What is the Internet of Things?
The Internet of Things is a term we will be hearing a lot over the next few years. Before we delve into what it is and what it could potentially mean to the global economy there is something I would like to clear up first.
There is a difference between the Internet and the World Wide Web. The Oxford Dictionary of English defines the Internet as “a global computer network providing a variety of information and communication facilities, consisting of interconnected networks using standardised communication protocols.” Or the connection of two or more networks. The same source describes the World Wide Web as “a widely used information system on the Internet, which provides facilities for documents to be connected to other documents by hypertext links, enabling the user to search for information by moving from one document to another.” So the Internet is the more physical element of routers and servers, while the World Wide Web is a system on the Internet that connects specific documents.
The reason I point this difference out is to show that they are two separate entities rather than the same. This is important in explaining the Internet of Things. The World Wide Web is dependent on the Internet, it is not the other way around. McKinsey.com states; “The Internet economy, now larger than that of Spain [roughly €1.4 trillion], surpasses global industry sectors such as agriculture and energy.” So, this clearly goes beyond social media and ordering clothes.
The Internet of Things
The Internet of Things is the name given to devices that connect to the Internet. This includes the obvious like computers, laptops and smartphones. It also includes further “things” like cars, house alarms and cookers. ATMs are a good example of early Internet of Things. With the massive advances in technology, this can only spread further as Jacob Morgan wrote for Forbes; “Broadband Internet is[has] become more widely available, the cost of connecting is decreasing, more devices are being created with wifi capabilities and sensors built into them, technology costs are going down, and smart phone penetration is sky-rocketing. All of these things are creating a “perfect storm” for the IoT.” Given these technological jumps and the human desire to connect it is a fair assessment that the Internet of Things will be a huge part of the global economy in the not too distant future.
This is an industry that could grow indefinitely. The projected short-term growth differs depending on who you ask. Jacob Morgan wrote; “As I mentioned, if it has an on and off switch then chances are it can be a part of the IoT. The analyst firm Gartner says that by 2020 there will be over 26 billion connected devices…that’s a lot of connections (some even estimate this number to be much higher, over 100 billion). The IoT is a giant network of connected “things” (which also includes people). The relationship will be between people-people, people-things, and things-things.” The potential here is really massive when looked at in those terms.
Business Insider has done a lot of research into this sector and the have a number of interesting findings such as; “Nearly $1.6 trillion will be invested to install IoT solutions in 2020, up from $450 million in 2015. The majority of the investment will be in software and application development, followed by hardware” and “businesses will be the top adopter of IoT solutions. They see three ways the IoT can improve their bottom line by 1) lowering operating costs; 2) increasing productivity; and 3) expanding to new markets or developing new product offerings.” So businesses will drive IoT research and development forward while IoT will make doing business easier, faster and potentially safer and more cost-effective. Governments and large institutions will also jump on the bandwagon. This led some people to speculate as to where this will eventually lead to. The terms IoT ecosystem, Smart Cities and Smart World have all been used. Quite simply, the Internet of Things is the future.
