What You Need to Know About the Internet of Things


If you haven’t heard about the “Internet of Things” yet, you’re probably either too busy living your life to the limit or congratulations, you have truly “unplugged” and I envy your peace of mind. The phrase “Internet of Things” – IoT for short – was actually coined byKevin Ashton back in 1999, and like a lot of game changing trends has taken 15+ years to really build momentum in the marketplace. So what is it, why is it happening now and why should you care about it?   I hope to provide some answers for you in this 3 part series of short articles.

Another important goal for us is to help you navigate through all the noise out there. You can then draw your own conclusions about how IoT will affect you as a consumer and a business professional. Our target audience is working professionals, and you don’t need to be a techie to read them. We’re writing here about the market impact of IoT, so even technical folks will get something out of them.

This is part 1, where I’ll introduce IoT; explain how it will affect your world and why hundreds of companies are already delivering products and services based on it. I’ll also try to show why things look so confusing right now by walking you through something called the Gartner Hype Cycle. Part 2 will focus on the market impacts of IoT and introduce you to a new HBR article co-authored by Harvard professor Michael Porter. The final article will examine a couple of interesting industries and markets in depth. I hope you enjoy the series and find it helpful.

So what is IoT?

Let’s get a quick definition out of the way, and then dig into it a bit. I’ll clarify things as we go on.

1st Concept: The Internet of Things (IoT) is a collection of connected devices and services that work together to do “useful stuff”.

You can get all technical about it, but at the end of the day that’s exactly what IoT is all about.   As a matter of fact, let’s add a sentence to that IoT definition:

A good IoT product or service is so useful that trying to use something that is not connected will at best downright annoy you or at worst not be feasible at all!

Keep that in mind you can’t go wrong. Manufacturers better too – successful smart products will fit that description perfectly.

OK so let’s throw 3 more ideas at you and then get the ball rolling. We’ll list them all together and then describe each in more depth.

2nd concept: A physical device is “IoT enabled” if it takes advantage of low cost sensors, low cost computer chips and a wireless connection. 

3rd concept: Multiple IoT enabled devices can work together in a single location.

4th concept: Many IoT enabled devices will take advantage of “cloud services” through Internet connections at those locations.

Low cost computer and wireless chips

Probably most everyone you know has a smartphone and access to a broadband Internet connection at home and at work right? Those smartphones have more computing power than supercomputers did 10-15 years ago, run on batteries and fit in your pocket or purse – simply amazing. Hundreds of millions of these devices are sold every year, driving down the cost, size and power consumption of the components used in them. Imagine the implications – all that technology available for use everywhere. Chris Anderson even called it the biggest “peacetime dividend” in history.

So thanks to smartphones and other computers, car electronics, and the Internet, it is now possible for manufacturers to add small, embedded computer chips and wireless chips to just about any kind of physical object at a very low cost. These components are frequently based on the older tech that those computers and smartphones had in them, shrunk down and simplified even further.   This “embedded computing and connectivity” will eventually be as common as a power plug or a battery.

In fact, all those massive numbers you read about IoT sales come from this – more than 8 billion “smart, connected devices” will be shipped annually, just 5 years from now. There are already literally thousands of examples of “IoT enabled devices” out there in a wide range of markets including consumer wearables, smart-home, healthcare, building automation, energy management, manufacturing, chemical processing and insurance.

You and your key “Locations” Connected – Home, Office, Car

Most all of us have these 3 primary locations where we spend most of our time – home, workplace and vehicle, and for most people in the developed world all of these locations are equipped with wireless networks and broadband Internet connectivity.   If you think about it a bit, that 8 billion connected device number starts to make sense. You already have a bunch of connected devices surrounding you, and many more coming:

  • Dozens are already in your car, and more are coming…
  • Dozens of these devices in your home, in your appliances, home entertainment… even in your house infrastructure
  • Hundreds or even thousands in individual stores and commercial buildings…

Not to mention you’ll probably have at least 2-4 devices on your person as well. That’s dozens, maybe hundreds of devices each person is interacting with every day.

Multiple IoT enabled devices in a single “location” can work together

All cars out there already have dozens of computers in them, and they all talk to each other. It started in the engine compartment and worked its way to every system in the vehicle. The same is going to happen our homes, offices and factories. We’re not talking about anything new here, just an acceleration and evolution of what’s already been going on for many years.

Cloud services for IoT enabled devices

Your car communicates with itself already, and when you take it to the dealer it communicates with their diagnostic equipment. GM’s OnStar system has been in cars for more than 10 years now. If you’re lucky enough to have a hybrid or electric vehicle you probably have a charging station in your house and a smartphone app that talks to your car.

If you’ve used a service like OnStar, it’s probably intuitive that a connected device could do something useful by interacting with an Internet connected service.   An appliance could detect a fault and automatically connect to a support center and provide status information about its condition. A connected medical device like a glucose monitor could report readings to your attending physician.   A complex machine could upload data in real-time about literally thousands of data points, which then needs to be loaded and analyzed.

So it probably makes sense to you that some “service” on the Internet could do useful things by interacting with connected devices. In fact the time will come – sooner than later in most developed markets – where customers will expect to have a bundled product offering consisting of connected products supported by Internet services. 

Congratulations, you’re now one of the IoT Elite

If you’re with me so far, consider yourselves IoT savvy. This is a very good thing to be right now, because markets are going to be adopting IoT aggressively over the next few years. The sooner you’re “IoT aware” the more effective you will be in this new marketplace. There are thousands of you out there already, but definitely not millions. Keep these concepts in mind and you can sift through all the noise out there better than most anyone you’re likely to interact with in the workplace.

Market Transformations are Distracting

Things change right? Technology changes how we work and live, both individuals and entire companies.   Companies and entrepreneurs that understand technology changes early can make a real impact on markets, and as we all know they’re frequently not the existing market leaders.

Large, existing companies have a lot to lose if they don’t anticipate these changes and transform themselves in time. So they do the right thing for their shareholders and allocate tens-of-millions of their marketing budgets to help get the word out that they’re gonna win big. They even create their own jargon, trying to take over an emerging trend and make people think they’ve created it themselves. Whether they’re justified or not is a different discussion altogether – it’s just a fact that money talks when you’re trying to build awareness.

The iconic Example of this has to be AT&T

To AT&T’s credit most everything in those ads is real today – it’s just that they didn’t bring any of it to market themselves.

We now have Cisco rebranding IoT to IoE (the Internet of Everything), and GE carving out the Industrial Internet for themselves. GE’s branding effort is genuinely helpful because the name describes exactly what they are focused on. Cisco on the other hand is trying to brand everything as their own, which is decidedly arrogant and fundamentally confusing.

This interplay of marketing and technology change goes through what Gartner Group calls the Hype Cycle. It’s a pattern that repeats itself all the time – technology gets over-marketed, ahead of demand.  Things eventually sort themselves out if the tech is promising and life goes on.

It probably wouldn’t surprise you that Gartner believes we are at the “Peak of Inflated Expectations” for IoT. Here’s all you really need to know about the hype cycle:

Truth number 1: technology marketing always gets ahead of reality.

Truth number 2: the big financial payoff comes after the hype dies down.

Truth number 3: it can take 5-10 years for a technology to reach the “Plateau of Productivity”

That’s enough for an initial post. Stay tuned or part 2 where I’ll build on what we’ve started here. We’ll talk a bit more about “smart connected products” and how companies are already putting connected products and services together for consumers and businesses.

I’d like to thank Dave Beasley for several conversations we’ve had that helped get this series together. He’s a true marketer with a deep understanding of technology marketing and the service provider business.

About the author

Brad Nicholas is an IoT obsessed, high-tech product and general management executive who’s worked in consulting, venture backed startups and software companies. Both Dave and I are here to help if you have any questions about IoT transformation or are considering developing or working with your own smart connected product concepts.

Good IoT reading / viewing material (all free access at time of this writing)

Chris Anderson


NYTimes on why gadgets must adapt with software


Chris Harrison of Carnegie Mellon at Structure Connect 2014

(you should watch at least the first 4 minutes or so, but the whole video is amazing)


Gartner Hype Cycle Overview


Gartner IoT Use Cases Webinar (excellent, and well worth an hour – free registration required)