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17 November 2022

What does IoT mean and what is it used for?

IoT is the acronym for Internet of Things, That is, the millions and millions of small sensors-type devices that are connected to the internet and are generating and sharing data.

It should be noted that, at first, only computers and servers were connected to the internet. But, with the proliferation of mobile devices and networks and the miniaturisation of sensors and other technological components, almost all products have been or have gradually been connected to the internet: from smartwatches and fitness bands to traffic lights, video surveillance cameras and industrial robots.

Connecting up all these objects and adding sensors to them adds a level of digital intelligence to devices that would be otherwise dumb, enabling them to communicate real-time data without involving a human being This, in turn, allows us to better understand the world around us and give a more appropriate and data-based response, almost in real time, to any problems that may arise.

For example, rain sensors strategically placed in a plantation can make the designed algorithms open the gate more or less according to the rainfall in the last days or hours.

The term Internet of Things (IoT) was coined by Kevin Ashton in 1999 when presenting a new sensor project he was working on, and it stuck from there on.

How does IoT work?

An IoT ecosystem consists of web-enabled smart devices that use embedded systems, such as processors, sensors and communication hardware, to collect, send and act on data they acquire from their environments.

IoT devices share the sensor data they collect by connecting to an IoT gateway or to another device. Generally, after collecting all this data, they are sent to the cloud for analysis. With the proliferation of Edge computing, however, it is increasingly common for the first rapid analysis to be conducted locally.

Sometimes, these devices may also communicate with other devices and act on the information they get from one another. IoT devices do most of the work without human intervention, although people can interact with the devices, e.g. to set up, give instructions or access the data.

Case examples


Adding RFID tags to pieces of equipment to help track their location was one of the first IoT applications. But, since then, the cost of adding sensors and an internet connection to any object has continued to fall. Thus, in 2004, the average cost of these sensors stood at $1.30. Already then, the forecast was that the cost would drop to $0.38 dollars per sensor by 2020.

The IoT was initially most interesting to business and manufacturing, where its application is sometimes known as machine-to-machine (M2M). However, since then, the IoT's applications have multiplied, and in fact we can now find many useful options for homes and offices. Our aim with the Internet of Things is making the personal, work and social life of people smarter and gaining complete control over everything around us.

However, the truth is that IoT is essential to companies, as it provides them with a real-time look into how their systems really work, delivering insights into everything from the performance of machines to supply chain and logistics operations.

In addition, IoT enables companies to automate processes and reduce labour costs. It also cuts down on waste and improves service delivery, making it less expensive to manufacture and deliver goods, as well as offering transparency into customer transactions.

Market forecasts

The technology analytics corporation IDC forecasts that the worldwide market for IoT solutions including smart systems, connectivity services, infrastructure, applications, security, analytics and professional services, will have a CAGR of 20% between 2020 and 2030.

This would involve 41.6 billion connected IoT devices by 2025. Most of them would be found in industrial and automotive equipment, but it also sees strong adoption of smart home and wearable devices in the near term.

Meanwhile, Gartner forecasts that IoT-related services will mobilise $58 billion in 2025, representing a CAGR of 34% from 2019. The enterprise and automotive sectors are two of the most important sectors where we will see more intelligent metering systems; intelligent security devices, such as intrusion detection systems and webcams; and building automation, especially in connected lighting.

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