The Internet of Things explained: evolutions, possibilities and realities

The Internet of Things: what is it, where does it come from, which technologies are involved , what are the challenges, what are the benefits, where is it used and how can you use it?

Among the many phenomena and related technologies that show exponential growth in recent years and (will) result in digital transformation (initiatives) is the Internet of Things, a.k.a. IoT.

It has taken over two decades for the ‘concept’ of the Internet of Things to become a reality that will impact many areas of business and society. Yet, it will take several more years before it is a daily reality in all possible areas, for numerous reasons.

At the same time, among others driven by new connectivity solutions and the cloud, as well as other 3rd platform technologies, the number of IoT applications and the number of connected devices are both accelerating. Add to that viable business models, technologies designed to leverage IoT-generated data fast and it’s clear that the Internet of Things is evolving fast and has found fertile ground to be leveraged in valuable ways.

nternet of Things concept

Defining the Internet of Things

There are many definitions of the Internet of Things. It just depends on how you look at it: the application perspective, the technological perspective, the benefits, etc.

The Internet of Things describes a vast range of applications, protocols, standards, architectures and data acquisition and analysis technologies whereby devices and appliances, which are equipped with sensors, specifically designed software and /or other digital and electronical systems, are connected to the Internet and/or other networks with a societal, industrial, business and/or human purpose in mind.

The Internet of Things is not one thing. Data which are acquired, submitted, processed or sent to devices, in most cases travel across the Internet, across cloud ecosystems or via (tailored) connectivity technologies which are developed for specific applications of IoT (e.g. wireless technologies for the IIoT or Industrial Internet of Things).

55% of organizations see IoT as strategic to their business as a means to compete more effectively (IDC, 2016)

As such the Internet of Things has no meaning as data and devices are inherently dumb and derive their meaning from the purpose, context and integration with processes, people and information systems for which they are designed. This is why some organizations and individuals prefer to drop the term Internet of Things and instead use the Internet of Everything. More about that in the box below.

The term Internet can be confusing when it’s seen as one open global network or one World Wide Web where everything and everyone is connected without borders and in open and freely available ways.

IoT: how it all started and evolved

As said in the introduction, the idea of the Internet of Things goes back quite some time. We can even go back a very long time but will begin at the end of the previous Millenium where we see RFID as a key development towards the Internet of Things.

The role and impact of RFID

In the nineties, technologies such as RFID, sensors and a few wireless innovations led to several applications in the connecting of devices and “things”.

Most real-life implementations of RFID in those days happened in logistics, warehouses and the supply chain in general. However, there were many challenges and hurdles to overcome, as we covered end 1999 in a white paper for a Belgian RFID specialist who targeted the logistics industry (mainly warehousing and industrial logistics as RFID was still expensive).

An example of an RFID application - electronic toll collection - Wikipedia by user Gary D
An example of an RFID application – electronic toll collection – Wikipedia by user Gary D

Gradually, the use of RFID (and along with it, several NFC or “near field communication”, wireless technologies), became popular in areas beyond logistics and supply chain management: from public transport, identification (from pets to people), electronic toll collection (see image), access control and authentication, traffic monitoring, retail to – back then – innovative forms of outdoor advertising. That growing usage was, among others, driven by the decreasing cost of RFID tags, increasing standardization and NFC.

From RFID to the Internet of Things

Although RFID strictly speaking has nothing to do with the Internet of Things, the possibility of tagging, tracking, connecting and “reading” and analyzing data from objects went hand in hand with what would become known as the Internet of Things around the beginning of this Millenium.

It was obvious that the connection of the types of “things” and applications – as we saw them in RFID – with the Internet would change a lot. It might surprise you but the concepts of connected refrigerators, telling you that you need to buy milk, the concept of what is now known as smart cities and the vision of an immersive shopping experience (without bar code scanning and leveraging smart real-time information obtained via connected devices and goods) go back since before the term Internet of Things even existed.

Again, it took a long time. Furthermore, we shouldn’t reduce the Internet of Things to just these popular and widely known concepts, even if consumer-related attention for the IoT without a doubt has led to the grown attention for it as you’ll read further.

The Internet of Things - infographic The Connectivist based on Cisco data - click for full image
The Internet of Things – infographic The Connectivist based on Cisco dataclick for full image

How the Internet of Things was coined in a context of RFID

According to the large majority of souces the term Internet of Things was coined in 1999 by Kevin Ashton, the co-founder of the MIT’s Auto-ID Center where a standard was developed for RFID, primarily from a retail perspective.

Kevin Ashton - who reportedly coined the term Internet of Things - in 2015
Kevin Ashton – who reportedly coined the term Internet of Things – in 2015 – By Larry D. Moore, CC BY-SA 4.0,

RFID existed years before talked about the Internet of Things as a system, connecting the physical world and the Internet via omni-present sensors. It also already existed when he co-founded the Auto-ID Center (now called the Auto-ID labs) at MIT.

Ashton, who was a marketer at P&G, wanted to solve a challenge he had seen before as Wired reports: empty shelves for a specific product. When shelves are empty, obviously no one can buy what’s supposed to be there. It’s a typical problem of logistics and supply chain. Ashton found the solution in RFID tags, which were still far too expensive to be able to put them on each product. When the MIT Auto-ID Center was launched, funded by the major global retail brands who understood the challenge and obvious benefits of a solution, he was ‘loaned’ by P&G and became the executive director at that Center as Wired explains.

The rest is a standard system, solving miniaturization challenges, lowering RFID tags prices and…history.

The exponential growth of IoT

One thing we can agree on is that the Internet of Things still has a long way to go and that the growth of connected devices or “intelligent things” will indeed continue to rise exponentially over the coming years.

With that growth, enabled by what Gartner would call a “nexus of forces”, comes growth in many other areas such as traffic, storage, processing capacity, data volumes, network capabilities, you name it.

The Internet of Things exists in many industries, applications and contexts. Some projects are still in the pilot stage while others form the backbone of important processes, operations and innovations. In other words: the Internet of Things is certainly here but the degree in which it is changing the ways we live, work and conduct business depends on the context.

Predictions on the number of connected devices

The exact predictions regarding the size and evolution of the IoT lanscape tend to focus on the number of devices, appliances and other ‘things’ that are connected and the staggering growth of this volume of IP-enabled IoT devices, as well as the data they generate, with mind-blowing numbers for many years to come.

It makes it look as if the Internet of Things is still nowhere. Make no mistake though: it is already bigger than many believe and used in far more applications than those which are typically mentioned in mainstream media.

At the same time it is true that the increase of connected devices is staggering and accelerating. As we write this, approximately each single hour a million new connections are made and there are about 5 to 6 billion different items connected to the Internet (last update: September 2016). By 2020, Cisco expects there will be 20 billion devices in the IoT. Estimations for 2030 go up to a whopping 50 billion devices.

Some predictions are even more bullish, stating that by 2025 there will be up to 100 billion devices and a few even think that it will be even higher.

The truth is that we will have to wait and see and that by the time we have written about recent predictions, new ones are already published. When we first wrote this overview Gartner estimated that by 2020 we would live in a world with over 26 billion connected devices. As the image below indicates Cisco back then predicted that 37 billion intelligent things would be connected to the Internet by 2020 (earlier the company talked about 50 billion) and some even went over 200 billion.

According to Cisco more than 99 percent of things in the physical world are not connected to the Internet yet – read the full article
According to Cisco more than 99 percent of things in the physical world are not connected to the Internet yet – read the full article

A variety of sources and predictions in context: impact matters most

Regardless of the exact numbers, one thing is clear: there is a LOT that can still be connected and it’s safe to assume we’ll probably reach the lower numbers of connected devices (20-30 billion) by 2020.

The variety of sources and pace at which data about the expected number of connected devices is released is so big that we plan a section with forecasts from several sources, nicely dated, so you can stay up-to-date.

There are several reasons why these predictions differ so much. Among them are certainly various uncertainties and challenges regarding the Internet of Things which are further fuelled by impactful events regarding among others security and privacy. And then there is the fact that the Internet of Things obviously also gets hyped by those who have an interest in doing so. This doesn’t mean that the Internet of Things is a hype as such (it has been at the beginning of this Millennium). However, the realities, data and even definitions regarding IoT are so vast that all predictions are really merely attempts, often fitting in a hypish perspective.

IoT: looking beyond the hype of data and predictions

Moreover, it’s not that much the growth of connected devices which matters but how they are used in the broader context of the Internet of Things whereby the intersection of connected and IP-enabled devices, big data (analytics), people, processes and purposeful projects affect several industries.

Also the data aspect is critical (again with mind-blowing forecasts) and how all this (big) data is analyzed, leveraged and turned into actions or actionable intelligence that creates enhanced customer experience, increased productivity, better processes, societal improvements, innovative models and all possible other benefits and outcomes. The impact of the IoT from a sheer data volume and digital universe perspective is amazing.

The number of IoT devices in the overall connected devices landscape

According to the Ericsson Mobility Report 2016, there will be approximately 28 billion connected devices by 2021. The report expects the Internet of Things to surpass mobile phones as the largest category of connected devices with 16 billion connected devices being IoT devices (of the the forecasted total of 28 billion, which include for instance smartphones as we mentioned in our article on mobile and mobility.

IoT devices are about to to surpass mobile phones as the largest category of connected devices - source Ericsson Mobility Report 2016
IoT devices are about to to surpass mobile phones as the largest category of connected devices – source Ericsson Mobility Report 2016

Reasons for the exponential growth of the Internet of Things

So, why this exponential growth of the Internet of Things and, admittedly, equally exponential growth of the attention for it, sometimes feeling like a hype?

Well, first of all IoT today is effectively hyped (yet, at the same time very real). Gartner’s latest Hype cycle for emerging technologies shows that the Internet of Things is at the peak of inflated expectations (while NFC is reaching the slope of enlightenment).

There are numerous reasons for the growing attention for the Internet of Things. While you will often will read about the decreasing costs of storage, processing and material or the third platform with the cloud, big data, smart (mobile) technologies/devices, etc. there certainly is also a societal/people dimension with a strong consumer element.

The Internet of Things and NFC in Gartners Hype Cycle for emerging technologies – more on InformationDynamix
The Internet of Things and NFC in Gartners Hype Cycle for emerging technologies

Industries driving the Internet of Things

Previously we mentioned how the Internet of Things today already is a reality in several industries, more so than in consumer applications. Below are some typical examples.

From the sheer perspective of (number of) devices, IoT is driven by consumer devices. According to a 2015 report by IC Insights (via Datamotion), a research company specializing in the semiconductor market, the increasing popularity of wearable devices and IoT devices is boosting sensor shipments.

However, behind this popularity and the growth of IoT, are several industries with some clearly taking the lead.


Given the “origins” of the Internet of Things (remember RFID) and the most typical (early) use cases, manufacturing (for now) is still taking the lead.

In April 2015, Gartner analyst Jim Tully said that there were 307 million installed units at the time of the Q&A in the manufacturing industry where systems with sensors have always been embedded into manufacturing and the automation processes.

In a May 2015 forecast on the worldwide growth of the Internet of Things market (poised to grow 19% in 2015) IDC forecasted that the IoT market in manufacturing operations will reach $98.8 billion in 2018. Drivers: efficiency optimization and “linking islands of automation”.

According to a February 2015 report by PwC, the majority of US manufacturers has deployed devices to collect, analyze/measure and act upon data. The infographic which came with the report, mentioned data from a survey conducted in February 2014. According to that survey 34.6 percent of respondents had already implemented devices and sensors to gather this data and another 9.6 percent was about to implement IoT devices within a year. Only 24 percent of all respondents from the US manufacturing industry said they had no plans to implement devices to collect, analyze and act upon data.

US manufacturers were using Internet of Things Technology in the manufacturing plant (32 percent), followed by the warehouse, the extended supply chain and the customer environment.

In March 2016, BI Intelligence estimated that global manufacturers will invest $70 billion on IoT solutions in 2020 (in 2015 they invested $29 billion). Business Insider also mentions research from TATA Consultancy, indicating an average increase in revenues by 28.5 percent between 2013 and 2014 for manufacturers who have Internet of Things solutions.


Facing huge challenges and transformations for several reasons, utility firms have 299 million units installed according to Gartner’s Tully. On top of utilities in the traditional sense there is also a lot happening in oil and gas.

Among the many typical use cases in utility firms: smart meters to improve efficiency in energy, from a household perspective (savings, better monitoring etc.) and a utility company perspective (billing, better processes and of course also dealing with natural resources in a more efficient way as they are not endless).

“Smart” is the word of the day in the service economy in which utilities operate.


Retail is moving up fast, both in operations and customer-facing circumstances as Tully says.

In its mentioned forecast on the worldwide growth of the Internet of Things market, IDC also emphasized retail in an ongoing effort to digitize the consumer experience. Digital signage in retail outlets is in fact the big driver in 2015, IDC found. Also remember how the term Internet of Things was first mentioned in a context of supply chain management in retail and consumer goods environment.


Connected cars and all the other evolutions in the automotive industry are driving the IoT market as well.

Again, according to the same research by IDC, connected vehicles is the hottest US market in the overall Internet of Things picture. You can see an example of how it can work in a car scenario in the video below.

Other industries (also mentioned by IDC) include healthcare, transportation (where “smart devices” and sensors have existed for quite some time), government (also since quite some time) etc.

Add to that the consumer context of IoT and you know why it is such a hot topic.

Consumer applications of the Internet of Things

Give and take 5 years ago, consumers rarely saw what the Internet of Things would mean to their private lives. Today, they increasingly do: not just because they are more interested in technology but mainly because all these applications are happening and mentioned on virtually every news outlet and website that covers technology.

Smart is a key concept in the evolution of the Internet of Things – from smart cities to smart social care but also empowered by smart devices and intelligent networks – picture J-P De Clerck – BT Benelux showcase 2014
Smart is a key concept in the evolution of the Internet of Things – from smart cities to smart social care but also empowered by smart devices and intelligent networks – picture J-P De Clerck – BT Benelux showcase 2014

Wearables and smart watches, connected and smart home applications (with Google’s Nest being a popular one but certainly not the first), you know the examples.

Although it is said that there is some technology fatigue appearing, the combination of applications in a consumer context and of technology fascination undoubtedly plays a role in the growing attention for the Internet of Things. That consumer fascination/applications aspect comes on top of all the real-life possibilities as they start getting implemented right now and the contextual and technological realities, making the Internet of Things one of those many pervasive technological umbrella terms, leading to genuine digital transformation opportunities in several areas, digital disruptions and, simply, business opportunities in the broadest sense.

The Internet of Things: security challenges

The Internet of Things still is a security nightmare. Both in consumer applications and industrial applications, there are many questions that need to be solved.

In fact, when Accenture looked at the slowing down of the consumer electronics market at the occasion of the Consumer Electronics Show 2016, the company observed that in order to bridge the gap between the current decreasing growth of the consumer electronics market and the next stage of increasing growth, which is expected to be driven by consumer applications in the IoT space and wearables, vendors need to address these security challenges.

The IoT Security Dilemma

Gartner estimates that more than 20% of enterprise security attacks will involve IoT connections by 2020, and threat growth is expected to outstrip security spending (source: Motley Fool SlideShare).

As said, the many security challenges regarding the Internet of Things are not just in the consumer electronics space. In business applications, the security challenges of a hyper-connected Internet of Things reality are at least as high, not to mention the impact on IT infrastructure and data capabilities.

In the IoT sensors communicate with each other and through gateways, connected to an Internet of Things platform, the various applications of the company are fed and triggered. Obviously such a platform needs to be highly secure as do the communications between sensors, gateways and the platform.

In a SlideShare presentation The Motley Fool summarizes some aspects of the Internet of Things Security Dilemma.

They mainly touch upon the impact on networks and information, the protection and funneling of data, the lack of standardization across networks and application programming interfaces (APIs) that inevitably come when devices and software interact and are interconnected and, last but not least, the disconnect between de facto expected security breaches in IoT and the efforts that businesses are doing to tackle with these security challenges.

More in the IoT Security Dilemma presentation below.

Cybercrime meets the Internet of Things

Connected devices and the internet of Things are increasingly used for large scale attacks.

An Internet of Things business plan must encompass security, from start to finish and beyond

Several DDoS attacks have been reported throughout 2016, including the up to 620 Gbps DDoS attack which made the website of well-known security journalist Bryan Krebs go down end September 2016. The attack received a lot of attention, also because it was related with other issues such as free speech (Krebs was attacked by hackers after exposing a network of hackers for hire, the attack was so intensive that Akamai had to stop protecting Kreb’s website against DDoS attacks and Google put the site in its Project Shield).

Fears are high that soon such attacks and even more intensive ones will become the norm. And it’s not just about DDoS attacks. Ransomware is also moving to the Internet of Things and security experts warn for cascade effects of exploited vulnerabilities in the connected reality which the IoT is. On top of the security challenges, compliance and data privacy also need to be tackled.

Among the many reasons why the IoT can be exploited so easily in several cases are:

  • Vulnerabilities in the devices.
  • Difficult or non-existing procedures to patch IoT devices.
  • A lack of awareness in and support from the boardroom.
  • Too much focus on saving costs in IoT projects and not investing in essential security controls.
  • Not enough attention for security overall and for the ‘perimeter of everything’ which is simply needed in the Internet of Everything.
The Internet of Things and security: smart business requires smarter security

Protocols, data impact, standards and changing paradigms: from cloud to fog computing

As so much data is created and increasingly will be created with the Internet of Things, the decentralized ways in which these data are generated need different aproaches, among others in the ways they are transported, processed and analyzed, driving (automated) actions.

One of these approaches is fog computing, a system-level architecture that extends the computing, network and storage capability of the cloud to the edge of the IoT network. This is especially important when a large geographical area is involved, when data needs to be processed extremely fast and data is collected at the extreme edge as Cisco calls it, for instance on oil rigs or in ships.

Fog computing visually explained - source Cisco blog post announcing the launch of the OpenFog Consortium
Fog computing visually explained – source Cisco blog post announcing the launch of the OpenFog Consortium

Fog computing is not the only technological aspect to deal with the reality regarding data, bandwidth, processing and analysis requirements of IoT projects. There are also numerous technologies that are involved, depending on the scope and context of the application, ranging from cellular technologies and home automation standards to satellite connections and machine-to-machine (M2M) technologies in the context of, among others, Low-Power Wide Area Networks.

With the huge challenges and opportunities on the unstructured data front in mind, it’s key to look at the evolutions of these technologies and the evolutions in fog computing.

More about IoT technologies, data impact and solutions

The state of the Internet of Things in organizations

How are organizations using the Internet of Things? What do they perceive as the main benefits of the IoT and what are their concerns?

The answers to these and other questions depend on the industry and type of applications. In areas such as manufacturing, oil and gas, utilities and of course logistics, the Internet of Things is already used in more advanced ways than in others.

Moving up the IoT maturity ladder

Many companies have been testing the waters and set up IoT pilot projects. However, this is changing.

34.1% of organizations have launched IoT solutions (IDC, 2016)

According to IDC, for instance, organizations are moving up the ladder of Internet of Things maturity, away from pilots and towards more strategic and robust IoT deployments on a larger scale.

In its 2016 Global IoT Decision Maker Survey, IDC found that over a third of organizations today have launched IoT solutions and 43 percent has plans for the next 12 months (the research was announced in September 2016).

IoT benefits and concerns according to business decision makers

There is an internal and operational focus by organizations over the short term as opposed to external, customer-facing benefits.

Some key takeaways regarding main Internet of Things benefits and concerns.

Major IoT benefits for surveyed companies include:

  • Better competitive capabilities.
  • Enhancement of productivity.
  • Internal process automation.
  • Reduction of costs.

Among the main IoT concerns are:

  • Security and privacy.
  • Costs, both upfront costs and ongoing costs.
  • A lack of internal skills.
More data and findings

The IoT made tangible: video

To make the ways the Internet of Things works and can be used across various areas of business and society here is a video example.

Among the many videos and presentations explaining the IoT is a video from the IBM Think Academy that explains it in a visual way with a practical example.

The Internet of Things is changing much about the world we live in. By way of example, the video mentions the way we drive (think about the autonomous or driverless car but also about smart parking systems and how the IoT can help in solving traffic issues or car diagnostics), the way we purchase (retail is one of the industries where the IoT is being looked at intensively) and how we get/pay energy (smart meters, for instance).

The IBM Think Academy YouTube channel video focuses a lot on how embedded sensors and chips send data that can be used for numerous reasons and then explains various applications where this data can be used. That’s not a surprise as the Internet of Things can’t be separated from big data (analytics) and artificial intelligence and cognitive computing, domains where IBM is highly involved in.

That is also what the Internet of Things is essentially about: how data is used from chips and sensors to drive various business processes, automate them, enable new applications and service customers in entirely new ways, to name a few.

The video gives the example of a car that alerts its driver a ‘check engine’ is needed and then shows how this data is leveraged in various scenarios, making the Internet of Things very tangible in case you are relatively new to what the IoT means and can mean in practice.

Hungry for more? The Think Academy channel has some other nice videos on the IoT and other technologies, explained in a simple and hands-on way.

RFID in the lives of consumers

RFID has come a long way. Even if you don’t know what it means, you “use” it.

Examples? Electronic door locks, many modern credit cards, identification cards with RFID, the list is long.

RFID is even used so much that end 2014, security firm Norton and Betabrand designer Steven B. Wheeler joined forces to create the world’s first RFID (and NFC) blocking jeans to avoid theft of data.

The Internet of Things in an infographic

Below is an infographic by Goldman Sachs on the Internet of Things which pretty well summarizes several of its aspects and evolutions.

The Internet of Things - what is it and where does it go - infographic by Goldman Sachs
The Internet of Things – what is it and where does it go – infographic by Goldman Sachs


Top image: Shutterstock – Copyright: jamesteohart – All other images are the property of their respective mentioned owners.