working locally. A connectivity management platform often handles the metering behind usage-based plans.
Part of the IoT Glossary. Spotted an error or a missing term? Tell us.