I get what you’re saying, but I’m not talking about SaaS products. I’m talking about physical things on local networks that don’t need cloud access.

For example, a common wall switch may use mqtt internally, but inexplicably railroad all commands through the online Tuya platform. The device requires a beefier ESP chip as a result. It must be capable of ethernet and async workflows for client platform auth, token refresh, and so forth. It may even cease functioning when it can’t reach the servers.

By comparison, the strictly intranetwork equivalent has far simpler hardware that can run for months on a watch battery. And yet, the cloud-based product will basically always be cheaper, in spite of being more complex and requiring cloud infrastructure.

So, how come? Yes economies of scale might apply to the hardware manufacturing, but certainly not to the cloud requirement. No economy scales quite like 0.