The Internet of Things, dubbed by some as the “third wave” of the development of the Internet, is set to dramatically transform the way we live, work, and do business. Moreover, this transformation is going to happen quickly: a recent report by McKinsey & Company estimates that the total potential economic impact of the Internet of Things could be anywhere between $3.9 and $11.1 trillion by 2025, while leading technology intelligence companies (including Gartner and IDC) have previously predicted that by 2020, we could see anywhere from 26 billion to 212 billion devices included in the Internet of Things.
But in spite of—or perhaps because of—the rapidly accelerating pace of this mega-trend, many people are still struggling to grasp the fundamentals of what the Internet of Things is all about. These four questions can help you better understand the concept:
What is the Internet of Things?
The term “Internet of Things” (IoT) was coined in 1999 by British technologist and innovator Kevin Ashton, a cofounder of the Auto-ID Center at MIT. Today, the term is used broadly to define the concept of using sensors and other technology to connect everyday objects to the Internet, thus leading to the creation of a global network of connected people and devices.
How is the IoT different from the “regular” Internet?
While the IoT operates under the same basic principles as the regular Internet, it does have a number of key attributes that differentiate it from the connection of computers to networks (the first, or “fixed,” wave of the Internet) or the connection of people and devices to the Internet and to each other (the second, or “mobile,” wave). A 2014 report from Goldman Sachs defined a helpful guideline, called the “S-E-N-S-E” framework, to capture and describe what the IoT does and explain how those actions differ from the standard Internet.
S—Sensing: The IoT generates data on a range of conditions (such as pressure, temperature, or acceleration) through a number of sensors attached to things. This leads to a scenario in which things with sensors generate more data than people do.
E—Efficient: The IoT helps make manual processes “smart,” for example, by automatically reducing power usage on a hot day. Thus, the Internet can enable “things” to increase their productivity, as opposed to simply increasing people’s productivity.
N—Networked: Everyday objects, from cars to watches, are connected to the network, shifting some of the intelligence from cloud storage (where data is stored outside of the local device) to storage much closer to the source (known as “fog computing”).
S—Specialized: Because so much of the technology and processes of the IoT are highly customized to specific verticals, like healthcare or retail, the IoT is much more fragmented when compared with the vast horizontal reach of smartphones and PCs.
E—Everywhere: The IoT is deployed even more pervasively than the regular Internet—everywhere from cities to the human body. This gives it a virtually ubiquitous presence and creates an order of magnitude more connected devices.
What verticals will the IoT impact?
The sheer breadth of the IoT is staggering. To get a better grip on its scope, it can help to break IoT activity up across the following five key verticals of adoption:
Wearables—These are devices connected to or worn on the human body that generate specific data about their wearer. Examples of wearable devices include fitness trackers, such as smart watches that record the number of steps a person walks in a day.
Connected cars—Connected vehicles feature a rich range of services, including real-time traffic reports and parking information, enhanced navigation, and streaming entertainment and information via wireless connectivity.
Connected homes—The IoT is bringing us a new generation of “smart homes” with lights that turn off automatically in unoccupied rooms, doors that you can unlock remotely, and refrigerators that can remind you when you’re out of milk.
Connected cities—Cities stand to benefit from IoT in a big way thanks to the innovations that it offers. These range from integrated public lighting networks to smart touch and voice screens that deliver an array of hyper-local information to real-time monitoring of energy use in city buildings.
Industrial Internet—The industrial IoT harnesses IoT technologies like machine learning and big data in a wide range of industrial processes. This allows businesses across different sectors to improve things like quality control, sustainability practices, and overall supply chain efficiency.
What’s behind the IoT’s momentum?
The phenomenal growth of the IoT has been enabled by a number of significant technology changes that have converged over the past few years. These include the following:
Cheaper sensors, bandwidth, and processing—Widespread deployment of new technology typically increases exponentially when technology costs drop. Over the past decade, sensor prices have decreased by more than half, bandwidth costs have dropped by a factor of 40, and processing costs have declined by a factor of nearly 60.
More smartphones—Connected homes, cars, and wearable devices rely on smartphones to serve as a kind of remote control, and the greatly increased rate of smartphone ownership in recent years means even more personal gateways to the IoT are opening.
Ubiquitous wireless coverage—Today, wireless connectivity is essentially available everywhere either freely or very cheaply, thus allowing IoT devices to connect anywhere they happen to be.
Big data—The sophisticated big-data analytics that have been developed in recent years mean that the huge volumes of data that IoT will generate are actually valuable because they can be properly analyzed.