What Is This Thing Called the ‘Internet of Things?’


Just who can solve its mystery…? Though many people may be getting tired of hearing the phrase ‘Internet of Things,‘ it doesn’t mean that they really understand the phenomena. Here we shed some light and begin our research series on IoT.


Just as the use of the word “Cloud” exploded in the late 2000s, we have seen the term “Internet of Things” (IoT) appearing everywhere during the past couple of years. It seems as though everyone is jumping on the bandwagon. Here, we try to make some sense of this phenomenon. Well, actually it is three interrelated phenomena:

  1. IoT as a Technology Phenomenon
  2. IoT as an Application Phenomenon
  3. IoT as a Marketing Phenomenon

IoT as a Technology Phenomenon

IoT is a multi-decade convergence of technology trends: constant substantial cost reductions (Moore’s law), maturation of interoperability and standards, ubiquitous connectivity (especially for wireless), and ease of implementation (stuff just works off-the-shelf). Figure 1 illustrates the oft-told story of how the many devices and components comprising the IoT had cost many thousands of dollars a couple of decades ago and now cost a few bucks or even pennies. That trend will continue for decades to come. As the components get ever closer to zero cost, IoT capabilities will be built into more and more objects.3

Figure 1 – Plunging Costs4 for Components of IoT

Regarding the ubiquity of connectivity, 30 years ago there were virtually no wireless access points. Today there are hundreds of millions of them. The modern cellular system did not exist until the 1980s. Now there are over 5 million cell towers connecting about 5 billion subscribers globally. The majority of inhabited locations have WiFi access or cellular access or both. And for the rest of the remote corners of the globe, there’s always satellite services.


We have seen steady progress in the development of standards and interoperability. This has also resulted in devices being much more ‘plug-and-play’ than they used to be. A decade or two ago, many of these technologies required a much larger engineering effort (see “RFID: Are We Really Out of the Engineering Stage?”). That was true for end users implementing the technology — especially off-the-beaten path technologies (for their time) like RFID and sensors. For those, end user organizations typically needed RF engineers as part of the system integration team to go in and do significant engineering work just to get things to work. Now components have become more and more reliable and easy to set up and use. For software and hardware developers, there are so many more toolkits and tools, enabling development of new connected devices and IoT applications to happen an order of magnitude (or two) faster than it used to.

By reducing cost at all levels the number of ‘things’ and applications for which IoT is cost effective and feasible in the real world continually expands. We are seeing many applications that were previously not economically viable but now make economic sense. Ultimately there will be intelligence and connectivity in virtually everything in the environment surrounding us.5

IoT Solutions Landscape

In order to understand all of the various technologies and solutions that form the IoT ecosystem, we have a proposed IoT Solution Landscape Framework. We will continue to refine this in the coming months and use it to help explain and make sense of who is out there and what they do.

Figure 2 – Proposed IoT Solutions Landscape Framework

Solution Heritage Matters

In addition to many startups, there are an enormous number of existing solution providers jumping on the IoT bandwagon. Knowing the heritage of a given solution provider and what assets and capabilities they bring to the table is critical to understanding how they fit and what motivates their involvement in IoT. For example, most of the communications carriers are providing various IoT services. Many of these are implementation services, but of course the provider is also motivated to sell communications services as part of those implementations. A network equipment provider, or an enterprise software solution provider, or a semiconductor manufacturer, each brings their piece of the puzzle from a different perspective.

IoT as an Application Phenomenon

Of course technology is not the point of IoT. What you do with it is what matters. Here we also see a very long history of IoT applications going back decades, such as:

Source: Photo by A P
  • Oil-well telemetry — Real-time sensing and transmitting of drilling mechanics and formation evaluation information uphole and remotely. The first electrical resistivity well log was recorded in 1926! Remote detection of oil spills was being done in the 1970s and remote pipe management began over 20 years ago.
  • Vehicle telematics — Remote tracking and management of vehicles, trailers, containers, including sensing condition of the engine and cargo, as well as unsafe driving or deviation from planned route (detecting theft or other malfeasance). The first tachograph6 was introduced in the 1920s and GPS-based telematics has been in use for over 20 years.
  • Telemedicine — In the early 1970s a variety of medical instruments, including electrocardiograph and x-ray machines, were used to provide healthcare remotely delivered to the Papago Indian Reservation.
  • Home Automation — Early versions of the smart home were already being implemented by individuals in their homes in the 1960s and 70s. X10 was conceived in 1975.7

We have seen an explosion of different applications in the past couple of decades. The potential future applications touch virtually every area of human endeavor and life.

Figure 3 – Example IoT Applications Domains

IoT as a Marketing Phenomenon

IoT as a Technology Phenomenon and as an Application Phenomenon have both been gradually emerging and evolving over the past several decades. So why have we seen the sudden explosion of interest in the Internet of Things? It is not due to any sudden shift in either the technology or the applications adoption, but rather the emergence of IoT as a Marketing Phenomenon that accounts for the major ‘buzz’ (or ‘hype’ depending on your perspective) that we are witnessing right now. Consider the amount of money spent on these campaigns: IBM spends over $1B a year on advertising and promotion and the “Smarter Planet” theme has been their core message in recent years; Cisco repeatedly messages about the “Internet of Everything,” which they tout as a “$19 trillion global opportunity over the next decade;” GE’s two-minute TV spot on the opening night of the NFL season this year, “The Boy who Beeps,” was more like a short film expressing GE’s vision forthe Industrial Internet (GE’s term for IoT).

The list of powerhouse technology companies spending hundreds of millions of dollars promoting the Internet of Things goes on and on — Intel, Google, Microsoft, SAP, Oracle, EMC, HP, Amazon (Kenisis), AT&T, Verizon, Apple, and the hundreds of firms in the tiers below them. They are all plowing enormous amounts of money into touting their IoT offerings and expertise. These efforts are often aimed at very specific offerings from these firms, but nearly as often they are more generally designed to burnish their IoT credentials and let everyone know “We’re in this game and we really get it.

The many billions of dollars being poured into IoT campaigns have created a tsunami of awareness. On one hand, people may be getting tired of hearing the term. On the other hand, it creates enormous momentum and forces even the most jaded users to think to themselves “I guess I’d better learn about this IoT thing and see whether/how it impacts our business.

Wave of Investment

This huge amount of spend on the IoT marketing phenomenon is also driving a wave of investment in IoT-related technology. No one wants to get left behind. That includes internal R&D investments by companies ranging from software solution providers to industrial manufacturers, electric utilities, farmers, factory owners, building owners, city planners, hospitals — you name it. It also includes a growing number of acquisitions of IoT technology companies.

We are in the middle of a hype cycle for IoT. There was a hype cycle around the Internet itself in the late 90s. That bubble did eventually burst, but the Internet didn’t go away. In fact, it has changed everything and continues to grow as a force in the economy and society at large. The Internet of Things is likely to have just as profound an impact on mankind as the Internet itself.

IoT Research Agenda

ChainLink has been researching the core elements of IoT since our inception: RFID, sensors, middleware, cloud-based systems, real-time / predictive analytics, as well as the various industry-specific application domains. In the coming months, we will continue to develop our IoT research agenda, to target those areas most relevant to our readership. We welcome any feedback on which dimensions of IoT are of most interest to you and what are your most urgent questions.

The Internet of Things, like the internet itself, is here to stay. It has been a multi-decade phenomenon in the making and will continue for decades to come. We aim to help our readers more deeply understand it and how it impacts your businesses and lives. Read Distributed Intelligence in the IoT.


1 The architecture of the Internet of Things is often highly multi-layered. More and more processing power is being distributed out to the edges of the network in or near end devices. Consider sensor data generated in an IoT-enabled machine or plant or building/home. Sensor data may be read dozens or hundreds of times per second by a local processor making various decisions based on that data. That local processor may in turn send much less frequent data about state changes or significant events up to a local appliance or SCADA device. This may in turn communicate via local network to some plant-wide server that finally connects up to an enterprise system. The actual connection to the internet may be far removed from the end-point sensors and processors. Furthermore, IoT devices may be only intermittently connected to the network. A vehicle with many onboard sensors and processors may not connect to the network until reaching certain way points or at the end of the journey. — Return to article text above 2 Generally today, an animal or person would use a wearable device or tag to participate in the IoT, but already we are seeing animals (and even a handful of people) with RFID tags semi-permanently installed under their skin. — Return to article text above
3 Plunging hardware costs also means that more and more of the value and revenue will shift toward software, the data generated, and services around the whole offering. — Return to article text above
4 Note: This chart does not account for inflation. If it did, the prices in past decades would be even several times higher than they are shown in this chart, showing that the downward price trend is even more dramatic. — Return to article text above 5 And implanted within us too! — Return to article text above
6 A tachograph records a vehicle’s speed, distance traveled, and driver activity. — Return to article text above 7 X10 is a popular communications protocol for home automation devices. — Return to article text above

To view other articles from this issue of the brief, click here.

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