What is the Internet of Things?

12.04.2021 by Dennis Nikles
The Earth seen from space with connected systems visualized as connecting lines.

From connected machines and GPS trackers to autonomous vehicles, the Internet of Things has many faces. It is often not clear exactly what the IoT is – and what benefits it offers enterprises and society.

What Exactly Is the IoT?

I am often asked that by people who don’t have much to do with the technology in their daily life. I then have to start from scratch and that’s what I’m going to do here. Already, nearly everyone is connected with everyone else – with new options for living on a daily basis. Basically, the Internet of Things does the same with all other “things.” What does that mean exactly? The scope is much too wide-ranging for a strict definition, but it mainly involves four core components that we constantly encounter in the IoT context:

1.) Physical objects that are to be connected with each other:
Be they printing machines, pallets, parcels or streetlamps, there are many things that are worth knowing more about and that we may even want to actively control. What we make of the IoT depends not least on how creative we are.

2.) Connectivity:
Without connection there can be no Internet. In the IoT’s case many paths lead to the goal, but power-saving modems attached to the devices themselves certainly matter, and so does the right underlying wireless technology.

3.) Sensor Technology:
The right sensor technology is key to ensuring there is something that things can report. From thermometers and acceleration sensors to GPS trackers, the IoT can record its surroundings in many ways, even about itself such as determining wear and tear.

4.) Infrastructure:
The IoT does not relay data as an end in itself. The treasure trove of data is only unearthed once there is a data infrastructure to link the data and learn from the results.

To summarize, the IoT consists of physical objects that communicate via the Internet, sharing data about their own status or about ambient parameters in order to acquire knowledge and control processes. From building electronics to the Smart Home, from goods trackers to fitness trackers, from vacuum cleaners to industrial robots, these four components are always involved. There are few if any limits to the possibilities of systems of this kind and there is no patent recipe. But the IoT takes us forward in many areas as users gain new ways to interact with technology. Companies can improve products, produce more efficiently and make processes more transparent – and that helps society to become more sustainable.

Which Developments Made the IoT Possible?

In terms of the speed of technical development the concept of the IoT is as old as the hills – or almost. As long ago as in 1982 a beverage dispenser at the Carnegie Mellon University told the Net “Hi, I'm the CMU CS Department Coke Machine!” and thirsty Internet early adopters were able to see the machine’s filling level. Specific developments in the direction of the Internet of Things as we know it today came later. They required a number of technological preconditions such as these:

  • For data transmission, IoT applications first had to be able to use wireless standards such as GSM, WLAN or Bluetooth. Later IoT-specific wireless technologies like NarrowBand IoT, LTE-M, LoRaWAN, Sigfox and Zigbee went on to open up entirely new application areas, especially for machine-to-machine communication. In my opinion the right connectivity remains the key to the IoT’s full potential.
  • Wireless modules and sensors have also made decisive headway. Entry is growing constantly more affordable and energy-saving hardware is suitable for new use cases that require low power consumption.
  • Hosting dedicated IoT applications at in-house data centers is for many companies costly and high-maintenance. Scalable cloud computing has transformed the IoT into a technology for the mass market. Gigantic in-house IT systems are no longer needed.
  • Increasingly open platforms and more and more standardization make it ever easier for companies to find and to implement the IoT solution that is the right match for them.
  • Big data is all very well, but what use is big data that goes unused? Major progress in artificial intelligence, machine learning and deep learning has given enterprises effective insights into their business processes.
  • Neural networks are contributing to IoT acceptance IoT, especially in the private customer market. Without them Alexa, Siri and Co. would probably be nowhere near as welcome in our living rooms, where around one household in three now has a smart speaker.

How Widespread Is the IoT?

There is no stopping it! Its user numbers reflect the IoT’s versatility. An estimated 14 billion connected IoT devices communicate with each other around the world according to industry analysts. In 2021 that means, for the first time, there are more IoT connections than connections between computers, smartphones and servers. According to Gartner these connections are split roughly fifty fifty between the consumer sector and enterprises in nearly all industries. And this boom is only now gaining momentum as the number of devices increases exponentially and is set to more than double over the next five years.

Why Is the IoT So Important?

The numbers prove the point. The IoT has developed into one of the most important technological innovations of recent years, and no wonder, given that seamless communication between people, processes and things was not previously possible. At the same time the solutions used are becoming increasingly affordable. Be it everyday items or highly specialized sensory technology, the more widespread digital technologies are, the less expensive it is to produce hardware and to develop and run the software for it. The connected things make it increasingly easy to collect relevant data, evaluate it and apply it actively to the situation without the least need for human participation. Take industry, for example. A connected production facility recognizes when the supply of screws falls below a critical level and triggers an order for screws so that the assembly line does not grind to a halt.

The IoT’s relevance by no means ends with these specific use cases. The Internet of Things provides powerful forward propulsion for other technologies. Machine learning, digital twins and edge computing, or data processing on the device, are only some of the new technologies that both benefit from the new data treasure trove and rely on it as a prerequisite.

What Benefits Does the IoT Provide?

By connecting sensors with production plant, companies can digitally automate and optimize individual processes or entire process chains. Industries such as manufacturing or logistics are the main beneficiaries of IoT data analysis. Machine maintenance, for example, can be undertaken at an early stage on the basis of sensor data. Cold chains can be better maintained and theft of goods can be detected at an early stage by means of a position tracker. And the IoT doesn’t only contribute to connecting things; there is a great potential for connecting people and machines. With the right interface and combination of web portal, cloud and wireless transmission users can control devices across long distances and keep track of their condition around the world. In the future that will include, for instance, controlling vehicles on the other side of the world or performing remote surgery by means of telemedicine.

But for me, the IoT is not just a technology revolution, but above all a business revolution. The reason: IoT solutions not only change the technical processes, they require a fundamental change in the entrepreneurial mindset. This is best illustrated by a look at the individual industries in which IoT solutions are used:

What Else Can the Internet of Things Do?

  • Smart Building
    The IoT in Smart Buildings can resolve not only security but also sustainability issues. Unused rooms are no longer heated or lit, sensors ensure the right climate and smart meters create clarity about electricity consumption.
  • Safety at Work
    The IoT also helps to improve occupational health and safety. Sensor technology informs employees autonomously about emergencies and can call out the emergency services itself. That applies to mines, oilfields or chemicals factories but can also save lives in offices by means of, say, smart smoke alarms.
  • Agriculture
    As the Internet of Agriculture the IoT is taking an entire sector into the future by monitoring cattle, managing irrigation or using autonomous drones for mapping or irrigation.

This brief excursion into different industries demonstrates that the more business processes are based on sensor data, the more and faster the potential benefits are realized. But the IoT is so varied and versatile that there are few if any limits to its uses, and retrofitting is an effective option and can be worthwhile.

The Elephant in the Room: Is the IoT Safe?

The IoT is not just a matter of productivity, efficiency or user convenience. A technological innovation of this dimension comes with other issues that must be addressed: first and foremost IT security and data protection. As responsible drivers of change we are duty bound to be up to speed in the quest for answers. Whatever is connected on the Internet is always a potential target for cyberattacks. We at Telekom have our Security Operations Center to fulfill security requirements by analyzing connections in connected manufacturing to identify threats automatically while maintaining full data protection. And open standards, a fast-growing IoT and cybersecurity market and end-to-end approaches also help to integrate solutions properly and securely. International politics is lending a hand with the standardization of security requirements by the EU Agency for Cybersecurity or the National Institute for Standards and Technology in the United States.

So now, 15,000 characters later, we know what the IoT is. It offers enormous scope for companies in a wide range of sectors, for people and for society in general based on objects with sensors and an Internet connection that provide us with new cloud-based findings. And even without a patent recipe I am excited about where our creativity will take us in the future. OK, Google? Switch off the light in the office.


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Dennis Nikles
Dennis Nikles

CEO Deutsche Telekom IoT

Dennis Nikles is a fan of digital technologies, leading with the Internet of Things. For him, IoT solutions are not a technical revolution; they are a business revolution. Dennis is enthusiastic about the benefits of IoT – for enterprises, employees and end customers. He has been with Deutsche Telekom since 2005, since 2017 as Head of IoT Global Sales & Commercials and since 2021 as CEO of Deutsche Telekom IoT.