Internet of Things – IoT guide with definitions, examples, trends and use cases

The Internet of Things (IoT) is an essential driver for consumer-facing innovation, data-driven business opportunities, industry transformation, new consumer applications and even entirely new business models and revenue streams across all sectors in the digital transformation economy.

The Internet of Things is the interconnection of physical devices, sensors and actuators with the Internet and other networks through uniquely identifiable IP addresses, whereby data is gathered and communicated through embedded electronics and software, connectivity technologies and IoT platforms (more on IoT definitions).

The Internet of Things is the third wave in the development of the Internet.

In combination with (big data) analytics, artificial intelligence, the cloud, information/data, business process optimization, people, smart goals and new ecosystems of value, the Internet of Things enables an unseen new wave of innovation and optimization. The Internet of Things further bridges digital and physical realities and powers information-driven automation and improvements on the level of business, society and people’s lives.

This is the challenge, change and chance that is facing all sectors, albeit it at different speeds per sector and individual goal.

The Internet of Things - online guide to the Internet of Things in context

In this guide we look at all the mentioned topics, at what the Internet of Things (IoT) is and how IoT can help you realize what many are doing in practice today. We explain the what, why and how of the Internet of Things, the roots, the definitions and the various IoT flavors and use cases.

You can jump to the section that interests you most by using the Table of Contents below. We start with some definitions, terminology and history to provide you with a full overview of everything you need to know as an executive or decision maker.

Table of Contents

Internet of Things is a reality

In several industries and companies, tangible value creation by leveraging the power of the Internet of Things is happening since quite some time as ample examples show.

Forecasts show an expected IoT universe with between 20 and 30 billion connected devices by 2020

However, it will still take until the next decennium (2020 and beyond) before hype and misunderstandings regarding the Internet of Things (or IoT) fade away and uncertainties and challenges in several areas are solved. 2017, 2018 and 2019 are pivotal years in this regard.

The usage of the Internet of Things also happens at different speeds. IoT investments in the manufacturing industry, for instance, are far higher than in any other vertical industry and in the Consumer Internet of Things space.

This is poised to change by 2020 although globally manufacturing will still account for the majority of IoT spend (hardware, software, services and connectivity).

The manufacturing industry, along with transportation and utilities are the three main IoT investment areas and are part of what is known as the Industrial Internet of Things.

Internet of Things as an evolving reality

IoT spending top 3 industries 2016 and global IoT spending forecast 2020 - source IDC
IoT spending top 3 industries 2016 and global IoT spending forecast 2020

Despite challenges, different speeds and the fast evolutions which we will see until the first years of the next decade, the Internet of Things is here.

In business and industry, there are thousands of Internet of Things use cases and real-life IoT deployments across a variety of sectors with the three industries which we just mentioned accounting for a more than significant part of deployments and investments as the image on the right shows.

In the IoT consumer space (consumer IoT was the fourth largest segment in 2016) there are many thousands of devices and applications for a broad variety of purposes.

The Internet of Things is a major force among the many phenomena and related technologies that show exponential growth in recent years and (will) result in digital transformation (initiatives).

Predictions regarding the economic impact, sub segments, technologies and number of IoT-connected devices keep evolving as well.

Even if for most people the number of IoT devices is not a relevant metric, it’s the one that gets most attention. Over the past few years predictions regarding the number of IoT devices by 2020 have been reviewed downwards. End 2016 most predictions varied anywhere between 20 and 30 billion devices by 2020 (more below).

It has taken over two decades for the ‘concept’ of the Internet of Things (IoT) to become a reality that is impacting and will impact many areas of business and society as we will see further.

Despite being a reality, the Internet of Things in general is still in its early days, regardless of massive attention, impressive forecasts and numbers, and major evolutions and deployments in many areas. However, if you look at the overall potential of what today we call the Internet of Things and in a few decades will probably have no more name at all, overall we are really just starting. Standards, technologies, maturity levels, devices and applications continue to evolve as various actors in the IoT ecosystem come up with platforms, new data analysis models and even evolving definitions and views to make IoT projects better and smarter. At the same time, challenges regarding regulation, security and data are being tackled – and even a universal IoT definition is still being debated.

The origin of the Internet of Things: how it all started

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 RFID has been a key development towards the Internet of Things and the term Internet of Things has been coined in an RFID context (and NFC), whereby we used RFID to track items in various operations such as supply chain management and logistics.

The roots and origin of the Internet of Things go beyond just RFID. Think about machine-to-machine (M2M) networks. Or think about ATMs (automated teller machine or cash machines), which are connected to interbank networks, just as the point of sales terminals where you pay with your ATM cards. M2M solutions for ATMs have existed for a long time, just as RFID. These earlier forms of networks, connected devices and data are where the Internet of Things comes from. Yet, it’s not 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

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 (and in M2M and more) – 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 sources, 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.

What is the Internet of Things? Definitions

There are many definitions of the Internet of Things and there is no universal one.

It just depends on how you look at it: the application perspective, the technological perspective, the industry context, the benefits, etc.

Internet of Things definitions

The Internet of Things is the interconnected sphere of physical devices with the Internet and other networks through uniquely identifiable IP addresses, whereby data is gathered and communicated through embedded sensors, electronics and software.

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

Physical devices are either designed for the Internet of Things or are assets, including living beings, which are equiped with data sensing and transmitting electronics. Beyond this endpoint dimension with devices, sensors, actuators and communication systems, the Internet of Things is also used to describe what is effectively done with the data acquired from connected things.

The Internet of Things describes a range of applications, protocols, standards, architectures and data acquisition and analysis technologies whereby devices and items (appliances, clothes, animals,….) which are equipped with sensors, specifically designed software and /or other digital and electronical systems, are connected to the Internet and/or other networks via a unique IP address or URI, with a societal, industrial, business and/or human purpose in mind. As you can read below, data and how they are acquired, analyzed and combined into information value chains and benefits are key in it. In fact, the true value of the Internet of Things lies in the ways it enables to leverage entirely new sources and types of data for entirely new business models, insights, forms of engagement, ways of living and societal improvements.

The Internet of Things (IoT) is the network of physical objects that contain embedded technology to communicate and sense or interact with their internal states or the external environment (Gartner’s definition)

The Internet of Things is an umbrella term and often a distinction is made between the Consumer Internet of Things (CIoT) and the Industrial Internet of Things (IIoT). We cover both below as they are still often used. However, CIoT and IIoT cover many use cases and applications as well and thus are umbrella terms too. Furthermore, there are overlaps between both.

We see the Internet of Things more from an Internet of Everything perspective, which is again part of a broader context. What this means is explained further below. The Internet of Things is not a thing. Data which is acquired, submitted, processed or sent to devices, in most cases travels across the Internet, fixed lines, across cloud ecosystems or via (tailored) wireless connectivity technologies which are developed for specific applications of IoT (e.g. wireless technologies for the IIoT).

Bridging digital, physical and human spheres through networks, connected processes and data, turned into knowledge and action, is an essential aspect in this equation. In recent years the focus in IoT has shifted from the pure aspect of connecting devices and gathering data to this interconnection of devices, data, business goals, people and processes, certainly in IIoT.

Common elements in IoT definitions

Most Internet of Things definition have several aspects in common. Here are the elements they have in common:

Defining the Internet of Things using 7 characteristics
Defining the Internet of Things using 7 characteristics

Everyone talks about a network (of devices, sensors or objects, depending on the source). It’s pretty clear that a dimension of networks and connectedness, we would even say hyper-connectedness, needs to be present in any decent IoT definition. The discussion then becomes if it’s “just” about the Internet or also about other networks. You know the answer. Obviously, the dimension of automation is an important one in many Internet of Things use cases, from a connectivity perspective too.


Devices, physical objects, sensors, the physical world, appliances, endpoints, the list goes on. They are all terms to describe what is obviously an essential part of a network of things. Some add words such as smart or intelligent to the devices. Let’s say that they contain technology that grants them an additional capability of ‘doing something’: measuring temperature or moisture levels, capturing location data, sensing movement or capturing any other form of action and context that can be captured and turned into data.


This is part of that intelligent notion but it also brings us far closer to the essence. You can define the Internet of Things by simply describing all characteristics (“what it is”) but you also need to look at its purpose (“the why”). Data is a crucial part of this equation, albeit just a first step as data as such is not enough. However, there is no Internet of Things without (big) data.


Data as such is maybe not without value but it sure is without meaning unless it is used for a purpose and it is turned into meaning, insights, intelligence and actions. Maybe you heard about the good old DIKW model (from data to information to knowledge to wisdom – and action)? Well, the data gathered and sensed by IoT devices needs to be communicated in order to even start turning it into actionable information, let alone knowledge, insights, wisdom or actions.

Intelligence and action

We just touched upon this aspect. However, in most definitions we see that intelligence is attributed to just the network(s) and/or the devices. While we certainly need, for instance, ‘intelligent networking technologies’ in many cases and while connected devices have a capacity of action, the real intelligence and action sits in the analysis of the data and the smart usage of this data to solve a challenge, create a competitive benefit, automate a process, improve something, whatever possible action our IoT solution wants to tackle. Just as there is no Internet of Things without (big) data, there is no useful Internet of Things deployment without understanding meaning, intelligence, (big) data analytics, cognitive and AI and so on.


There is always a degree of automation, no matter the scope of the project or the type of Internet of Things application. In fact, most IoT applications are essentially all about automation. And that often comes with costs and benefits. Industrial automation, business process automation or the automatic updating of software: it all plays a role, depending on the context. You know the saying: software eats the world. Well, it also drives Tesla cars and soon autonomous vehicles whereby maintenance, upgrades and so forth are all about automation and software, powered by data which are fed by sensors and connected devices.


Meaning and hyper-connectedness is what we miss in many answers on the questions regarding what the Internet of Things is. We stay too descriptive and focused on just the technologies and don’t look at purpose and intelligent action enough. Obviously we can say that this isn’t strictly about the Internet of Things but more about the Internet of Everything or the Internet of Things ecosystem or something else but for us it’s key in order not to confuse the Internet of Things with a bunch of fitness devices that are connected with some app, for instance. Because, although these are the kinds of apps most people speak about, they certainly are where the majority of Internet of Things use cases are and they are the furthest away from the original meaning of IoT.

IoT in flux: from a device- and technology-centric definition to a connected view

While the above mentioned elements come back in all IoT definitions there are a few we miss that are essential in the evolving views regarding the Internet of Things as it moves from devices and data to outcomes and actionable intelligence, and ultimately to a hyper-connected world of digital transformation (DX).

Internet of Things maturity and evolutions in transformation to a hyper-connected world

The aspect of hyper-connectivity and integration often lacks. In a context of a reality whereby devices, people, processes and information are more interconnected than ever before; an Internet of Things definition and approach just needs to mention these aspects as the IoT is part of something broader and is more about data, meaning and purpose than about objects. A key element of that hyper-connectivity in the IoT sphere is that sometimes mentioned ongoing bridging of digital and physical environments, along with human environments, processes and data as the glue, enabler and condition to create value when properly used for connected purposes.

Then there is also the possibility to create new ecosystems where connected device usage by groups of people can lead to new applications and forms of community ecosystems. Last but not least and we’ve mentioned this often before: no Internet of Things without security.

Virtually everyone agrees that in the next decade, in 2020 and beyond, we will decreasingly speak about the Internet of Things.

The Internet of Things is a misnomer in two senses.

  1. First, the things don’t describe the essence of what it truly means and make it seem like a thing that is composed of connected things. However, as said it is not a thing as it’s often referred to in popular media. On top of covering a vast connected ecosystem of myriad technologies, platforms and other components as such, the Internet of Things also fits in a technological and organization context whereby actionable intelligence is at the core of human and business value creation opportunities. The Internet of Things has no purpose nor means to exist without all these aspects.
  2. Secondly, after years of future visions around very old concepts and ideas such as connected refrigerators, the current fascination with the possibilities that arise as a result of connecting ‘things’, the ‘connected things’ aspect will move to the back and IoT will be seen just as we look at the Internet today: an obvious phenomenon of increased connectivity that is like electricity. What is behind it, the sensors, the devices, the protocols, the essential possibilities, will not matter, except to people who need to realize IoT projects in real life and watch over the technology aspect within frameworks of regulations, meaning and security.

The question and evolution increasingly will not be about the Internet of Things but about the broader digital transformation economy picture with outcomes and integration in mind and de facto overlapping sets of technologies being a given.

What is the Internet of Things – a visual answer

To end this part on definitions and descriptions, here is a good illustration of the vast reality of the Internet of Things – and at the same time an illustration of what IoT means.

Internet of Things map - source Internet of Things Applications USA - click here for a larger version
Internet of Things map – source Internet of Things Applications USA – click here for a larger version

The top right section clearly shows the Internet of Things: smart objects with an IP address which can sense (depending on use case, gather data on various parameters such as location, temperature, moisture level and dozens of more possibilities). This data gets sent for processing or analyzed at the source.

The upper left section is the ‘Internet of People’. Think about everything you use to connect with the Internet, such as your smartphone. It’s in the meeting of this sphere and the Internet of Things that most IoT consumer applications today get born. Several so-called Consumer IoT (CIoT) applications such as wearables can’t live without smartphones. Moreover, for several control and monitoring activities you’ll need some sort of device such as a tablet, for example in a smart home context.

The sphere at the bottom of the image is composed of all connected objects that do not have an IP address and do not belong to the Internet of Things. They exist since a long time, mainly in the sphere of industrial Internet and we see them migrate to the Industrial Internet of Things (IIoT). Replacing such devices or tagging them so they become IoT-enabled is a part of what happens in IIoT.

The exponential growth of the Internet of Things

As we saw earlier the Internet of Things still has a long way to go and the growth of connected devices or “intelligent things” will continue to rise exponentially over the coming years, as multiple challenges get solved.

In that sense it is safe to say that, despite the fact that we’ve been talking about the Internet of Things for a long time and the fact that IoT in many industries is a reality, we are still in the early years. Although it is expected that, as a term and concept, the Internet of Things will dissapear and just become part of a new normal, we are far from there. Note, however, that in a business context it’s best to focus on goals and use cases when trying to get projects accepted and done than to speak about the IoT.

With the exponential 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.

Number of IoT-connected devices - 46 billion by 2021
Number of IoT-connected devices – 46 billion by 2021

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. 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. The latest updates (end 2016) forecast anywhere between 20 and 30 billion connected (IoT-enabled) devices in 2020.

According to Juniper Research (data end 2016), the number of connected IoT devices, sensors and actuators will reach over 46 billion in 2021.

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

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 (such as companies selling IoT solutions). 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

Impact, data and outcomes before devices

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
The Internet of Things and NFC in Gartners Hype Cycle for emerging technologies

The flavors of IoT: the Industrial Internet of Things

The Internet of Things, the Internet of Everything, the Consumer Internet of Things, so many terms that it becomes confusing.

The main value and applications are found in the so-called Industrial Internet of Things or IIoT. In all honesty one of the main reasons why we started talking about the Industrial Internet of Things is to distinguish it from the more popular view on the Internet of Things as it has becoming increasingly used in recent years: that of the consumer Internet of Things or consumer electronics applications such as wearables in a connected context or smart home applications.

Industrial Internet of Things definition

The Industrial Internet of Things is defined by the Industrial Internet Consortium as ‘machines, computers and people enabling intelligent industrial operations using advanced data analytics for transformational business outcomes” as you can also see in the infographic below.

Industry 4.0 and the Industrial Internet of Things technology ecosystem
Industry 4.0 and the Industrial Internet of Things technology ecosystem (copyright Zapp2Photo)

What industries are covered? Some people mainly look at ‘heavy’ industries such as manufacturing, oil and gas, transportation. Others also add ‘less heavy’ smart city or smart agriculture applications into account. Sometimes there is a bit a thin line because of course you can also have very simple applications in smart cities.

What is crucial in the Industrial Internet of Things or IIoT is the connection between IT (information technology) and OT (operational technology).

For now, IIoT is the most important segment in IoT, much more than consumer applications, for instance.

IIoT use cases, benefits and challenges

The Industrial Internet of Things is related with Industry 4.0: all IoT applications in Industry 4.0 are forms of IIoT but not all IIoT use cases are about the industries which are categorized as Industry 4.0.

Typical use cases of the Industrial Internet of Things include smart lightning and smart traffic solutions in smart cities, intelligent machine applications, industrial control applications, factory floor use cases, condition monitoring, use cases in agriculture, smart grid applications and oil refinery applications.

So, even if the term is not so much an umbrella term as the Internet of Things is, it still covers many potential applications and use cases.

A lot of organizations are considering IIoT applications and many have already started, certainly in early moving markets such as manufacturing or oil and gas. But others are still waiting or uncertain.

According to research from IDG in 2016, 70 percent of organizations are still in the “consideration”, “early discussions” or “planning phase” as the infographic below indicates.

And this despite the many opportunities, among others in regards with business continuity, efficiency, cost reductions etc.

But there are also many challenges, not in the least in regards with industrial data as you can also see in the infographic and the page of Visual Capitalist, who made it.

The Industrial Internet of Things - IIoT barriers and opportunities according to Visual Capitalist
The Industrial Internet of Things – IIoT barriers and opportunities according to Visual Capitalist

The opportunities and difference of IIoT

It’s important to know that the Industrial Internet of Things is not just about saving costs and optimizing efficiency though. Companies also have the possibility to realize important transformations and can find new opportunities thanks to IIoT.

Those who can overcome the challenges, understand the benefits beyond the obvious and are able to deal with the industrial data challenge have golden opportunities to be innovative, create competitive benefits and even entirely new business models in Industry 4.0.

Below is a presentation that explains the Industrial Internet of Things and also how the IIoT is different than other Internet of Things applications, for instance in the consumer space.

The flavors of IoT: the Consumer Internet of Things

Give or 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 are interested in technology but mainly because a range of new applications and IoT-enabled devices has hit the market.

These devices and their possibilities are getting major attention on virtually every news outlet and website that covers technology. Wearables and smart watches, connected and smart home applications (with Google’s Nest being a popular one but certainly not the first): there are ample of you know the examples.

Nest 3rd Gen thermostat – source
Nest 3rd Gen thermostat – source

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 aspect comes on top of all the real-life possibilities as they start getting implemented and the contextual and technological realities, making the Internet of Things one of those many pervasive technological umbrella terms. Obviously, the Consumer Internet of Things market is not just driven bynew technology fascination: their manufacturers push the market heavily as adoption means news business possibilities with a key role for data.

The Consumer Internet of Things and consumer electronics

With the Consumer Internet of Things we are strictly in a consumer electronics reality.

47% of consumers are concerned about privacy and security issues regarding IoT

While some of the applications in this space already are popular (fitness and personal health, for instance), the real growth still needs to come.

Below are some IoT consumer electronics challenges to tackle first:

  • Smarter devices. Consumers are waiting for smarter generations of wearables and IoT products, which are able to fulfil more functions without being too dependent from smartphones, as is the case with many of such devices today (think the first generations of smartwatches, which need a smartphone).
  • Security. Consumers don’t trust the Internet of Things yet, further strengthened by breaches and the coverage of these breaches. Moreover, it’s not just about the security of the devices but also about, among others, the security of low data communication protocols (and IoT operating systems). An example: home automation standard Zigbee was proven easy to crack in November 2016.
  • Data and privacy. On top of security concerns, there are also concerns regarding data usage and privacy. The lack of trust in regards with data, privacy and security was already an issue before these breaches as we cover in our overview of the consumer electronics market evolutions.
  • A “compelling reason to buy”. The current devices which are categorized as Consumer Internet of Things appliances are still relatively expensive, “dumb” and hard to use. They also often lack a unique benefit that makes consumers massively buy them.

The Consumer Internet of Things market: focus on experiences and benefits

Whereas the focus of the Industrial Internet of Things is more on the benefits of applications, the Consumer Internet of Things is more about new and immersive customer-centric experiences.

Consumer IoT purchases, the fourth largest market segment in 2016, will become the third largest segment by 2020 (IDC, 2017)

It is expected that the market will really start picking up as of end 2017 or 2018, when the Consumer Internet of Things will grow rapidly across several types of devices and applications, once manufacturers are able to meet the various challenges.

As mentioned, the Consumer Internet of Things typically is about smart wearables and smart home appliances but also about smart televisions, drones for consumer applications and a broad range of gadgets with IoT connectivity.

It’s important to note that de facto the Consumer Internet of Things overlaps with the use of the IoT across several industries.

On top of examples such as smart meters, as explained above, it is clear that the CiOT offers manufacturers of devices and applications important opportunities to leverage data to build new revenue streams and even new partnerships and ecosystems to leverage this data in various ways. Data privacy and security will remain a challenge for several years to come but at the same time new generations of devices with clear benefits and a focus on the consumer experience will boost the market.

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 Everything

The Internet of Everything is a term that was coined by Cisco but is also used by other companies like Intel.

The Internet of Things focuses too much on the things and, as mentioned, is also very broadly used. It’s why some started distinguishing between the just mentioned Consumer Internet of Things and the Industrial Internet of Things.

Cisco and other prefer to use the term Internet of Everything, partially because of that umbrella term issue, partially because of the focus on things and partially to provide context to their views and offerings. But it’s not just marketing. The Internet of Everything or IoE depicts crucial aspects of IoT, namely people, data, things and processes. It’s this mix that matters. Moreover, the classic illustration of the Internet of Everything also made clear what, for instance, machine to machine or M2M is all about.

We’ve based ourselves on that classic depiction and added the dimensions of value and data analysis.

Internet of Everything in context - based upon Cisco
Internet of Everything in context – based upon Cisco

The Internet of Things across industries: sectors and use cases

Cross-Industry IoT investments, which represent use cases common to all industries, such as connected vehicles and smart buildings, will rank among the top segments by 2020 (IDC)

Previously we mentioned how the Internet of Things today already is a reality in several industries, more so than in consumer applications. However, the landscape evolves fast.

The Internet of Things is used in various industries for numerous use cases which are typical for these industries. On top of that, there is a long list of IoT use cases that is de facto cross-industry.

As the Internet of Things is embraced and deployed at different speeds throughout consumer and industrial sectors, we take a look at some of the main industries and use cases which drive the IoT market and IoT projects.

Patterns and shifts in the vertical industry and IoT use case spend

Note that the biggest and/or fastest growing use cases are not always related to the biggest and/or fastest growing industries in terms of IoT spending.

While it is expected that in terms of use cases there will be high growth in consumer-related use cases such as personal wellness and smart home applications, the largest majority of spending is and will be done by enterprises.

Among the reasons for this phenomenon:

  • The costs and scope of the investments. A full-blown, enterprise-wide IoT project in industrial settings such as manufacturing or logistics is far more expensive than a smart home implementation.
  • The shifts in the major IoT use cases and industries. Remember that the Internet of Things mainly started as an industrial and business sector phenomenon. Industries with many existing physical assets can realize fast cost savings and efficiencies of scale. That’s why today they spend more in IoT projects than consumer segments where we see more ‘new’ devices, rather than existing assets.
  • As industries keep leading the current waves of IoT spending until 2020, the fact that they started first and the advent of ever more consumer use cases and better (safer and more useful) solutions means that gradually consumer IoT catches up with Industrial IoT spending.
  • Last but not least, the rise of cross-industry applications and of scenarios whereby consumers and businesses meet each other in business-driven initiatives (for instance, the push for telematics in insurance, the push for smart meters in utilities) has a levelling effect on the adoption and spend in IoT.

The top industries driving the Internet of Things 2016-2020

According to IDC data, published early 2017, the 3 main industries in terms of IoT spending in 2016 were, respectively, manufacturing, transportation and utilities. Consumer IoT spending ranked fourth.

While globally in the period until 2020, manufacturing will remain the major industry (except in Western-Europe) there will be global changes in this top 3. Among the fastest growing industries in the period until 2020 are insurance, healthcare, retail, consumer and, as mentioned, cross-industry initiatives.

Obviously, there is a difference between IoT spend and number of IoT projects.

A report by IoT Analytics, really a list of 640 real-life IoT projects, indicates that from the perspective of number of projects connected industry ranks first but is closely followed by smart city implementations (where we mentioned the report), which rank second.

Why this difference? On top of the fact that various firms use various approaches and definitions (even if you compare spending forecasts instead of spending and projects as we do here), there is the very simple fact that many smart city projects tend to be far cheaper than industrial counterparts. In most smart city IoT projects, low data bandwidth is needed and equipment, depending on use cases is far cheaper. As an example: the – for now – cheapest connectivity technology over longer ranges, LPWAN, is predominantly found in smart city projects.

Major IoT industries and IoT use cases 2016 - 2020 - IDC data - i-SCOOP
Major IoT industries and IoT use cases 2016 – 2020 – IDC data
More on IDC'S forecasts

The Internet of Things in manufacturing

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.

Global manufacturers will invest $70 billion on IoT solutions in 2020 (BI Intelligence)

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.

66 percent of early-movers in manufacturing say IoT is now critical to competitive advange (Verizon, source see below)

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.

IoT in manufacturing: use cases

Internet of Things use cases in manufacturing cover a broad range of applications, including:

The graphic from Verizon’s “State of the Market: Internet of Things 2016“, below shows some data and benefits across several use cases.

Internet of Things in manufacturing - source Verizon 2016
Internet of Things in manufacturing – source Verizon 2016

The Internet of Things in retail

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. It is mainly in the optimization of processes and of logistics that the IoT offers immediate benefits to retailers. However, obviously the customer-facing and inventory-related aspects matter a lot too.

The use of IoT in retail, among others, changes customer experience, leads to better customer insights, enables new collaborations and business models and further blurs the line between digital and physical in an in-store context.

Internet of Things in retail – positive experiences reported by early movers – source Verizon: “State of the Market – Internet of Things 2016”

Retailers are working with IoT for several innovative and immersive approaches, ranging from virtual closets and self-checkouts to smart shelves (inventory accuracy) and connected vending machines. As data analysis in such real-time environments needs to happen fast, fog computing approaches are being closely looked at here.

More about IoT in retail

The Internet of Things in government and cities

The Internet of Things (IoT) is already used across several government activities and layers as digital transformation efforts rank high on the government transformation priority list. Obviously, the government sector is a very vast ecosystem and so are the many IoT use cases in government.

On top of the use of IoT for national, regional, supra-national, local and government-related services (often delivered by government agencies or regulated, semi-regulated and state-sponsored service providers), the Internet of Things sooner or later often involves government. Think about regulations, for instance. Or the role of governments in energy. And let’s not forget security and safety.

Smart cities and citizen-facing public services

Probably the best-known usage of IoT in a government context concerns smart cities, in reality mainly smart city applications.

Smart city projects are what people hear about most and they get a lot of attention, among others because smart city applications are close to the daily lives of residents. Another reason why smart cities are often mentioned is that de facto smart city projects account for a big portion of IoT deployments. Think about smart waste management (often a local matter), smart parking and environment monitoring.

Smart city - use cases and applications

More about smart cities

Another area where we see the Internet of Things popping up is in citizen-facing public services.

To a large extent smart city uses cases overlap with IoT use cases in public services as one of the key tasks of a city is to serve the citizens. However, with public services we also go beyond the local/urban level. The degree of overlap depends on the way government services are organized in a particular country or region. IoT initiatives in citizen-facing public services include the already mentioned local ones but also smart energy (often with state-sponsored partners), for instance.

Improving citizen satisfaction is the main objective when considering or implementing the Internet of Things or other emerging technologies – source Accenture infographic
Improving citizen satisfaction is the main objective when considering or implementing the Internet of Things and other emerging technologies – source Accenture infographic
More about IoT and public services

Infrastructure, healthcare, safety and security

Public services brings us to infrastructure. Again, this is a broad category which can be organized by several partners in the government ecosystem. Smart grid is an example, smart roads another one (in cases where road infrastructure is a national or ‘shared’ matter). But also think about applications such as toll collection.

Next there is safety and security. On a national level this certainly also includes defense and the industrial-military complex. On more regional levels we see applications such as smart lighting (there is a link between lighting of public spaces and crime), various forms of identity control, surveillance and so on. Last but not least, there is the role of IoT in security alerts, fighting natural disasters etc.

That brings us to healthcare, another sector going through digital transformation, and closely related with government. Healthcare is organized differently across the globe, from funding to healthcare insurance and actual care. However, there is always a government component. Healthcare is a key IoT market.

Moreover, governments have a role in public health which can be enhanced by taking initiatives using the Internet of Things and in collaboration with private an state-sponsored partners. The same goes for public safety by the way. An example: collaborations between governments and insurance firms, leveraging telematics.

The omnipresence of the Internet of Things in government – opportunities, regulation and challenges

There are really hundreds of ways in which governments leverage and can leverage the Internet of Things to improve citizen experience, realize cost savings and, not to forget, generate new revenue streams.

The latter is quite important as many IoT projects have an impact on the funding of cities. A simple example: if you have a perfectly working smart parking solution in a city, you lose revenues for all the obvious reasons. So, it’s not just a matter of technologies but also of finding creative ways to turn enhanced citizen experience and citizen services in a global picture that is beneficial for everyone.

This takes time, planning and, as you can imagine, given the complexity of the government ecosystems, lots of alignment and coordination.

In some countries and on supra-national levels initiatives are taken and funding is foreseen across a range of ‘smart’ initiatives where often also cities and government agencies can benefit from in the scope of projects within a designated area and an agenda with a clear goal. At the same time, governments get increasingly active in the area of IoT security and regulation, as said, is always nearby. As an example, take the connected car of the future. It’s pretty clear that governments will be hugely involved in this and it’s less obvious than it may seem. Just to give you an idea: in some countries, traffic regulations are already a complete mess because of the arrival of fast electrical bikes. You can imagine what will happen once vehicles are connected and ‘smart’.

The Internet of Things in utilities and energy

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 and in energy.

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) and smart grids (which is about more than the Internet of Things).

The Internet of Things in automotive

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. The connected car is one of those typical examples where the Consumer Internet of Things and Industrial Internet of Things overlap.

The Internet of Things in other sectors

Other industries include healthcare, transportation (where “smart devices” and sensors have existed for quite some time), logistics, agriculture and more.

Add to that the consumer context of IoT and you know why it is such a hot topic. Stay tuned for more detailed overviews per industry with various examples of applications in practice and with various use cases per sector.

Biggest drivers for IoT projects according to Alexandra Rehak - Ovum - at Internet of Things World Europe 2016
Biggest drivers for IoT projects

IoT: technology, connectivity, cloud and 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 fixed lines, 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 or LPWAN.

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.

IoT network technologies

Internet of Things platforms

In order to build an IoT solution, different components are required. There are the connected or tagged devices, equipped with sensing and data capabilities. There is the challenge of connectivity. You need a strategy. Security cannot be an afterthought. The list goes on.

Another component which becomes increasingly important is the IoT platform. The term is used for many sorts of platforms but we look at so-called IoT Application Enablement Platforms, what real IoT platforms are. They combine several functions in one software solution and are offered by hundreds of vendors, including big players such as Amazon, Microsoft, SAP and IBM, to name a few.

According to MachNation IoT platform revenue will reach USD2.0 billion in 2017

Some takeaways:

  • In 2017, the IoT platform market will grow with an unseen triple-digit percentage of 116%.
  • Open data and interoperability become even more important.
  • IoT platform growth remains huge with high double-digit numbers until at least 2025.
  • The main drivers to acquire IoT platforms are better, faster and cheaper development and deployment.
  • There is a growing interest in open source IoT platforms.
  • The market will go through a stage of consolidations as vendors rush to offer more complete solutions which can also be leveraged in vertical industry situations.
IoT future forecasts: focus on IoT platforms

Internet of Things 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.

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.