What happens when you build the perfect IoT device, win industry awards, and then watch the business model you mastered become completely obsolete?
I found out the hard way.
Ten years ago, I was living the IoT entrepreneur's dream. My company's intelligent energy monitoring and control device won the prestigious Gauteng Accelerator Programme (GAP) ICT 2014 Innovation Hub Award, beating 90 entries and earning close to a half-a-million in prize money and incubation services. Press coverage ensued post-victory, highlighting how our SABS-approved device could manage heavy energy loads like geysers, pools, and air conditioning whilst preventing costly insurance claims. Fast-forward to today, and I'm running GlobalApex, beta-developing The Sentinel—a smart geyser system that detects leaks and optimises energy consumption—addressing the same real problems for South African homeowners facing water scarcity and escalating electricity costs.
But here's what blindsided me: whilst I was perfecting hardware, the entire industry shifted beneath.
The Old World: Build It Once, Sell It Forever
For the first decade of my IoT career, the business model was beautifully simple. Engineer a brilliant solution, manufacture it efficiently, market it effectively, and sell it once. Done. Customer happy, manufacturer profitable, everyone moves on. From SA to Oz (inside joke).
My smart geyser device, The Sentinel, embodies this approach perfectly. It detects leaks before they cause catastrophic water damage, automatically shuts off supply, and optimises heating schedules to reduce electricity costs. It's a complete solution that delivers immediate, measurable value.
Under the traditional model, customers pay upfront—perhaps R5,000 for the device, installed—and expect it to work indefinitely, or, embed with other sector partners. We provide basic support, occasional bug fixes, and hope they recommend us to friends. Revenue recognition happens at point of sale. Engineering continues improving future versions, but existing customers don't directly contribute to those development costs.
This model worked. Until it didn't.
The Subscription Revelation
Recently, I noticed something troubling at industry and online developments. Competitors with inferior hardware were generating significantly higher revenues per customer. How? They'd embraced Firmware-as-a-Service (FaaS)—turning one-time hardware sales into recurring subscription relationships.
Instead of selling devices once, they were selling continuous firmware improvements, advanced features, and enhanced analytics through monthly subscriptions. Their customers weren't just buying hardware; they were subscribing to evolving intelligence.
The economics are staggering. A R5,000 device generating R100 monthly firmware subscriptions produces R6,200 in the first year alone. By year three, each device has generated R8,600—72% more revenue than traditional sales.
But the real insight isn't mathematical—it's strategic. And, I love it!
Why FaaS Changes Everything
Firmware-as-a-Service fundamentally realigns incentives between manufacturers and customers. Under traditional sales, manufacturers focus on reducing support costs for existing devices whilst engineering new products for fresh revenue. Customer success after purchase becomes a cost center.
FaaS flips this dynamic. Customer success becomes directly tied to ongoing revenue. Happy customers continue subscribing; dissatisfied ones cancel. This creates economic pressure to continuously improve functionality, fix problems quickly, and deliver measurable value.
For The Sentinel customers, and in theory, this could mean:
Basic Tier (Free): Essential leak detection and energy monitoring Smart Home Tier (R75/month): Weather-based heating optimization, solar integration, load-shedding scheduling AI Optimization Tier (R125/month): Machine learning-driven efficiency improvements, predictive maintenance, insurance integration
Each tier delivers additional value that customers can quantify through reduced electricity bills, prevented water damage, or insurance premium discounts.
The South African Opportunity
Our unique challenges actually create ideal FaaS conditions. Electricity costs justify optimisation subscriptions. Water scarcity makes leak prevention essential. Load-shedding creates demand for intelligent scheduling. Solar adoption requires sophisticated energy management. You get the picture.
Customers already pay R200+ monthly for streaming services that provide entertainment. Why wouldn't they pay R100 monthly for firmware that saves them hundreds on utilities whilst protecting their homes? Did someone just whisper: an opportunity to embed?
The Implementation Reality: the OTA dream!
Transitioning from hardware sales to FaaS isn't simple. It requires:
Technical Infrastructure: Secure update mechanisms, modular firmware architecture, reliable connectivity, rollback capabilities.
Business Model Evolution: Subscription billing systems, customer success teams, continuous feature development, retention strategies.
Customer Education: Demonstrating ongoing value, explaining subscription benefits, proving ROI through measurable savings.
Market Timing: Introducing subscriptions too early alienates customers; too late means competitors capture the opportunity.
The Competitive Landscape
Companies implementing FaaS effectively will capture disproportionate market value. Those clinging to one-time sales will find themselves competing solely on price whilst carrying unsustainable support costs.
Tesla demonstrated this transition perfectly. They transformed cars from depreciating assets into appreciating platforms through over-the-air updates that add functionality post-purchase. Customers now expect continuous improvement rather than static functionality.
The Evolution Continues
The IoT industry's evolution from hardware-centric to software-centric mirrors broader technology trends. Just as SaaS transformed enterprise software by aligning vendor success with customer success, FaaS promises similar transformation for connected devices.
The Tesla Moment for Smart Geysers
Tesla didn't just revolutionise electric vehicles—they revolutionised the entire concept of ownership. When you buy a Tesla, you're not purchasing a depreciating asset that becomes obsolete over time. You're buying into a platform that continuously improves through over-the-air updates. Features like enhanced autopilot, improved battery management, entertainment upgrades, and performance optimisations arrive regularly, making your car more valuable over time rather than less.
This is exactly my future vision for The Sentinel.
Instead of selling a static geyser monitoring device that does the same thing for its entire lifespan, I'm reimagining it as an evolving intelligence platform. Through FaaS, The Sentinel becomes South Africa's first continuously improving IoT management system.
Monthly firmware updates could deliver:
- Load-shedding integration: Automatically schedules heating during Eskom's available power windows
- Solar optimisation: Learns your solar generation patterns and heats water using free daytime energy
- Weather prediction: Adjusts heating based on cold fronts and seasonal patterns
- Insurance connectivity: Provides real-time monitoring data that could reduce premiums
- Predictive maintenance: Warns homeowners weeks before component failures
- Municipal integration: Coordinates with local water restrictions and pressure patterns
Just as Tesla owners eagerly anticipate software updates that add new capabilities to their vehicles, Sentinel customers would subscribe to continuous improvements that make their homes smarter, more efficient, and better protected.
The past judging panel were right about having "tremendous potential to impact energy consumption in the country." But they—and I—were thinking too small. We were solving today's problems with today's features.
FaaS allows me to solve tomorrow's problems with tomorrow's features, delivered to devices installed today. When new challenges emerge—different load-shedding patterns, evolving solar technology, changing insurance requirements—Sentinel owners won't need new hardware. They'll get solutions through firmware updates.
After ten years in IoT, I've learned that the most successful technologies aren't those that work perfectly on day one. They're the platforms that evolve, adapt, and improve over time whilst maintaining continuous relationships with their users.
Tesla proved that subscriptions can transform hardware from depreciating assets into appreciating platforms. It's time to bring that same revolutionary thinking to South African homes—one smart step at a time.
The Sentinel launches soon, and unlike most traditional sales model, it's being designed from day one as a FaaS platform. Early adopters won't just be buying leak detection—they'll be subscribing to the future of intelligent home management.
The revolution starts now.