What is IoT?

The Internet of Things (IoT) is a giant system of devices that communicate with each other. In this article, you’ll find everything about IoT.


The Internet of Things, or IoT for short, surrounds us on an everyday basis. Believe it or not, you will probably use or encounter an IoT device today, and you might not even be aware of it. You’ll find IoT devices in our homes, vehicles, cities and businesses. 

Many businesses across various industries are beginning to rely heavily on IoT to work smarter and more efficiently. Because of this, the amount of IoT devices is on the rise. IoT Analytics predicts that by the end of 2022, there will be 14.4 billion IoT devices in the world and that in 2025, that number will rise all the way up to 27 billion

So what makes IoT devices so popular? And are IoT devices as secure as they seem? In this article, we will take a look at what IoT actually means, how it works, where it’s used and how businesses can benefit from IoT devices.

The definition of IoT

IoT stands for the Internet of Things, which is a giant system of devices that communicate with each other. Every single one of these devices is connected to the internet, allowing a seamless exchange of messages. These messages contain data collected by sensors within the devices. For example, about what’s going on in the device’s surroundings. Then, based on this information, IoT devices can take action without the need for human interference.

How does IoT work?

If you were to observe IoT devices, you might notice that they work and communicate with each other at a quick speed. To make this possible, there are many things that happen “behind the scenes” such as collecting and processing data. Let’s take a closer look at what makes IoT work. 

IoT devices are pieces of hardware connected to the internet. Although each one comes in different shapes and sizes, they have similar components that make them part of the same network of devices. Every IoT device contains a main board made up of sensors and actuators. This tiny, yet powerful computer processes data and is programmed to carry out certain tasks. In most cases, they are compatible with some specified cloud infrastructure that holds the software layer for users.

The sensors inside an IoT device serve the role of collecting particular pieces of data. The type of data collected depends on the type of the sensor. For example, temperature sensors collect data on the temperature of their surroundings. They can be found in anything from a machine to save it from overheating or an air conditioner in a living room. If a device needs to collect various types of data, it needs to have multiple sensors inside of it.

Once the sensor has collected the data, it is then sent to a cloud. Cloud computing is a crucial part of IoT as it serves as a platform for the collection of data. While in the cloud, the data is looked at and examined very closely so that necessary information can be extracted from it.

The processed data triggers an action that the IoT device carries out. 

Let’s go back to the temperature sensor example. If the data sent to the cloud is outside the preferred temperature range of a machine, then this is a trigger. The device will automatically pause the machine in order for it to cool down or simply send out an alert about this occurrence.

Where is IoT used?

As mentioned at the beginning of this article, many industries rely heavily on IoT. Each one uses IoT in its own way to solve industry-unique problems. There are as many ways to use IoT as there are challenges to tackle. So now that we went through how IoT works, let’s take a look at real-life applications of IoT and see how often we encounter IoT devices in our daily lives.


Have you ever used self-checkout at your local grocery store? Well, then you have used IoT. Self-checkout kiosks are one of the most popular applications of IoT in the retail industry. Not only do they shorten the amount of time spent waiting in line, but they are also the safer and more convenient check-out option that many customers prefer. 

Smart shelves are also gaining popularity. These use weight sensors installed on the shelves to track when an item is out of stock. They can also provide retailers with data on the popularity of specific items. Inside coolers and freezers, IoT is used to monitor the temperature to make sure it’s in the right range.


IoT in manufacturing improves the efficiency and quality of work done by machinery and staff and prevents the need for frequent repairs. Remote monitoring and control of machines is key to productivity. It allows for informed decision-making based on the collected data, such as the speed at which a machine works, how often it pauses, and so on. An example of IoT in manufacturing is predictive maintenance. This is a way to know in advance if a machine will need repairs thanks to sensors that monitor the state of the machine. When the device detects a malfunction, it sends out an alert. Digital twins are also important IoT devices in manufacturing. These are exact digital copies of actual machines. They’re used for running tests with no risk of damaging the actual machine and finding possible malfunctions or limitations of a machine.

Smart Cities

Smart cities may seem like a thing of the future. Yet, many of us actually live in cities where smart city technology already exists. For example, smart traffic lights detect and adjust to the number of vehicles on the road and the number of pedestrians crossing the street. They can even change the level of brightness based on weather conditions. Air-quality monitors measure a specific area’s air quality in real-time. Smart trash cans have sensors that detect when a trash can is full and send an alert so that it can be emptied.


Strong security is crucial in the finance industry, and that’s where IoT comes in. A smart fraud detection system that notifies and blocks instances of fraud saves e-commerce companies a lot of money. Many banks have ATMs in a publicly accessible place nowhere near one of their locations. IoT can help keep the bank’s clients’ card and account information safe by detecting suspicious behaviour and sending out alerts. Additionally, IoT helps banking customers have an improved customer experience. Digital banking is much more convenient than the traditional way of heading to the bank and waiting in long queues.


IoT plays a big part in sustainable solutions that have a positive impact on the environment. This can be seen in the way it’s used in the energy industry. Here, the main goal is to use energy in a “smart” way to save resources. The bonus is cutting energy costs. For example, smart utility metres measure gas and electricity with great accuracy. This way you keep track of how much you are using and how much it’s costing you (and the planet). 

Another tool for your home is a smart thermostat, which manages heating and cooling so your home stays in a preferred temperature range. When paired with an app, a smart thermostat allows you to control the temperature of your home from anywhere. It also shows you data over a period of time that helps you make green and money-saving decisions about your heating and cooling usage. Outside of the home, IoT is used in various ways, including in smart street lighting, where it adjusts the brightness of the lights depending on whether a pedestrian or vehicle is around.


The mobility industry is slowly moving away from traditional modes of transportation to a more innovative approach. This approach is heavily based on IoT. Self-driving cars show up more frequently on the roads, and they’re made possible by IoT devices inside the vehicle. These IoT devices collect all the information they can in order for the car to drive itself, such as the road situation and navigation. 

IoT is also used in smart parking, which is navigation to available parking spaces so that the driver doesn’t waste time and fuel driving around. In an IoT-based fleet management system, information about the cargo, the vehicle and the driver is used to improve safety and efficiency, as well as predict vehicle maintenance.


The use of technology in healthcare surged during the pandemic. Remote patient monitoring (RPM) proved to be essential during the lockdown and has remained a popular option for patients. RPM enables readings such as blood pressure and heart rate to be sent automatically and in real-time to healthcare professionals. For this type of monitoring to happen in real-time, the patients have wearables on them such as smartwatches. In addition to treating existing conditions, it can be used in the early detection of illnesses such as Parkinson’s disease.

For some time, the German government has also been approving digital health applications (DiGa) to be used for medical purposes. Because they must meet certain strict requirements, only some are selected for approval. Just like medicine, DiGas are prescribed to patients and can help in the treatment of a wide range of physical and mental illnesses. 


Despite the association of innovative technologies with big cities, you may also find them in rural areas. In fact, there is a rise of IoT devices in the agriculture sector as more and more people are turning to technology. 

Examples of IoT in agriculture are soil moisture monitoring, gate and fence sensors and cattle monitoring. In soil moisture monitoring, sensors measure the amount of moisture in the soil to prevent dried-out soil and overwatering. Gate and fence sensors send out an alert when opened or broken into to improve the safety of animals. 

For owners of livestock, cattle monitoring systems can come in handy. These track the location of an animal and monitor their health, so the farmer may respond quickly to any health-related issues they experience.

Home appliances

A lot of the time, IoT devices can be found inside the home. In addition to wearables, IoT is also in many smart appliances. Examples of IoT devices include home assistants such as: 

  • home assistants such as Amazon’s Alexa,
  • smart locks you can open and close with an app,
  • smart monitoring systems that alert you when there is a leakage or poor air quality, and 
  • smart coffee machines you can turn on with your phone.

The history of IoT

Although IoT may seem like a brand new invention, the origin of connected objects dates all the way back to the 19th century. Of course, the internet didn’t exist yet, but the first conception of connecting objects took place 200 years ago. When the internet was invented in 1983, it paved the way for the first Internet of Things device. In 1990, John Romkey made IoT a reality. So what was the first IoT device of all time? A toaster that could be turned on and off through an internet connection.

In 1994, Amsterdam set itself apart by creating the 1st smart city. This was a virtual city called De Digitale Stad where a typical city landscape was built. Instead of using the internet for academic purposes, people in Amsterdam could join De Digitale Stad, get an avatar, experience a city in virtual form and interact with each other, building an online community.

Although the first IoT device was created in 1990, it actually wasn’t until 1999 that Kevin Ashton coined the phrase Internet of Things during his time working in supply chain optimisation at Procter & Gamble. He allegedly called it the Internet of Things, because he wanted to grab the attention of senior executives during a presentation, and the internet, at that time, was a hot topic of discussion.

Before home assistants like Amazon Alexa or Google Home were on the market, a bunny-shaped assistant Nabaztag was part of some people’s homes. Nabaztag was first created in 2005 by a company called Violet. It was a small IoT device that took the form of an adorable bunny connected to WiFi. The device gathered and shared information on things such as the weather, road traffic and financial news. With each new version, it offered more features until 2015 when the servers and all the bunnies were shut down. In 2018, a movement started to resurrect the bunnies and bring them back on the market.

With more and more people wanting to take advantage of technological advancements and tools available to them, the number of IoT devices was quickly on the rise. So much so that in 2010, Cisco IBSG reported that the number of connected devices surpassed the number of people for the first time ever. The number of IoT devices was 12.5 billion, while the entire human population amounted to 6.8 billion people, so the number of connected devices was 1.84 per person. That number has been increasing since then.

Right now, IoT is part of Industry 4.0. The 4th Industrial Revolution refers to the 21st-century switch from traditional ways the manufacturing industry operated to one based around technology and connected devices, called the Industrial Internet of Things, or IIoT. Currently, there is a trend in IIoT of combining IoT devices with machine learning and AI. Together, they work on large amounts of data to predict malfunctions and the need for maintenance based on the status of the infrastructure as a whole. 

Why IoT is so important

The Internet of Things was created to make people’s lives easier, and this still remains its main purpose today. The reason people and businesses worldwide are beginning to rely heavily on IoT devices is that they enable us to work and live smarter and more sustainably. Let’s take a look at the specific benefits IoT has on the world and the impact it has on it.

Increased productivity with IoT

Increased productivity and smarter decision making are some of the biggest benefits of IoT. These benefits can be seen in IoT applications inside any workplace and place of business, regardless of whether it’s a grocery store, an office or a manufacturing warehouse. 

It’s no secret that data collected over a long period of time paves the way for smarter business decisions. In order to make business decisions that are the best for a company, you need to have reliable data. IoT devices provide this data, which is collected automatically, in real-time and stored so you can look at it as a whole to get the big picture. That includes various types of data such as information about processes, machinery and customer behaviour. 

Productivity can be increased with data gathered by IoT by improving operational efficiency and cutting down on machine downtime. Predictive maintenance allows you to step in when there’s a small malfunction before it turns into unpredicted downtime. IoT devices can also increase productivity on their own by assisting in certain processes. This includes: 

  • having vision sensors detect when a product is of poor quality, 
  • moving products in a production line, and 
  • tracking deliveries and keeping track of inventory levels in real-time.

IoT optimises patient care

The benefits of using IoT in healthcare are numerous, but there is one that’s overarching: patients are better cared for. With IoT, healthcare is more accessible to patients. They can access it from the comfort of their homes. Remote patient monitoring is a way for medical professionals to stay updated on their patient’s health in real-time to provide them with help as soon as they need it. This type of monitoring also enables the early detection of serious illnesses. In order to provide their patients with high quality care, healthcare professionals need access to reliable data on their patients, and IoT helps with that. 

Improved efficiency in farming

The agriculture industry can be unreliable as it depends on the environmental conditions of a particular season. IoT can’t change the weather but it can make the jobs of people working in the agriculture industry easier and more efficient as well as save them resources and money. With IoT, farmers can know more about what’s going on in their place of work, with their animals, crops and surroundings without having to manually check everything. 

This enables them to act when needed and removes the guesswork from the job. With all the data collected, farmers can produce higher quality crops, ensure the safety and health of livestock and focus on matters that need their attention thanks to automated processes that reduce the stress and amount of work required from them. 

Smart cities and sustainability 

In smart cities, IoT plays a big role in public safety and sustainability. Big cities have a reputation for traffic, crime and pollution, and IoT can be used to help in the reduction of these things. Reduction in traffic, car accidents, energy consumption and air pollution are all advantages of using IoT in cities. City citizens benefit from access to real-time information about traffic, air quality, dangerous road conditions and parking availability. 

Smart buildings are often also part of smart cities, and they increase the comfort of building occupants, save the building owner money and conserve energy for the whole city.

IoT and AI

Artificial intelligence, or AI, refers to the intelligence shown by a machine, as opposed to the natural intelligence shown by a human being. It’s often combined with IoT to build a strong and reliable technological tool. Although machines can’t feel emotions, they can still use their computing power to adapt to new surroundings, problem-solve, learn new things, apply reasoning and detect emotions in humans. However, not all AI machines can do all these things. Some are created with more limited capabilities.

By combining IoT and AI, you get a machine that can make smart decisions with little or no human interference. Simply put, while IoT collects data, AI learns from the data and makes decisions based on it. There are different levels of AI that can be combined with an IoT device, depending on the way the tool will be used. The more sophisticated a machine is, the more it can do on its own.

The benefits of combining AI with IoT include increasing efficiency and safety, as well as decreasing costs. These types of machines work at quite a high speed and provide reliable results. By letting the machines carry out certain time-consuming tasks, people can fully focus on other things that require their attention. Real-life examples of AI in IoT are self-driving cars, robots and smart devices used in the healthcare industry, such as the ones that predict illnesses.

Is IoT secure?

One of the first things that come to mind when hearing IoT needs large amounts of data to work is the issue of privacy. As much as we want to make our lives easier with technology, we want to keep our information safe, regardless of whether it’s information about how we live our private lives or how we run our business. So since IoT can know everything about our lives and our businesses, can we trust IoT to keep this information safe?

There is always a risk of hackers when it comes to technological solutions and the potential risk of them getting access to your data. However, the European Union created the GDPR to unify the security level of data that can identify people. This forces companies to level up the standard of technology and create a safer environment for data storage and transfer. 

How can you start using IoT in your business?

Every business faces its own set of unique challenges. As mentioned above, there are as many different ways to use IoT as there are challenges out there. The goal of using IoT in business is to help it run the best possible way, i.e. with more efficiency, cost-effectiveness and increased safety. Generic IoT solutions don’t always cut it. Business owners and their staff know exactly what challenges they face at the workplace. That’s the kind of information that’s necessary to build a successful and reliable IoT device for that particular business. That’s why the best IoT solutions are custom-made.

The best way to get an IoT solution custom-made for your business is to have a long-term partnership with an IT provider that will fully know and understand your needs. Not only will they be able to provide you with a customised solution, they will also adjust that solution based on the changing needs of your business, your staff and the market. 

Custom-made and flexible solutions are critical in a constantly changing, highly competitive industry like manufacturing. A trusted service partner can be thorough when identifying and understanding pain points. That’s why they can provide manufacturing companies with tailored software solutions that address their every need without implementing unnecessary features. 

Fast implementation, scalable solutions, and reliable product coordination are all benefits of a custom-made IIoT solution from a service partner. As an outcome, the customer obtains robust and reliable manufacturing software. The agile tool optimises production processes, increases efficiency, and lowers costs, giving you a competitive advantage.

If you want to know more about our services for Industry 4.0, reach out to us. We will define your pain points and figure out if there is an Industry 4.0 solution that will help your manufacturing business grow faster and run more efficiently. 

Written by

Krzysztof Sobota Aug 9, 2022