The Economic Shift Reshaping How OEMs Manage Products

Forbes

05-08-2025

Thomas Ryd is CEO & cofounder of Northern.tech, a device lifecycle management leader with a mission to secure the world's connected devices.
Over the past decade, industries shifted from hardware-defined products to software-driven services. From connected thermostats to smart factory equipment, physical devices are now just the starting point—what drives long-term value is the software that powers them. Within this evolution are new business models rooted in subscriptions, recurring revenue and continuous digital engagement.
As a result, the traditional 'ship it and forget it' mindset no longer applies. Products must now be treated as living platforms, requiring ongoing management and improvement throughout their lifespan. Changing how products are designed and delivered, OEMs must similarly evolve and adapt how products are managed post-deployment.
Moving From Hardware To Software In A Connected Economy
The rise of the software-first economy didn't happen overnight, but it's clearly here to stay. Fueled by higher long-term revenue generation and overall consistency, businesses moved away from one-time transactions toward SaaS-based recurring revenue models. This approach offers predictable income, higher margins, scalable growth and often longer customer life cycles—attributes that make software companies especially attractive to investors.
But this transformation isn't limited to cloud or enterprise technology. It's happening everywhere. In the automotive sector, vehicles today offer performance enhancements and advanced features, purchased via subscriptions. In industrial settings, smart machines are monitored and optimized through real-time analytics and subscription maintenance contracts. Even in the home, everyday products like appliances, lighting systems and thermostats now function more like digital platforms than static tools, complete with a list of optional, subscribed features, functionality and value.
A key driver behind this transition is the Internet of Things (IoT), introducing billions of smart, connected devices into the global economy. Each of these endpoints represents an ongoing software component that must be maintained, secured, improved and funded over time.
The value of a product is no longer constrained to a static state at the time of purchase. Each product, how it performs and improves over time and the revenue it generates, is dynamic, with the ability to change through its software. Software is the heartbeat, and OEMs managing it effectively are critical to long-term success.
The Implications For Smart Product OEMs
For OEMs, the software-first economy presents a turning point in traditional product management. The days of building a device, shipping it and moving on to the next generation are over. Today's connected products demand ongoing engagement and support beyond the point of sale. Consumers expect regular software updates, robust cybersecurity and new features delivered over time—regardless of whether they're using a smartphone, connected appliance or industrial equipment.
Software-centric products place a new level of responsibility squarely on the shoulders of OEMs. It's no longer acceptable—or sustainable—to manage smart products with a hands-off strategy. The manufacturer must ensure every device remains secure, functional and compliant throughout its life cycle.
To succeed in this environment, OEMs must think like software companies. They need to adopt agile development processes, deploy updates continuously, embrace a proactive, service-oriented mindset and establish a business model that supports the ongoing resource requirements. And security can no longer be an afterthought; it must be embedded throughout, from design to final decommission.
Ultimately, this is a strategic shift. Manufacturers who fail to adapt risk falling behind as competitors deliver smarter, safer and more reliable products through dynamic software-first strategies.
DLM: The Framework For The Software Revolution
Today's OEMs need a strategic framework that supports long-term product performance, security, compliance and revenue generation: device life-cycle management (DLM).
Modern DLM is a holistic, end-to-end approach to managing connected devices from concept to retirement. By implementing DLM, OEMs shift from reactive, break-fix support models to proactive life-cycle management. It helps ensure that devices stay up-to-date, resilient to threats and in full regulatory compliance throughout their operational life.
This structured approach empowers OEMs to treat their devices like evolving software platforms, managing updates, security and performance just as a SaaS provider would. Without an end-to-end view of smart products, it's challenging for OEMs to capture the full scope of resources required to support the product. DLM provides the overall picture and key life-cycle stages so OEMs can adjust their business models and resource allocation appropriately.
DLM As A Competitive Differentiator
For OEMs operating in regulated industries like healthcare or automotive, DLM is critical for maintaining compliance with evolving cybersecurity mandates such as the Cyber Resilience Act (CRA) and NIS2. These regulations require not just secure design but verifiable processes for patching, monitoring and retiring connected devices.
Even outside heavily regulated sectors, DLM marks the beginning of viewing traditional hardware products through a software-centric lens. This unlocks technical benefits like improved security, reduced downtime and faster feature rollouts while also supporting modern business models. Subscription-based maintenance plans, over-the-air (OTA) feature packages and add-on services help OEMs monetize the full life cycle of a device—an essential part of success in an economy where long-term support costs can outpace the original sale price.
Forward-thinking OEMs understand that DLM isn't just about updates and maintenance but also about building a sustainable future. When leveraged strategically, it signals reliability and recurring revenue that simultaneously boosts customer loyalty. In a market where differentiation hinges on software quality and post-sale engagement, DLM is a strategic asset no OEM can afford to ignore.
Future-Proofing In A Software-Defined World
The line between hardware and software has all but disappeared. Every connected device is now a platform—one that must evolve, improve and remain secure over time. In this new reality, success is defined not by what a product does at launch but by how well it performs and adapts throughout its life cycle.
OEMs that embrace DLM are better positioned to deliver the security, agility and customer satisfaction that today's market demands. But sustainability requires more than operational excellence—it depends on monetization. Without a plan to fund long-term software upkeep, the cost of updates and maintenance will eventually exceed the value of the original sale.
To future-proof both products and business models, DLM must move from the backend to the boardroom. It's no longer a technical detail—it's a strategic imperative. OEMs who recognize this shift and invest accordingly will lead the software-defined economy.
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