Decoding the IoT Product Development Process

Breaking down the five stages of IoT product development in 2025

IoT and embedded product development is a complex, multi-stage process that requires seamless integration between hardware, firmware, and cloud connectivity. Unlike traditional devices, IoT products constantly communicate with cloud platforms, introducing unique challenges (and opportunities). With the IoT market projected to grow from $714.48 billion in 2024 to $4,062.34 billion by 2032, the stakes for managing the IoT product development process have never been higher.

In a competitive marketplace, engineering leaders and their teams should implement observability tools to track performance from the start. This will give them a competitive advantage with the ability to troubleshoot bugs, push firmware updates, and maintain reliable connectivity, all while ensuring the product scales effectively.

IoT brands need a structured approach to take an IoT product from an idea to full-scale production. Following industry-standard phases helps teams optimize performance, fine-tune designs, and streamline manufacturing. These key stages include:

1. Concepting, Prototyping, and Design:
   During this initial phase, teams establish the product vision, define key technical requirements, and create early prototypes to test feasibility. Teams should decide on a production-ready Over-the-Air (OTA) solution and plan for an initial observability set-up to accelerate development and scale into production.
2. Engineering Validation Testing (EVT): This is the first validation phase. Teams test prototypes for functional performance, ensuring the core design meets initial engineering specifications. 
3. Design Validation Testing (DVT): During this phase, teams focus on refining the hardware and firmware design to optimize manufacturability, durability, and scalability.
4. Production Validation Testing (PVT): As the final pre-production checkpoint, teams fine-tune the manufacturing process, finalize quality control measures, and prepare units for customer deployment.
5. Mass Production (MP): The product is now manufactured at scale, requiring continuous monitoring and real-time observability to ensure reliability.

Each phase plays a crucial role in ensuring IoT devices’ reliability, security, and efficiency before they reach customers. However, the work doesn’t stop once manufacturing is complete. Ongoing monitoring, updates, and optimizations remain critical to long-term product success.

In this blog, we’ll deep dive into the five-step IoT product development process and highlight key challenges, best practices, and tools that drive successful launches. 

Stage 1: Concepting, Prototyping & Design

IoT product concept development starts with a clear vision centered around the end-user’s needs and experience. This foundational stage involves a collaborative effort from people across the organization, including:

• Product Managers define the product requirements.
• Hardware Engineers focus on component selection and physical design. 
• Firmware Engineers develop the embedded software.
• UX Designers ensure a seamless user experience.
• Cloud Architects enable data integration and identify the security strategy.

IoT and embedded product development typically follow one of two paths: New Product Introduction (NPI) or iterative improvements.

New Product Introduction (NPI) is the process of introducing a brand-new IoT product to the market. It requires extensive market research, feasibility studies, and prototype validation to confirm that a new concept meets market demands and is scalable and ready for efficient manufacturing. Teams should assess key factors such as:

• Connectivity standards
• Security protocols 
• Cloud integration strategies 

On the other hand, Iterative Improvements are a key aspect of embedded product development. These enhancements allow teams to refine and optimize existing embedded devices, integrate new features, improve connectivity, or enhance cloud interactions without requiring a complete redesign. 

Enhancements in iterative development often prioritize: 

• Boosting efficiency
• Expanding functionality
• Improving quality
• Fortifying security against emerging threats

Choosing connectivity, cloud, and security strategies

Selecting the correct wireless protocol (e.g., Wi-Fi, Bluetooth, Zigbee, or LoRa) is one of the most crucial early decisions in IoT development. Connectivity is vital in determining how devices communicate with cloud systems and each other. Deciding which wireless protocol depends on power consumption, range requirements, and data transfer needs. 

Security also plays a critical role because IoT devices are a frequent target for cyber threats because of their simple and low-footprint nature. To bolster security, teams should implement strong encryption, secure authentication mechanisms, and firmware integrity checks to prevent vulnerabilities. Addressing these concerns early helps organizations avoid costly redesigns later in the development cycle.

By following a structured lifecycle, engineering teams support smooth transitions in the IoT product development process and help ensure that the final product meets key performance, reliability, and compliance requirements while balancing feasibility, cost, and design constraints.

Best Practices for IoT Prototyping

Prototyping is an indispensable step in IoT development, allowing teams to test, refine, and validate designs before committing to full-scale production. There are two primary types of prototypes: 

• Looks-like prototypes refine the industrial design and form factor.
• Works-like prototypes validate hardware functionality, connectivity, and power efficiency. 

These prototypes help teams troubleshoot potential design flaws early, reducing risks, including helping prevent costly issues, in later stages. 

But prototyping comes with its own set of challenges. Hardware and firmware must work together seamlessly to ensure stable performance. Connectivity and power efficiency must be carefully balanced, especially for battery-powered devices. And perhaps most importantly, the product’s compute capacity needs to be scalable, allowing for future updates and long-term success.

Integrating observability early in the prototyping phase

Adding observability tools during the prototyping phase provides IoT organizations invaluable visibility into device performance. Observability platforms help companies make no assumptions about their environment. Real-time monitoring enables engineering teams to assess connectivity stability, power consumption, and firmware behavior under real-world conditions. By tracking performance metrics early, teams can identify potential failure points before moving into large-scale testing. 

Balancing cost, timing, and technical performance in IoT product concept development

Bringing an IoT product to market takes a coordinated effort across multiple teams, including: 

• Product Managers
• Hardware Engineers
• Firmware Engineers
• UX Designers 
• Cloud Architects

These teams must collaborate to balance cost, development timelines, and technical performance. Each developmental phase presents trade-offs—rapid iteration versus thorough testing, material cost efficiency versus manufacturability, and feature complexity versus on-time delivery. Strategic decision-making at each step helps teams stay on track and deliver a high-performing product without overspending or delays.

Common challenges for IoT prototyping

Prototyping often requires quick iterations using off-the-shelf components and temporary fixtures to quickly validate functionality while the team refines the vision for the product. While these early iterations can be rough and time-consuming, they are essential for providing technical feasibility before formal development begins.

Some of the biggest challenges teams face during IoT prototyping include:

• Assessing feasibility and risk: The product must be technically and commercially viable before moving forward.
• Managing iterative testing cycles: Prototypes often require multiple iterations to fine-tune functionality, connectivity, and user experience.
• Ensuring compatibility between hardware and firmware: Seamless interaction between hardware components and embedded software is crucial to avoid costly rework later.

Readiness criteria to move to the next stage:

• A functional prototype must be created to demonstrate connectivity and system integration.
• Feasibility and risk assessment should be defined for both hardware and software.
• Initial observability is set up to track performance and reliability during field testing.

Stage 2: Engineering Validation and Testing (EVT) for IoT product development

Once the IoT prototype is refined, it enters Engineering Validation and Testing (EVT), which is one of IoT development’s most critical and demanding phases. At this stage, components are assembled using production-intent materials, and the prototype begins rigorous testing to ensure functional stability.

To validate that the product meets technical requirements and can withstand real-world conditions, multiple teams work together: 

• Hardware Engineers
• Firmware Engineers
• Electrical Engineers
• Mechanical Engineers
• Quality Assurance (QA) 

Key testing areas in EVT

Unlike traditional hardware testing, EVT for embedded IoT devices demands additional layers of validation to ensure robust connectivity, power efficiency, and remote management. These tests include:

• Hardware-firmware synchronization: Ensuring smooth communication between embedded systems and firmware to prevent performance bottlenecks.
• Connectivity stress testing: Evaluating device performance across different environments to identify signal strength issues and potential interference.
• Power efficiency testing: Optimizing energy consumption is critical for longevity and reliability, especially for battery-operated IoT devices.
• OTA update validation: Over-the-Air (OTA) updates enable remote firmware or software modifications to be deployed to thousands or even millions of devices without manual intervention. Early OTA validation ensures seamless, secure, and scalable remote firmware deployment, reducing the need for physical recalls and manual updates.

By incorporating these testing layers, EVT refines the design and ensures it’s stable and secure before the product moves to the next validation stage.

Common challenges in EVT

EVT presents several technical hurdles that can severely delay timelines. Some common challenges that teams must navigate include:

• Integration issues: Hardware, firmware, and mechanical components are often developed separately before integration, leading to unexpected compatibility issues.
• Data transmission bottlenecks: Latency and real-time data handling challenges can emerge, requiring hardware and cloud infrastructure optimizations.
• Firmware instability: Early-stage software may introduce bugs that affect system behavior, requiring continuous iteration and debugging.
• Connectivity issues: Embedded devices must navigate intermittent connectivity, network transitions, and data loss across diverse network conditions, from low-power Bluetooth to constrained cellular and Wi-Fi environments, without disrupting functionality.

Readiness criteria to move to the next stage:

• There’s a stable design foundation with validated connectivity.
• The OTA framework is in place for remote updates.
• No major hardware redesigns are required.

Stage 3: Design Validation and Testing (DVT)

Progressing through the IoT development process, the next stage is DVT. This phase requires engineers to finalize component choices and refine assembly procedures to ensure products are ready for large-scale manufacturing. Development teams focus on stress testing and functional validation to ensure the product’s long-term durability and performance, including: 

• Validating end-to-end connectivity to ensure seamless network performance in real-world environments. 
• Conducting final firmware stability testing to verify that updates function correctly. 
• Testing OTA scalability and reliability to confirm that over-the-air updates can be  securely and efficiently deployed across multiple devices. 

To ensure the IoT device is scalable, secure, and optimized for deployment in real-world environments, this phase involves: 

• Manufacturing Engineers
• Test Engineers
• Firmware Engineers
• Security Analysts 

The Role of Observability Tools in DVT and Beyond

As IoT devices transition from controlled lab settings to real-world environments, observability tools become essential. Without clear visibility into network conditions, temperature changes, and power limitations, it’s a challenge to maintain long-term stability, and diagnosing failures in the field can be time-consuming and costly. But with the right tools in place, collecting data is simple. Observability tools help track anomalies, detect crashes, and analyze behavior when devices are no longer physically accessible. 

These tools enable engineers to:

• Quickly identify and resolve issues: Debugging problems remotely prevents costly delays and reduces reliance on in-person troubleshooting.
• Monitor beta units and early production runs: Engineers can track device performance across different locations, uncovering issues that may not arise in lab testing.
• Extract data-driven insights for product improvements: Analyzing real-world performance helps teams optimize firmware, enhance power efficiency, and improve device reliability.

By integrating observability tools during DVT, teams can proactively address potential failures, streamline debugging, and ensure product reliability before moving into large-scale production. 

Validating IoT performance in controlled and live environments

IoT organizations have spent billions of dollars recalling defective devices. To avoid this expensive pitfall, organizations need to ensure reliability before the devices reach consumers. An IoT device should undergo extensive testing in both controlled and unpredictable real-world scenarios:

• Field testing: Devices are tested in controlled environments to confirm they meet performance expectations and function as intended in typical use cases. Observability during field testing is critical to help ensure reliable data collection and proactive issue resolution. This step helps refine both hardware and firmware before a wider rollout. 
• Live testing: This testing introduces unpredictability, such as fluctuating network coverage, extreme weather, and unexpected user behavior, which can all impact performance. These real-world challenges often reveal issues controlled testing might miss, making this phase critical for catching hidden defects and fine-tuning the device for long-term success.

This combination of testing helps expose defects that might go unnoticed in lab conditions, enabling teams to fine-tune devices for long-term success.

Common challenges in DVT

Despite careful planning, DVT presents several challenges that must be addressed:

• High failure rates: Early production failures expose unforeseen flaws and may require adjustments to component selection, design tolerances, or manufacturing processes to improve reliability.
• Supplier variability: Inconsistent quality from different suppliers can impact device performance, necessitating strict component qualification and supply chain management.
• Late-stage design modifications: Making design changes at this phase can introduce delays and additional costs, especially if tooling or certifications need to be revised.

Readiness criteria to move to the next stage:

• The team has high confidence in the design’s manufacturability and scalability.
• The IoT organization has sourced all components from mass-production tooling and processes.
• The product has fully integrated observability for remote diagnostics and performance monitoring.
• Regulatory compliance has been achieved (FCC, CE, ISO, etc.).
• Quality assurance and stress testing are complete.

Stage 4: Production Validation and Testing (PVT)

Product Validation and Testing (PVT) is the final step before full-scale manufacturing. This phase builds units using final production processes to optimize production efficiency and minimize failures, making this stage critical for establishing quality control measures and reducing manufacturing risks before mass production. At this point, ensuring a stable supply chain is crucial to avoid delays. Any unexpected component shortages or inconsistencies can lead to production bottlenecks.

To optimize the production process while maintaining high device performance and security standards, this phase involves collaboration among: 

• Manufacturing Engineers
• Quality Assurance Teams
• Operations Managers
• Firmware Engineers

To prepare for Mass Production (MP), teams must validate final firmware and OTA updates to ensure long-term device management and security. By addressing any remaining manufacturing or firmware issues at this stage, teams can confidently transition into full-scale production, minimizing the risk of defects or failures in the field.

Common challenges in PVT

Despite careful planning, the PVT phase presents several challenges that teams must address:

• Material shortages: Unexpected disruptions can delay production timelines.
• Firmware finalization: Ensuring final firmware is bug-free, and OTA-ready is critical for product performance and security.
• Production scalability: Validating that the manufacturing process can efficiently scale without compromising quality or reliability. 

Readiness criteria to move to the next stage:

• The production line operates at target efficiency, meeting quality standards.
• The OTA update infrastructure has been successfully tested.
• No major design or firmware changes are needed before scaling.

Stage 5: Mass Production (MP) and Scaling

Now that all validation phases are complete, the IoT product enters mass production (MP), where the focus shifts from testing to full-scale manufacturing and deployment. However, IoT product development does not stop at launch. Ongoing monitoring, OTA updates, and optimizations remain critical to maintaining product quality, ensuring security, and optimizing supply chain logistics.

Teams at this stage must work together to scale production while maintaining quality and addressing post-launch challenges. This stage involves:

• Manufacturing Engineers
• Operations Managers
• Firmware Engineers
• Product Managers
• Customer Support

Post-launch monitoring and observability 

Once IoT devices reach end users, maintaining reliability becomes a top priority. Monitoring product behavior in real-world environments allows teams to diagnose issues quickly, ideally before they impact customers, and optimize device functionality. monitoring performance, diagnosing failures, and optimizing functionality don’t end at manufacturing. 

This raises an important decision for IoT brands: Should they build their own observability solution or invest in an off-the-shelf platform? Companies must decide whether to develop an in-house observability system or purchase a third-party solution. Ultimately, deciding to build or buy an observability solution depends on an organization’s technical capabilities, budget, and long-term product strategy. Here are the top considerations when deciding whether or not to build an in-house IoT observability system.

Common challenges in MP

Even after a product reaches mass production, several challenges can impact long-term success, including: 

• Maintaining quality control at scale: Maintaining consistent quality across high-volume manufacturing requires robust testing and strict oversight.
• Scaling cloud infrastructure: As more devices come online, cloud infrastructure must handle increasing data loads without performance bottlenecks.
• Managing user feedback and issue resolution: Post-launch, teams must efficiently track customer-reported issues, deploy fixes, and refine the product based on real-world usage.
• Performing ongoing security updates: IoT devices remain vulnerable to evolving threats, making regular security patches and firmware updates critical for long-term protection.

Success criteria for MP:

• Reliable, large-scale production is established with high-quality assurance.
• An effective remote monitoring strategy is in place.
• OTA updates can be deployed seamlessly across all devices.

Optimizing IoT device quality in development and beyond 

IoT product development extends beyond manufacturing. Features like OTA updates allow companies to continuously improve functionality, fix issues remotely, and enhance performance without costly recalls. Post-launch monitoring also helps teams detect problems early, minimizing failures and reducing downtime.

Why leading IoT companies choose Memfault

This is where Memfault supports the IoT development process. By offering remote monitoring, automated crash reporting, and OTA updates, Memfault empowers IoT device developers to build more reliable software and:

• Detect and resolve issues faster with real-time observability.
• Ensure seamless firmware updates without disrupting user experience.
• Optimize device performance throughout the product lifecycle.

Leading IoT teams trust Memfault to scale and streamline device development. Memfault helps accelerate go-to-market, reduce costs, and enhance product quality by enabling engineering teams to focus on innovation. With powerful observability tools, companies can ensure reliability and deliver a seamless user experience for long-term success.

Want to see for yourself how top engineering teams optimize IoT development?  

Watch our on-demand webinar: How Bond Home Built In-House Observability & Why They Switched to Memfault.

Citations

1. Fortune Business Insights, “Internet of Things (IoT) Market Size, Share, Growth, Trends, 2032,” 2025. 
2. Caitlin Gittins, “Over the Air Updates (OTA): Best Practices for Device Safety,” IoT Insider, 2024. 
3. Romuald Gallorini, “Choosing the Right Wireless Protocol for Your IoT Application,” Electronic Design, 2018.
4. Ievgeniia Kuzminykh, “A Review of IoT Firmware Vulnerabilities and Auditing Techniques,” Sensors, 2024. ​
5. Forbes Technology Council, “Adopting a ‘No Assumptions’ IT Architecture for Modern Observability,” Forbes, 2024.​
6. Caitlin Gittins, “Over the air updates (OTA): best practices for device safety,” IoT Insider 
7. Spotflow, “A Practical Guide to Monitoring & Observability of IoT Devices,” IoT For All, 2024.
8. “IoT Testing: Approaches, Challenges, and Tools,” IoT For All, 2024.
9. Ryan Case, “The #1 Thing to Consider When Building an In-House IoT Observability System,” Memfault, 2024.