Why IoT Products Fail: Firmware and Embedded Software Mistakes That Cost Millions

The growth of IoT is faster than some companies are able to keep up with. More and more devices are being launched into the market, but not every device has a long life cycle. Many cool devices are real winners that simply don’t last, and more often than not, the issue isn’t hardware or design, it is firmware. When the software that runs inside the device is buggy, insecure, or poorly architected, even the best hardware is useless.

If you are building an IoT solution and you want it to last as long as possible, it is important to know the common hidden problems that arise at the firmware level. A good partner, like Yalantis, which has a long, successful history in embedded software engineering, can also help you avoid those pitfalls early.

Understanding Firmware in IoT

When people discuss the Internet of Things (IoT), sensors, mobile apps, or connectivity technologies often take center stage. Firmware, on the other hand, is rarely mentioned, and yet, it governs nearly everything the user experiences, including device responsiveness, security, battery life, stability, timing, and even longevity.

The importance of IoT firmware is essential because a well-designed product can feel sluggish and unsafe due to bad firmware, while even the most rudimentary hardware can feel smart and premium because the firmware is reliable.

The trouble is that many companies jeopardize their product by downplaying the importance of firmware engineering – treating it as just another type of development rather than the bedrock of the product experience. This is where the large-scale led failure begins.

Before we explore the specific mistakes, here’s a quick snapshot of why firmware failures are so damaging.

  • You can’t easily “patch” hardware bugs later.
  • Firmware updates are complex and risky.
  • Faulty firmware often leads to recalls that are expensive and reputation-damaging.
  • Hardware units already in consumer hands become liabilities overnight.

Understanding the root causes can save countless hours of rework and millions in losses.

IoT concept illustration showing connected smart devices like appliances, sensors, security systems, and electronics linked together across a digital network.

1. Weak Security Practices

Security is often the area where things go wrong. Many devices with out-of-date protocols or hardcoded passwords and no encryption are imported. In the worst cases, an attacker may access the firmware and take complete control of the device.

The amount of financial loss from a single security incursion can be significant: legal costs, emergency patches, public relations fallout, and sometimes, even product recalls. It is far worse when the devices relate to a larger interconnected system, such as a smart home or industrial applications.

Brands that take security seriously invest in encrypted communications, secure boot processes, signed firmware updates, and periodic vulnerability testing for the devices and connected networks. These methods will take longer to develop, but they can prevent more severe consequences down the line.

2. Poor Power Optimization

Firmware has a powerful impact on a device’s efficiency and battery life in battery-dependent devices. If the firmware keeps the processor awake and/or sends data too frequently, a device will drain its battery sooner than expected.

This is typically one of the primary reasons why customers abandon IoT devices, as they do not meet the user’s expectations for battery life when compared to the marketed specifications.

Intelligent battery power control, efficient sensor management, and low-power modes can dramatically enhance battery life. This is important for wearables, asset trackers, smart home sensors, etc that are requested to run for months or years.

3. No Reliable OTA Update System

If you cannot safely update an IoT device post-launch, you have a time bomb on your hands. Without remote updates, businesses are at a standstill on whether to replace hardware or leave users with non-functional devices. Bugs will surface, expectations will change over time, and security gaps will increase.

End users experience an even greater issue with bad updates bricking devices, mid-update failures, or the update having no rollback. This is one of the fastest ways to lose customer trust.

Good OTA update systems have extensive testing, safe signing, security checks, recovery systems, and lots of time.

4. Mismatch Between Hardware and Firmware

This is a recurring issue. Teams select microcontrollers or sensors first and find out down the line that the firmware requires additional memory, faster speeds, or higher quality libraries. At this point, the hardware has already been locked in, and changing it can be costly and time-consuming.

When this happens, it causes the software to be unstable, leading to continuous crashing and delivering never-ending features.

The teams that include firmware engineers early on in the process, before any hardware is finalized, don’t have to deal with this issue.

5. Limited Real-World Testing

The devices don’t always operate in optimal conditions. Homes with multiple routers, industrial floors with extreme noise, severe weather, weak or unstable networks, etc. A firmware that seems to work seamlessly in the lab is likely to encounter many issues once in the wild.

This is precisely the kind of issue that needs field testing. Slow reconnections, overheating, packet loss, random resets, poor range, erratic long-term behavior, etc.

Field testing is easily one of the priciest mistakes a company can make.

6. Overcomplicated Firmware Design

At times, teams can try to add features far too quickly or apply library after library without proper consideration for maintenance down the line. The firmware ends up bloated, difficult to troubleshoot, and slow. Indeed, when things go bad, even small bug fixes can require significant rewrites.

A simple, modular architecture not only performs better, but it also makes upgrades and new feature development easier. Good firmware doesn’t attempt to provide every capability possible at once; it does the basics well.

7. Unstable Connectivity Handling

Of course, without connectivity issues, users would have a great experience. There are expectations from users, especially on how devices reconnect automatically after Wi-Fi drops or when there are changes in the networks used. When users experience delays, disconnections, or missing data, the firmware is usually not ready for the unstable conditions.

Smart retry logic, clean state transitions, and other factors stratified in the design of the connectivity system firmware from the start are all required to achieve a reliable system.

8. Forgetting About Scale

One device will fail at 20,000 units. More devices mean more updates, more data being sent at once, and pressure on the backend. Without the right firmware, companies face data loss, network congestion, and performance issues during large rollouts. A perfect device at 500 units could fail at 20,000.

Always planning for scale more with cost-effectiveness than planning for scalability issues.

Why Experience Matters

IoT development requires understanding several different components: hardware, cloud, mobile apps, connectivity, and firmware. When something goes wrong, the first component to be scrutinized is usually the firmware. That is the reason why many companies choose to work with specialized teams.

Engineering teams like Yalantis come with knowledge and experience in embedded development, secure IoT architecture, OTA update systems, and long-term product support. This knowledge helps minimize the risks and ensures the device remains stable throughout its lifecycle.

Wrapping It Up

The issue isn’t bad ideas, as most IoT products fail due to not having the firmware built to withstand real-world situations. An excellent idea can seamlessly transform into an expensive failure due to security holes, inconsistent updates, odd hardware pairings, and insufficient testing.

The problem, however, can be avoided. Companies can achieve reliable, secure, and scalable devices with intentional firmware architecture, real testing, and support from skilled engineers.

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