Smart connected industrial products and the Internet of Things (IoT) are transforming the industrial business landscape in a radical way. To reach the full potential of IoT-technologies manufacturing firms are forced to rethink almost every aspect of their value creation process. To utilize this promising digital technology and to cope with the new market conditions of IoT environments, research shows that industrial firms have to make a fundamental shift in value creation logic and break free from the value chain perspective of business. Instead they have to embrace a view where value is co-created within ecosystems in both a vertical and a horizontal manner. By exploring the value creation logic of small and medium sized (SME) Swedish industrial machinery manufacturers, this study contributes to a deeper understanding of how manufacturing firms view their value creation processes and how aligned this logic is to the latest research in IoT. The study found that Swedish industrial machine manufacturers do understand the transformative force of IoT-technologies and see great business opportunities to utilize IoT in their business. The study, however, identified a lack of co-creation and difficulties in embracing an ecosystem perspective. While quick to embrace change on a technical level, respondents still adhere to a firm-centric and linear perspective of value creation, with a strong attachment to the value chain concept. The study suggests that it is not a lack of technical proficiency or engineering know-how, but rather an adherence to goods-dominant logic and attachment to the value chain concept that prevent Swedish SME manufacturers from fully embracing the growing market of industrial IoT. Hence, we see an urgent need for both practitioners and academia to shift their attention from the dazzling potential of cutting-edge technologies to the nitty-g