Amalgamating sensors, actuators, and cloud computing with non-digital products and services is regarded as critical opportunities to lead innovation, transforming the conventional way of business activities, such as value creation, new product development (NPD), and design practices. However, a paucity of empirical studies examines IoT design challenges and practices across NPD process. Thus, this study aims to explore design practices and challenges for IoT development through investigating empirical data. The case study methodology is selected, as it is particularly appropriate for a phenomenological exploration of how IoT systems are developed. Through multiple case study, emerging patterns and themes on design challenges are recognised which are largely related to extra layers of development complexity with continuous process, and data management issues. A major contribution arising from this paper is to propose design challenges and implications for IoT systems development, which may unlock its value by selling physical products, providing customised services, and harnessing data arising from the product in use.