How the Internet of Things Operates

Many of us have envisioned smart homes where appliances operate automatically according to our needs. The moment you wake, the alarm rings and the coffee maker begins brewing. Lights activate as you move through the house. A hidden device responds to your voice, reading your schedule and messages as you prepare for the day, then switches on the morning news. Your car drives you to work, taking the quickest route while you catch up on reading or prepare for your first meeting of the day.

These futuristic concepts have long been depicted in science fiction, yet they are now either already within reach or about to become a reality. This emerging technology is the foundation of what we now call the Internet of Things.

The Internet of Things (IoT), sometimes referred to as the Internet of Everything (IoE), comprises all web-connected devices that gather, transmit, and act on data collected from their surroundings through embedded sensors, processors, and communication hardware. These "smart" or "connected" devices can interact with other related devices via a process known as machine-to-machine (M2M) communication, exchanging and acting on the data they share. While humans can configure, give instructions, or retrieve data from these devices, the devices themselves do most of the work autonomously, requiring minimal human intervention. This has been made possible by the compact mobile components now available and the constant connectivity of our personal and business networks.

Connected devices generate vast amounts of Internet traffic, producing data that not only helps enhance device functionality but can also be harvested for other purposes. The sheer volume of data and the online connectivity of these devices raise significant concerns about privacy and security.

However, this technology offers access to real-time information like never before. We can remotely monitor our homes and loved ones for safety. Businesses can streamline processes to boost productivity, reduce waste, and avoid unexpected downtime. Sensors in city infrastructure can help alleviate traffic congestion and alert us to the potential failure of critical structures. Devices placed outdoors can track environmental changes and warn us of approaching disasters.

These devices are becoming ubiquitous, and their capabilities can be applied to virtually any physical object.

What is the Internet of Things?

The term "Internet of Things" was introduced by Kevin Ashton, likely in 1999, as the title of a corporate presentation he delivered at his job at Procter & Gamble. While working there, Ashton conceived the idea of placing an RFID tag on each lipstick and linking it to a radio receiver on the shelf to track sales and inventory, signaling when restocking was necessary. He believes that such data collection can address numerous real-world problems [sources: Ashton, Gabbai, Simmonds].

Billions of connected devices make up the Internet of Things. They rely on built-in hardware and software to send and receive data via various communication protocols. These devices may use our smartphones as a gateway to the Internet, connect through a hub in our homes, or link directly via our home Internet service. Data is often sent to cloud-computing servers for aggregation and analysis. We can access the results via apps or browsers on our mobile devices or computers. Some devices even update your social media status automatically.

Although many of us do not yet have fully smart homes, the IoT is already vast. Estimates vary, likely due to different criteria for inclusion, but it's estimated that there are already between 15 and 25 billion connected devices, with projections ranging from 50 to 212 billion by 2020 [sources: FTC, Intel, McLellan, OIC]. Some forecasts predict around a trillion connected devices by 2025 [source: Wasik].

Even with such a large number, the concept becomes more believable when you consider that sensors and tiny computing components can be embedded in almost anything. Many people already own smartphones, which serve as access points for numerous connected gadgets and are themselves part of the IoT. Wearable fitness trackers are also becoming increasingly common. Additionally, embedded processing, sensing, and communication devices are being integrated into almost everything—from bathroom scales and refrigerators to shoes. Smart thermostats, smoke detectors, and security cameras track your behaviors to help reduce energy costs, offer remote views of your home, alert you to potential issues, and even assist in contacting emergency services. You can even purchase small tags to track items like car keys, pets, or children.

More connected devices are already available or will soon be on the market. Currently, we tend to interact with individual smart devices (often through separate apps), though they typically do not work together. However, efforts are underway by companies and industry groups to develop standards and platforms that will enable these devices to work together more seamlessly while enhancing security. Beyond the home, many industries and cities are also adopting or have already implemented technologies that contribute to the Internet of Things.

As more devices become compatible with one another, even those from different manufacturers, we'll be able to automate many of our everyday tasks. We've essentially granted common physical objects both computational abilities and sensory functions. These devices can collect data from their surroundings (including our bodies) and use it to adjust their settings, communicate with other devices to prompt changes, and compile the information for us to analyze. Many of these devices operate based on complex algorithms, not just simple if-then commands like earlier embedded computing, either within their own processors or on cloud servers.

There’s still plenty of innovation underway, meaning these smart devices are sure to enable new possibilities that we haven’t even thought of yet.

The Tech Behind the IoT

The technology powering the Internet of Things has been in development for a long time, even predating the existence of modern computers. Machine-to-Machine (M2M) communication has existed for years, possibly beginning with early 20th-century telemetric systems that transmitted encoded data from measuring instruments over telephone lines, radio waves, or satellite links. The first such system was used in 1912 to send data from a power plant in Chicago to a central office via phone lines. Since then, telemetry has been used for tasks like weather monitoring, wildlife tracking, and even overseeing the crew and equipment aboard the International Space Station (ISS) [sources: Llewellyn, TechTarget].

We’ve been living in the computer era since the mid-20th century, and our journey into the Internet age began when ARPANET was developed by the U.S. Advanced Research Projects Agency in 1969. However, it wasn’t until Tim Berners-Lee introduced the World Wide Web in 1991 that the public truly embraced online connectivity. Today, being disconnected from the Internet is the exception rather than the rule. The web expanded rapidly, high-speed Internet became a staple in homes, and wireless networking spread everywhere. Meanwhile, microchips and other computing technologies shrank over time, allowing us to incorporate them into mobile devices. Modern smartphones can access the web via cellular or Wi-Fi and communicate with other devices using Bluetooth and other local methods. In fact, thanks to these same technologies, many other electronic devices can do the same.

The processing power of web-connected servers housed in massive data centers, known as the cloud, has played a crucial role in making everyday devices part of the Internet of Things. These devices may connect to the Internet by transmitting data to your phone or another central hub in your home through local communication methods such as:

This connection can be made directly via your router or modem using Wi-Fi or wired options like Ethernet, cable, or power line networking (where signals are transmitted over your home’s power lines). Alternatively, devices may bypass your home network and connect using cellular communication. They may also communicate with nearby smart devices.

The IoT-connected devices are equipped with computing hardware, including processors with embedded programming that dictate their actions, sensors that collect various types of data (such as temperature, moisture, light, motion, chemical levels, heart rate, and body movement), and communication hardware capable of sending and receiving signals.

Some connected systems can leverage nearby devices to gather data, such as city traffic systems that communicate with smartphones to monitor traffic conditions. Smart devices also work alongside tagging technologies like RFID tags, QR codes, and barcodes to collect information about items. These devices require a power source, which can be supplied through an outlet, a solar panel, or replaceable/rechargeable batteries, provided the embedded hardware is designed to be energy-efficient. Additionally, companies are researching wireless power for potential future use.

Although many devices operate using their own embedded software or firmware, a significant amount of processing can be offloaded to cloud-based systems via the Internet, where they can process larger amounts of data. Some of these devices employ sophisticated algorithms that enable them to learn from and adapt to various stimuli and patterns, allowing them to self-program to a degree. The process of sending and analyzing sensor data is often near-instantaneous, thanks to the rapid speeds of Internet communication, enabling real-time responses.

Some Technical Issues and Solutions

Currently, many connected devices can communicate with the Internet and our smartphones, and even with a few related devices. However, the majority of them cannot interact with each other due to differing standards, proprietary hardware, and incompatible communication protocols. For most remotely controlled smart household items, separate apps or websites are needed to interface with each device or view its data, unless they are specifically designed by the same manufacturer to be compatible. In simpler terms, getting an alarm clock to communicate with a coffee maker is not yet feasible unless you are an electronics enthusiast or the devices come from the same brand.

There are no universal standards or platforms that allow seamless communication between all smart devices, preventing centralized control through one app. However, several organizations are working to develop standard protocols and software to make interoperability between devices from different manufacturers possible. The AllSeen Alliance, founded by Qualcomm and joined by other companies, is developing an open-source, platform-independent software framework called AllJoyn. Additionally, Cisco, Samsung, Intel, and others are creating their own open-source platform, IoTivity. The Thread Group, led by Nest, ARM, and Samsung and consisting of over 160 members, including Qualcomm, released specifications for their IP-based protocol designed for networking low-powered connected devices in July 2015. Furthermore, CableLabs is reportedly exploring the use of cable boxes as hubs to connect various devices.

A variety of smart device platforms are either already available or emerging, such as Apple's HomeKit, Google's Project Brillo, SmartThings, Ninja Blocks, Evrythng, Samsung Artik, and Wink. Some of these platforms are a combination of hardware hubs and software, while others are purely software-based applications or platforms that can be set up by users or implemented by the manufacturers themselves. These platforms may require licenses or be open-source, and while they tend to support multiple devices and brands, no platform is fully comprehensive. Centralized access to such devices would enhance convenience, security, and ease in automating your smart home.

A significant issue faced by the Internet of Things mirrors a challenge faced by the Internet itself. The primary identifier for routing Internet traffic to and from devices is the IP (Internet protocol) address. The widely used IPv4, a 32-bit standard from 1981, uses four sets of numbers separated by periods, each ranging from 0 to 255 (giving 256 possible values per slot). Due to these limitations, the maximum number of available IPv4 addresses is about 4.295 billion. The Wall Street Journal reported that the U.S. ran out of IPv4 addresses in 2015, while other countries had already reached the same point, prompting companies to buy unused addresses or transition to the new IPv6 system [source: McMillan].

IPv6, a 128-bit standard, offers the potential for over 340 undecillion (340 followed by 36 zeros) IP addresses. Its format includes eight groups of four-character hexadecimal values separated by colons. While fewer addresses are publicly available due to rules and reserved blocks, the available number of addresses in IPv6 will far surpass the expected number of devices in the coming years. This ensures each device could receive a unique IP address. Organizations must invest time and money to ensure their hardware, software, and networks are compatible with IPv6, though many newer systems and browsers are already IPv6-ready [sources: Fiveash, Hardiman, McMillan].

A temporary solution that many organizations use is network address translation (NAT). NAT allows entire networks of devices to be mapped to a single IP address, making the Internet treat the network as one destination. From there, network servers manage the flow of data, directing it to the correct devices within the network. While this works well for organizational equipment, it is less suited for the variety of devices typically found in people's homes.

Devices of the IoT

The devices contributing to the Internet of Things stretch across personal, household, public, business, and industrial sectors. Any area not impacted by them now is likely to be in the future. The smart devices that most of us interact with daily are our internet-connected smartphones, which are equipped with sensors like accelerometers, gyroscopes, GPS, and sometimes heart-rate monitors, but these are just the beginning of what’s to come.

Within the realm of personal devices, we have wearables such as fitness trackers and heart monitors that utilize our phones for data transmission. Smartwatches like the Apple Watch and Pebble provide similar functions along with even more capabilities, syncing seamlessly with our phones. The potential for sensors and microprocessors in clothing is not far off either, with sewable boards and sensors from companies like Arduino paving the way. Even pets are becoming part of the IoT, as sensors are used to track them. We also already have cameras that upload images to the internet, scales that share our weight on social media, toothbrushes that monitor our brushing routines, and gaming systems that recognize voice commands.

Numerous household appliances, such as thermostats, water heaters, security cameras, and lights, are capable of gathering data, being controlled remotely, and notifying users via the Internet in case of issues. Some of these devices even learn from your behavior over time to adjust settings or notify you of unusual activities. Smart garage doors and digital locks can let you into your home using data from your phone instead of a traditional key. WiFi-enabled stoves and ovens can be monitored or turned off and on remotely. A common futuristic concept is a refrigerator that tracks its contents and alerts you when you’re out of items or suggests dinner recipes based on what you have. Rest assured, this idea is already in the works.

We're just beginning to see the rise of smart cities, where entire urban areas are being equipped with sensors and other advanced technologies. Devices capable of taking sensor readings and transmitting data are ideal for applications such as utility usage monitoring, an area where manual meter readings are still often necessary. Smart devices could also enable the monitoring of road conditions, pollution levels, and water and energy consumption. Roads already have sensors in some places to detect traffic congestion and road conditions, with smart cars or smartphones in the area receiving alerts about traffic delays. Other potential applications include adjusting traffic lights based on real-time conditions, tracking garbage bins to know when they need emptying, and providing parking availability information. Scientists are also working on small sensors that can be embedded in materials like cement to monitor the condition of infrastructure, detecting issues before they lead to disasters like bridge collapses.

Cars are becoming increasingly advanced. While GPS has been a feature for years, and we've had toll tags that pay automatically when we pass toll stations, cars are now being equipped with more sensors and computing capabilities. Smart cars can serve as entertainment and information centers, provide Wi-Fi for other devices, and even track driving data such as speed and fuel efficiency. Soon enough, we may have self-driving cars that allow for hands-free and eyes-free driving, all while continuously monitoring the road and other vehicles to avoid accidents. There are already cars and services available that allow you to start, locate, or unlock your car remotely, and contact emergency or roadside assistance services.

The healthcare industry is already benefiting from a variety of connected devices, with even more in development. Doctors and caregivers will soon be able to monitor vital signs, activity levels, and other important metrics from a distance, potentially saving lives and enabling older adults to live independently for longer. Hospital beds and garments embedded with sensors can also collect crucial data about patients' conditions, and researchers are working on innovations like carpets that detect falls and minuscule computing devices that can be injected into the human body.

Smart devices are also making waves in manufacturing and other industries, where remote monitoring can save both time and money. GE, for example, explored the use of sensors in the ceramic mixing process for battery production. By analyzing the data, researchers were able to identify the key factors that determine when the ceramic mix is ideal, leading to a more consistent product and a significant reduction in defects [source: Wasik]. This kind of monitoring can be applied to nearly any business: in retail, inventory is tracked and alerts are sent when items need restocking; in agriculture, soil and crops are monitored for irrigation needs, and livestock can be tagged and tracked; and in office buildings, energy usage can be optimized to reduce waste and lower costs. The potential applications are limitless.

Security and Privacy Concerns

Many of us conduct financial transactions and share personal information online, so we are likely aware of the data about us stored in the cloud. However, now even our everyday objects are starting to gather and transmit even more data about our lives, raising concerns about privacy and security.

The use of big data to target ads at us is already a common practice, with connected devices like smartphones allowing ads to follow us and alert us to nearby deals. This data also reveals information about our habits, including our shopping and travel behaviors, income levels, and health status.

Target once found itself in a difficult situation after sending baby-related advertisements to a teenager’s father, who confronted the store manager, questioning whether they were encouraging his daughter to get pregnant. It was later revealed that Target had analyzed customer data to target ads to people likely to be pregnant based on their purchases [source: Hill]. This kind of data analysis is also useful for detecting fraudulent activity on credit cards and bank accounts. But the same techniques could enable harmful biases in areas like credit, employment, housing, and more. The extent of surveillance made possible by facial recognition or other smart technologies is also a growing concern.

The threat of connected devices being hacked is another serious risk. While the idea of machines gaining sentience and turning against us remains firmly in the realm of science fiction, the danger lies in malicious actors. Our devices collect and transmit vast amounts of information, from video footage inside our homes to our movements and health data. Hackers could potentially steal sensitive information, spy on us, or cause disruptions. Imagine a hacker seeing into your home, turning your stove on while you're away, or taking control of your car while you're driving it. There have even been alarming incidents where hackers accessed web-enabled baby monitors to make disturbing comments to children [source: Hill].

Smart devices, such as security cameras, light bulbs, and health monitors, have been found to have security vulnerabilities. While some breaches might be minor annoyances, others could have serious or dangerous consequences. If personal information is exposed, security flaws could result in identity theft or financial loss. Manufacturers also face significant financial repercussions if customers lose trust in their brand or if they face lawsuits and fines due to breaches.

To ensure the security of devices, it will be crucial to conduct rigorous testing, consistently update firmware and software, and implement strong data encryption methods. Following industry standards across manufacturers and devices may help alleviate security concerns. Businesses can bolster their internal IT security by controlling access to collected data and providing consumers with choices about how much data is gathered, stored, and used. Experts also recommend limiting data collection to the essentials for device functionality, routinely deleting outdated data, enabling automatic software updates, and even programming devices to eventually phase out when they are no longer supported and more susceptible to security risks.

Economic Impacts of the IoT

The IoT can significantly influence the economy in numerous ways. For instance, connected mobile devices have revolutionized payment systems by enabling small businesses and individuals to accept payments without needing expensive registers or credit card processing systems. All that's required is a simple app on a tablet or smartphone, a basic card reader, and an Internet connection. Companies like Square and Paypal handle these payments, taking a small fee for each transaction. The IoT is also set to disrupt other sectors, such as insurance, by allowing the use of sensors on virtually anything. These sensors can help detect risks early and reward customers for using these devices, or penalize them for risky actions like speeding.

The IoT will further streamline processes and improve efficiency, leading to notable impacts on company profits. With embedded technology that can instantly communicate conditions, significant reductions can be made in the waste of perishable goods, materials lost due to manufacturing issues, time lost from unexpected breakdowns, and energy consumption—resulting in cost savings. Real-time data access will also enable businesses to make better and more timely decisions. As companies have already monetized data, the increased availability of this data will provide even more opportunities.

As more devices become connected, industries will experience disruptions, efficiencies, and automation that could lead to job reductions in areas like inventory management, manufacturing process monitoring, and utility meter reading. However, while automation has historically led to job losses in manufacturing, it often shifts the skill set required for workers to more complex tasks. In some cases, automation even increases jobs due to rising product demand. For example, despite the prevalence of ATMs, which took over many teller tasks starting in the mid-1970s, bank teller jobs increased from 1999 to 2009, in part because banks could open more branches, reducing operating costs and enabling them to serve more customers [source: Bessen].

The growth of the Internet of Things (IoT) will likely create many new job opportunities, particularly in fields directly related to these devices and the data they produce. Roles in hardware sales and maintenance, device development, software analytics, and data analysis are expected to expand (although some of these tasks are being automated with advanced programs). Increased demand for IT professionals and customer service representatives will be driven by the need for monitoring connected devices. The rise in data generated by IoT devices may also require an expansion of data centers. Cisco forecasts that the data generated annually by IoT devices will grow from 113.4 zettabytes (ZB) in 2013 to 403 ZB by 2018 [sources: Cisco, McLellan].

According to Machina Research, the Internet of Things was valued at approximately $900 billion in 2014 and is expected to reach $4.3 trillion by 2024, a value greater than the GDP of many nations. Other analysts predict the IoT's potential value could climb to $6.2 trillion by 2025 [source: Intel]. Embracing the IoT will require significant IT investments from companies, as well as changes in business processes, new equipment, and greater demands for Internet bandwidth, storage, and staffing to manage the evolving technology. Nonetheless, the hope is that the return on investment will be substantial, potentially even greater than the costs.

Despite the costs involved, smart cities, buildings, and homes enabled by IoT technology could greatly reduce waste, pollutants, and greenhouse gas emissions, contributing to a more sustainable future. These devices also offer numerous conveniences, freeing up time for more rewarding professional and personal tasks—or perhaps just for a nap. Who wouldn't want that?