Internet of things platform encroachment and manufacturer product selection strategy:The role of technology level and data value

In the Internet of Things (IoT) setting, IoT platforms not only provide technology services to manufacturers but also market their store brand smart products, thus encroaching on the product market. However, existing research has not yet addressed the uncertainties inherent in IoT technology or the comprehensive impact of data value collected by smart devices on platform encroachment and manufacturers’ product decisions. To fill this gap, this paper utilizes game theory models to develop a bidirectional interaction model between an IoT platform and a smart product manufacturer. The findings are as follows: Firstly, even in the face of high encroachment costs, a higher value of data from smart devices will motivate the platform to encroach upon the smart product market. Secondly, when IoT technology value is high, the manufacturer’s single-product strategy prevents platform encroachment, whereas a dual-product strategy encourages it. In contrast, under lower IoT technology, selling both traditional and smart products leads to internal competition, eroding both. Finally, our finding also illustrates that, with moderate demand spillover, platforms see little profit from encroaching on the smart product market. Instead, they can avoid competition by focusing solely on IoT services, prompting manufacturers to produce only smart products.