We can’t deny that the internet now plays a major part in our day-to-day lives as a whole: the banking system, government administration, schools, universities, eCommerce stores, and social media rely on the existence of the internet.

The advancements in internet technologies have grown faster and faster: many of what we’ve seen in sci-fi movies back in the 80s and 90s have now become a reality.

We now have smart cars that can drive themselves to their destinations without the help of any human driver, smart assistants like Alexa and Siri that can now only answer our questions but remind us of our meetings and even automate some tasks.

Many of these advanced technologies are part of what we call the Internet of Things, or IoT.

The term IoT has become somewhat of a buzzword in the past half-decade or so. Chances are unless you’ve been living under a rock, you’ve heard the term used in conversations at least once in these past few years.

Yet, what actually is the Internet of Things? How will it affect our day-to-day lives and our business? How should we take advantage of the IoT?

Have any of those questions and/or are currently interested to learn about IoT but don’t know where to start? You’ve come to the right place.

In this guide, we will discuss all you need to know about the Internet of Things, and by the end of this guide you’d have learned about:

  • What actually is IoT?
  • A brief history of IoT
  • How does IoT work?
  • Different elements of IoT
  • Examples of IoT implementations in different industries

And more.

Without further ado, let us begin.

Richard Simms Founder

What Actually is IoT?

Internet of Things (IoT) refers to a concept where objects (things) can connect to the internet and to other devices so they can interact with each other without the help of traditional computers (those with a keyboard, mouse, and screen) and even without any human supervision.

As we know, traditionally only computers can connect to the internet, and over the years these computers have been made smaller and smaller so now we have smartphones and wearables (i.e. Apple Watches) that are technically computers. Yet, with IoT, things like thermostats, doorbells, locks, video cameras, and even cars can now connect to the internet so they can communicate and even control each other.

For example, a smart security camera equipped with a motion sensor can detect the presence of humans coming closer to the door. The camera will then capture the face of this visitor, recognizes it as the owner of the house, and sends information to a smart lock device installed on the door so it will unlock itself. All of this happens without a traditional computer (PC/laptop or even a smartphone) and automatically without the help of a human user.

This is a basic implementation of IoT, and there are many more, potentially on a much bigger scale.

IoT used to be just an idea, a concept, but with the wide availability of wireless connectivity (Wi-Fi, cellular 4G and now 5G, etc.), microelectromechanical systems (MEMS), and especially the adoption of faster internet bandwidth all over the world, IoT implementations and deployments have also advanced rapidly in recent years.

This is why tech giants like Google and Amazon are now heavily invested in their IoT products. In 2014, Google acquired Nest, a company specializing in smart thermostats, and now Google uses the Google Nest brand for its line of smart home products including smart speakers, smart displays, and more.

A Brief History of IoT

The actual idea of connected devices has been around for decades, at least since the 70s. Many sci-fi novels from the 70s and 80s have explored the idea of devices interconnectivity and “everywhere internet”, but it was not called the “Internet of Things” back then.

The actual term “Internet of Things”, on the other hand, was coined relatively recently back in 1999 by Kevin Ashton, then an assistant brand manager of Procter&Gamble. Ashton used the term “Internet of Things” as the title of his presentation about RFID, then a state-of-the-art technology and its potential implementation in P&G’s supply chain.

However, the IoT concept failed to get any traction throughout the 2000s, and it was only in the summer of 2010 that IoT started to gain some popularity.

Back then, it was leaked that Google’s StreetView service actually collects and stores a massive amount of data of the public’s WiFi networks, causing people to realize the possibility of Google not only crawling and indexing the internet but also the physical world, the things.

However, it was the famous market research company Gartner that revived the term “Internet of Things” in their 2011 edition of the annual Hype Cycle for Emerging Technologies report. The IoT trend snowballed, and popular tech media like Forbes, Wired, and Fast Company started using IoT as a buzzword, leading to today’s popularity.

In 2014 and 2015, IoT is no longer a mere concept nor a buzzword, but a day-to-day reality with a plethora of affordable smart devices (like Nest Thermostat), and today in 2021, there are more than 50 billion actively connected IoT devices, and the number is still expected to grow to more than 64 billion in 2025.

IoT Explained: How Does an IoT System Actually Work?

For many people, IoT might seem like a totally abstract concept that is difficult to comprehend. However, once you’ve got the hang of it, how IoT works is actually not rocket science.

At the core of the Internet of Things is the interaction between machines, hence the term “M2M “ or “Machine to Machine”. Programming codes allow two connected devices to interact with each other, command and control one another, and work together to perform a task without any human supervision. Depending on the network connectivity, two devices can be separated halfway across the world and still communicate and control each other (i.e. via cellular connectivity).

As you can see, these two devices (or, two things), can connect and interact with each other with just the internet. Human operators in an IoT implementation will only need to supervise and perform minimal control over the IoT system, and these machines will work on their own.

In short, one of the key purposes of IoT is to implement automation, although IoT is not only about automation.

In practice, an IoT system has five interconnected elements:

1. Sensors

A sensor (or a group of sensors/devices) collects data from the environment.

Think of these sensors as the IoT system’s “eye” that connects the system to the physical world. There are different types of sensors for different types of data: thermostats for temperature reading, cameras for video feed, motion sensors for vibration/motion, and so on.

There are also sensors that are a part of a device. Our smartphone, for example, is actually a device with multiple sensors in it: a camera, GPS, gyroscope, and so on.

Nevertheless, the first step of how an IoT system works is by collecting data as an input, and this is only made possible with these sensors.

2. Connectivity technology

Connectivity technology is arguably the most important element of any IoT system. Connectivity technologies like Wi-Fi, cellular connectivity, Zigbee, and so on, facilitate the devices’ and sensors’ connection to the internet (the cloud).

Without internet connectivity, there’s obviously no IoT.

Why are there so many different connectivity technologies available? Simply put, at the moment we don’t have a one-size-fits-all, perfect connectivity solution that:

  1. Consumes as little energy as possible
  2. Has unlimited data rate/bandwidth, can send an unlimited amount of data instantly
  3. Can connect two different devices separated halfway across the world (global coverage)

Such technology doesn’t exist, at least at the moment, and so all the connectivity options we have today always have tradeoffs between these three technical requirements: energy consumption, bandwidth, and coverage range.

It’s crucial to choose the right connectivity solution based on the project’s needs by considering which of these tradeoffs is not crucial to the specific IoT project.

3. Data Processing/Management Software

With the help of the connectivity solution, the sensor successfully transferred data to the cloud, which is then processed by the IoT software.

The software can be relatively simple, for example, ordering a smart lock to unlock the door, or it can also be quite complex, like analyzing the person captured in a video feed whether they are an intruder.

Depending on the IoT application, the software may or may not make decisions on its own. For example, if the temperature caught by a thermostat is too low, the software (with the help of simple AI) can order the HVAC device to increase its temperature output.

Alternatively, the software may only provide information to a human user via some form of user interface (more in this below), and it’s the human operator who must make the decision.

4. User Interface

Even if the IoT system is fully automated, the system must also be able to provide information to the human user in one way or another. This can be as simple as a text notification to the user’s smartphone, an email, or a dedicated user interface (i.e. an app).

As discussed, depending on the IoT application, the user may also be able to control the system via this user interface, like manually turning on/off the light in a smart home.

5. IoT Device

These devices will produce the “output” of the IoT system.

For example, a thermostat acts as the sensor in an HVAC IoT system, which will feed data to an HVAC control system (software and user interface) via Wi-Fi. Then, the HVAC control system will send a command to a bedroom AC unit to lower its temperature.

The AC unit here is the IoT device.

With the advancements in technology, virtually all devices we can think of now can be the output in an IoT system: smartphones, speakers, lighting, printer, and even vehicles.

As discussed, the IoT output device might be controlled by human intervention (via user interface/software) but advanced IoT systems can perform the actions automatically. For example, a smart doorbell or security camera can automatically notify 911 or relevant authorities in your area when it detected intruders.

Why IoT Is Important: The Benefits of IoT

Now that we’ve understood how IoT words and some examples of IoT implementations, why is IoT important, after all?

The Internet of Things offers numerous benefits for both individuals and organizations. Some of these benefits are universal and applicable across multiple industries, but some are industry-specific.

In general, IoT offers two main benefits or features:

  • Connectivity: improved communications and collaborations within devices, potentially on a global scale. This allows organizations easier access to information, as well as the ability to control remotely deployed devices.
  • Automation: by allowing devices and sensors to communicate with each other, we can allow them to control each other without any human supervision and interference.

These two benefits, in turn, will produce these other positive effects:

  • Improved productivity and efficiency

IoT implementations allow us to automate simple but repetitive tasks, freeing our human workers’ valuable time from repetitive administrative tasks that can otherwise be used to perform tasks within their core competencies. This will allow each staff and employee to be more productive and efficient in contributing to the organization’s goals.

  • More efficient use of resources and assets

For example, advanced IoT sensors can help monitor whether resources are used efficiently, and IoT systems can also automate lighting and HVAC systems, among others, to conserve energy. By installing a simple motion detector, for example, we can automatically turn off the light and air conditioning of a room when it’s not occupied, which in the long run can save the company a significant amount of money in electricity and utility bills.

  • Improved transparency and accountability

By enabling improved monitoring and automated scheduling, we can improve transparency and accountability of the whole business process.

For example, we can monitor the location and activities of employees during the workday, as well as installing RFID tags or other sensors to track the location of goods and equipment. This allows the organization to have more control over multiple operation areas, which in turn, can help improve the organization’s productivity.

  • Improved work safety

With IoT, we can automate dangerous tasks, reducing or even eliminating risks of workplace hazards. We can also automate scheduled maintenance to ensure equipment stays at its optimal (and safe) performance and stays compliant with the required regulations.

Also, smart IoT security systems utilizing smart cameras, alarms, motion detectors, and other security devices can also significantly improve the organization’s security.

Improved work safety will also make the organization more attractive not only for your employees but also for investors and partners.

  • More access to customer data

One of the key aspects of successful marketing and business development is the availability of customer data, and IoT has allowed more consumers to adopt smart IoT devices including smart cameras, smart speakers (like Alexa or Google Home), smart doorbells, and even their own smartphones. These devices can collect more customer data like behaviors, demographics, psychographics, and others that can help organizations in developing marketing and business development strategies.

This way, organizations can also better understand the behaviors and expectations of their ideal audience, allowing them to improve customer service quality and maximize retention. Automation using IoT solutions can also help companies provide better customer service.

  • More credibility and opportunities

An organization that implements state-of-the-art IoT solutions will leave more positive impressions on customers, partners, and investors alike. A tech-savvy company will also have an easier time attracting skilled and experienced talents who will prefer a safe, secure, and efficient working environment.

Due to the increased productivity and effectiveness, the organization with IoT deployments can also improve the quality of their products/services while maintaining a competitive price, or offer a wider range of products and services to pursue more opportunities.

With IoT implementations, the organization can be more efficient in executing tasks, both in terms of quantity and quality (difficulty). By being more productive, the organization can also establish more credibility with its partners, clients, and investors.

IoT Implementations Across Different Sectors

With more than 50 billion IoT devices all around the world in 2020, IoT systems are now widely implemented across many different industries. Here are some important examples:

Wearable Technologies

One of the key implementations of IoT across many industries is wearable technology.

Today, wearable devices like smartwatches are used widely for various applications like monitoring the health and fitness of consumers, for example by monitoring heart rate, oxygen saturation, glucose levels, and so on.

In various industries, wearables are also used to improve workplace safety and security, for example, monitoring worker’s location and physical conditions. Wearable devices can also be applied to improve organizational efficiency.

Smart Home Application

A popular and important implementation of IoT is the smart home, which is an umbrella term used to describe how IoT-enabled home appliances are connected to the home’s internet to connect with each other, communicate, and automate tasks.

For example, the smart home can automatically dim or turn off lighting depending on the conditions picked up by the sensors and can adjust HVAC equipment’s temperatures accordingly.


There is a wide range of IoT implementations in the agriculture sector. IoT sensors can collect various useful information from temperatures, weather, humidity, wind speed, soil composition, and more. This information can then be used to automate farming tasks and can help human workers in making better decisions to improve yield and quality of harvests, minimizing hazards, and reducing waste.

For example, farmers or workers can now monitor temperature and humidity remotely, as well as automating watering and fertilizing to ensure precision and efficiency.


IoT is also widely implemented in the healthcare industry and is actually among the fastest-growing sectors regarding IoT implementations. IoT wearables, for example, can allow hospitals and medical professionals to monitor patients’ heart rate, glucose level, temperature, and other information while the patients stay at home.

In hospitals, various IoT equipment has also been adopted, like smart hospital beds that can automatically alert nearby nurses/doctors when the patient wanted to get up from the bed.

The possibility for IoT implementations in the healthcare industry is virtually limitless, and in the near future, we’ll see even more IoT devices and technologies in hospitals, as well as in patients’ homes.

Industrial Automation

With IoT, an organization can implement various sensors to monitor and automate various tasks in the factory. Sensors can help monitor fuel levels in machines, as well as notifying operators when components need replacing.

IoT enables factories to monitor, optimize, and optimize processes closely, which in turn, can improve efficiency and customer satisfaction.

Various IoT implementations can also help factories and companies to conserve energy. A wide variety of electrical equipment like switches, power outlets, lighting, and so on can now be integrated into the internet, allowing us to implement automation to conserve energy.


IoT applications can help improve transportation systems in various different areas: communications, integrations, control, information processing, and others.

Smart vehicles and even fully automated vehicles are now a reality, which is made possible by IoT. IoT systems allow real-time communications between a vehicle and its control system, as well as between different vehicles. GPS systems can allow vehicles to perform automated parking, and even driving themselves to their destination.

IoT implementations to improve driving safety and convenience are now also common in more affordable consumer vehicles.

Challenges and Drawbacks of IoT Implementations

As beneficial as IoT is, it is not yet perfectly implemented at the moment. There are still some challenges and concerns in implementing an IoT system of any kind and size, and there are also some potential threats that should be considered.

Here are some key concerns to consider when planning an IoT project:

  1. Data Security

Since at the core of IoT is the transmission of data to the cloud, data security is always a major concern in any IoT implementation. Your IoT devices may transmit confidential/sensitive data that might be intercepted by hackers and cybercriminals, which can lead to drastic repercussions.

Even worse, many IoT sensors and devices are not equipped with adequate security measures unlike traditional computers and even smartphones. This is why more and more cybercriminals are now actively targeting these vulnerable IoT devices.

When planning any IoT project, data security infrastructure and best practices should be considered, and failure to do so may lead to long-term and even permanent damages not only financially, but also for the company’s reputation.

IoT implementations should be performed by experienced professionals that understood the importance of data encryptions and other best practices and technologies to prevent data breaches.

  1. Connectivity Issue

All IoT projects would rely on a reliable connectivity solution that is capable of facilitating the project’s connectivity needs. It’s crucial to choose the right IoT connectivity solution based on the project’s requirements regarding coverage area, bandwidth, and energy consumption.

Also, IoT projects require a connectivity solution that can ensure uninterrupted data transmission to ensure reliability, so it’s crucial to partner with the right connectivity solution vendor, as well as preparing the necessary networking equipment like routers, hubs, cables, and so on.

Preparing a backup solution is also preferred to ensure redundancy, as well as preparing local data storage for backup means.

  1. Skill Requirement

IoT solutions and systems are still relatively new and can involve complex interconnected devices that will otherwise need the supervision of experienced and reliable professionals who know what they are doing. These professionals capable of deploying, setting up, managing, and operating your IoT system can be very hard to find and recruit, and even then, expect to pay a high labor cost.

While IoT as a whole may facilitate automation and reduce labor costs, you’ll still need the remaining staff to be well-trained and capable of making the most of the IoT implementations, or else it will beat the purpose.

  1. Energy Consumption

As with any technology, IoT relies on energy. However, in an IoT system that involves numerous connected devices, energy consumption can be an even more challenging issue. Different, remotely deployed IoT devices and sensors might require their own power supply units and/or batteries, and managing the logistics can be a major challenge.

It’s crucial to remember that these IoT devices also require a stable supply of energy, so it’s crucial to ensure a well-planned energy infrastructure. This may include investments in equipment like surge protectors and UPS devices, among others.

  1. Integration and Compatibility Issues

Since IoT is, again, fairly young, at the moment we do not have an international standard of compatibility for IoT devices and systems. It has improved in recent years with various companies working on standardized protocols and frameworks. However, there’s still the possibility of devices from different manufactures failing to communicate and integrate with each other.

  1. Cost

IoT implementations can be expensive, especially if the project involves a massive number of smart devices/sensors and require advanced technical infrastructure including data security measures, power supply infrastructure, and connectivity infrastructure.

Besides the potentially high initial investment, operating and maintaining an ongoing IoT system may also involve significant operational costs. Although IoT solutions, as discussed, can provide numerous benefits, it’s crucial to ensure the financial feasibility that the benefits do exceed the initial investments and operational expenses of the IoT project.

Closing Thoughts

Why is IoT now such a big deal across many different industries? Simply put, the benefits provided by an IoT system far outweigh the drawbacks and costs. Arguably IoT has become one of, if not the most important technologies in the past decade and also the years to come, enabling us to connect numerous things from home appliances to industrial machines to vehicles, enabling real-time connectivity and automation.

IoT enables both individuals and businesses to survive and thrive in the more competitive and demanding future by providing efficiency and productivity to ensure competitive advantage.

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