An integrated overview of the Internet of Things

The Internet of Things consists of various hardware and software components. The hardware includes networked devices - from simple sensors to smartphones and so-called "wearable devices" (e.g. Google Glass) - and the networks that enable the connections. Software components consist primarily of data storage, analytical programs and user interfaces to display the desired information.

The advantages and the added value for the economy and the end user result from the complex interaction of all these components. The basic idea is that objects, similar to computers, are given an identifier and can be controlled by them via a network. In the process, these objects will generate a fantastic amount of data, opening the door to new optimization possibilities. Basically, the Internet of Things is bringing about a fusion of the physical and digital worlds.

Mobile access to the Internet, coupled with rapid growth of the mobile phone market, has created a user demand for the Internet of Things. Below are some of the drivers that are driving the ecosystem and the evolution of the Internet of Things.

The most important exponents who help to shape the market come from the commercial environment (off-line and on-line), from research and government institutions.

Drivers

An important driver in the development and spread of the Internet of Things is the "cost implosion" in the semiconductor industry. Without these components, no efficient collection of data via sensors would be possible. In addition, miniaturization is an important factor to guarantee "invisibility" in the physical world. The need for microchips in the mobile and tablet markets has significantly reduced the cost of these chips.

Increased network availability and the steady rise in bandwidths are important factors in making the Internet of Things possible at all at the operational level. The number of available addresses for connecting objects to the Internet has increased from 4 billion to 340 trillion with the introduction of IPv6 3. Wireless networks allow the connections of objects, which are not possible in a static environment.

Storage technologies and data management are further key drivers. The open source movement has massively reduced IT costs on the server side. New storage methodologies create the basis for processing large amounts of data - almost in real time.

The development of increasingly powerful analytical tools and applications makes it possible to draw conclusions of strategic relevance from data.

Possible uncertainties

Taken together, these drivers have the potential to make the Internet of Things one of the most important parts of our daily lives. However, it should not be forgotten that new technologies often trigger short-term hype. So it is by no means certain that all the new developments will "survive".

According to Gartner, the Internet of Things is now at the so-called "peak of inflated expectations" 4. The hype is currently at its greatest. Like the Internet itself, emerging technologies are growing organically. At present, there are not many business models that have the potential to shake up existing markets - the keyword here is "disruptive technologies". The early and relevant developments come mainly from industrial giants that have the financial resources to invest in the market and research of new technologies.

Another possible hurdle is the lack of standards. There are many parallel developments and infrastructures. De facto, however, no such standards have yet been formed. However, these are necessary for the dissemination of the technology in terms of interoperability and openness.

In addition, such infrastructures pose completely new challenges in terms of security. How will smaller and smaller devices be protected from cracking attacks 5 ?

Advantages and risks

The success and ultimate breakthrough of the Internet of Things depends sensitively on how society assesses the benefits and risks of this technology. It is clearly documented that society's perception of a new development has a decisive influence on its success in the market as such6. Possible factors that may be important and decisive for the perception:

• Data security and corresponding regulations
• Regulation of responsibilities, exit options (how do I cancel the services of my refrigerator?)
• Clarity of control and knowledge of who is funding and driving research in these areas.

Economic potential

According to McKinsey, the Internet of Things has the potential to inject an additional six trillion dollars into global markets by 20257. Other estimates even go twice as far. The Internet of Things will affect different market sectors at different speeds and to varying degrees 8.

Morgan Stanley, for example, estimates that real-time analysis of local weather data can save the global agricultural sector up to $20 billion9. ABI Research predicts that the number of cars equipped with communication-compatible devices will double every four years. New optimization strategies through the Internet of Things and the emergence of autonomous vehicles will massively change public transportation and make it more cost-effective. Governments will also fundamentally benefit from the new developments, as Cisco has shown in a study 10. In addition to public transport, the study also lists the energy sector and healthcare as beneficiaries of the new technology.

The Internet of Things is no longer a dream of the future, but has long since become a reality and part of our everyday lives. This includes mostly simpler applications such as package tracking or fitness trackers. But also integrated sensors in cars, which make maintenance more efficient and cost-effective through the constant production of data, or the networked household equipped with intelligent thermostats (Google's Project Nets) are further examples. From these, we can see that technology is quietly and steadily infiltrating our daily lives. As with other new developments, how the Internet of Things will evolve, which players will prevail and how much this technology will actually impact our daily lives cannot (yet) be predicted. However, the trend of the physical and digital worlds merging more and more will be unstoppable.

Companies should therefore take a serious look at this topic so that they do not run the risk of missing out on important developments and falling behind as a result. The ecosystem also offers enough room for resourceful start-up ideas, especially in the area of data analysis, visualization and applications in general.