What is the Internet of Things (IoT)?

An engineer makes an adjustment to the robot "The Incredible Bionic Man" at the Smithsonian National Air and Space Museum in Washington October 17, 2013.REUTERS/Joshua Robert

You've likely heard the phrase "Internet of Things" — or IoT — at some point, but you might also be scratching your head figuring out what it is or what it means.

The IoT refers to the connection of devices (other than typical fare such as computers and smartphones) to the Internet. Cars, kitchen appliances, and even heart monitors can all be connected through the IoT. And as the Internet of Things grows in the next few years, more devices will join that list.

We've compiled a beginner's guide to the IoT to help you navigate the increasingly connected world.

Terms and Basic Definitions

Below, we've provided a glossary defining the Internet of Things:

• Internet of Things: A network of internet-connected objects able to collect and exchange data using embedded sensors.
• Internet of Things device: Any stand-alone internet-connected device that can be monitored and/or controlled from a remote location.
• Internet of Things ecosystem: All the components that enable businesses, governments, and consumers to connect to their IoT devices, including remotes, dashboards, networks, gateways, analytics, data storage, and security.
• Entity: Includes businesses, governments, and consumers.
• Physical layer: The hardware that makes an IoT device, including sensors and networking gear.
• Network layer: Responsible for transmitting the data collected by the physical layer to different devices.
• Application layer: This includes the protocols and interfaces that devices use to identify and communicate with each other.
• Remotes: Enable entities that utilize IoT devices to connect with and control them using a dashboard, such as a mobile application. They include smartphones, tablets, PCs, smartwatches, connected TVs, and nontraditional remotes.
• Dashboard: Displays information about the IoT ecosystem to users and enables them to control their IoT ecosystem. It is generally housed on a remote.
• Analytics: Software systems that analyze the data generated by IoT devices. The analysis can be used for a variety of scenarios, such as predictive maintenance.
• Data storage: Where data from IoT devices is stored.
• Networks: The internet communication layer that enables the entity to communicate with their device, and sometimes enables devices to communicate with each other.

IoT Predictions, Trends, and Market

BI Intelligence, Business Insider's premium research service, expects there will be more than 24 billion IoT devices on Earth by 2020. That's approximately four devices for every human being on the planet.

And as we approach that point, $6 billion will flow into IoT solutions, including application development, device hardware, system integration, data storage, security, and connectivity. But that will be money well spent, as those investments will generate $13 trillion by 2025.

Who will reap these benefits? There are three major entities that will use IoT ecosystems: consumers, governments, and businesses. For more detail, see the Industries section below.

IoT Industries

Several environments within the three groups of consumers, governments, and ecosystems will benefit from the IoT. These include:

Manufacturing	Transportation	Defense	Agriculture
Infrastructure	Retail	Logistics	Banks
Oil, gas, and mining	Insurance	Connected Home	Food Services
Utilities	Hospitality	Healthcare	Smart Buildings

IoT Companies

There are literally hundreds of companies linked to the Internet of Things, and the list should only expand in the coming years. Here are some of the major players that have stood out in the IoT to this point:

Honeywell (HON)	Hitachi	T-Mobile (TMUS)	Comcast (CMCSA)
GE (GE)	AT&T (T)	Cisco (CSCO)	IBM (IBM)
Amazon (AMZN)	Skyworks (SWKS)	Apple (AAPL)	Sierra Wireless (SWIR)
Google (GOOGL)	Iridium Communications (IRDM)	Ambarella (AMBA)	ARM Holdings (ARMH)
Texas Instruments (TXN)	PTC (PTC)	Fitbit (FIT)	ORBCOMM (ORBC)
Garmin (GRMN)	Blackrock (BLK)	InvenSense (INVN)	Microsoft (MSFT)
Control4 (CTRL)	Silicon Laboratories (SLAB)	CalAmp (CAMP)	LogMeIn (LOGM)
InterDigital (IDCC)	Ruckus Wireless (RKUS)	Linear Technology (LLTC)	Red Hat (RHT)
Nimble Storage (NMBL)	Silver Spring Networks (SSNI)	Zebra Technologies (ZBRA)	Arrow Electronics (ARW)

IoT Platforms

One IoT device connects to another to transmit information using Internet transfer protocols. IoT platforms serve as the bridge between the devices' sensors and the data networks.

The following are some of the top IoT platforms on the market today:

• Amazon Web Services
• Microsoft Azure
• ThingWorx IoT Platform
• IBM's Watson
• Cisco IoT Cloud Connect
• Salesforce IoT Cloud
• Oracle Integrated Cloud
• GE Predix

IoT Security & Privacy

As devices become more connected thanks to the IoT, security and privacy have become the primary concern among consumers and businesses. In fact, the protection of sensitive data ranked as the top concern (at 36% of those polled) among enterprises, according to the 2016 Vormetric Data Threat Report.

Cyber attacks are also a growing threat as more connected devices pop up around the globe. Hackers could penetrate connected cars, critical infrastructure, and even people's homes. As a result, several tech companies are focusing on cyber security in order to secure the privacy and safety of all this data.

More to Learn

BI Intelligence has compiled an exhaustive and detailed report on the Internet of Things that is your one-stop resource for all you need to know about the IoT.

The report gives a thorough outlook on the future of the Internet of Things, including the following big picture insights:

• IoT devices connected to the Internet will more than triple by 2020, from 10 billion to 34 billion. IoT devices will account for 24 billion, while traditional computing devices (e.g. smartphones, tablets, smartwatches, etc.) will comprise 10 billion.

• Nearly $6 trillion will be spent on IoT solutions over the next five years.

• Businesses will be the top adopter of IoT solutions because they will use IoT to 1) lower operating costs; 2) increase productivity; and 3) expand to new markets or develop new product offerings.

• Governments will be the second-largest adopters, while consumers will be the group least transformed by the IoT.


And when you dig deep into the report, you’ll get the whole story in a clear, no-nonsense presentation:

• The complex infrastructure of the Internet of Things distilled into a single ecosystem

• The most comprehensive breakdown of the benefits and drawbacks of mesh (e.g. ZigBee, Z-Wave, etc.), cellular (e.g. 3G/4G, Sigfox, etc.), and internet (e.g. Wi-Fi, Ethernet, etc.) networks

• The important role analytics systems, including edge analytics, cloud analytics, will play in making the most of IoT investments

• The sizable security challenges presented by the IoT and how they can be overcome

• The four powerful forces driving IoT innovation, plus the four difficult market barriers to IoT adoption

• Complete analysis of the likely future investment in the critical IoT infrastructure:   connectivity, security, data storage, system integration, device hardware, and application development

• In-depth analysis of how the IoT ecosystem will change and disrupt 16 different industries


To get your copy of this invaluable guide to the IoT universe, choose one of these options:

1. Subscribe to an ALL-ACCESS Membership with BI Intelligence and gain immediate access to this report AND over 100 other expertly researched deep-dive reports, subscriptions to all of our daily newsletters, and much more. >> START A MEMBERSHIP
2. Purchase the report and download it immediately from our research store. >> BUY THE REPORT

The choice is yours. But however you decide to acquire this report, you’ve given yourself a powerful advantage in your understanding of the fast-moving world of the IoT.