There area lot of things to explore around IoT – what it is, technology, system architectures, security, implementation challenges, and many others. We will get to all of those, but a great place to start is how we got here and the implications of IoT. Rather than starting with things, let’s start with what is really important – economics.

Just what is the Internet of Things (IoT)? At the simplest level it is devices that interact with the physical world and communicate over a network. Simple, but with very significant implications. Let’s dig into these implications and see how such a simple concept can have such great impact.

The major drivers of IoT are technology, economics, software, and integration. Individually these are significant. Combined they will have a major impact on all aspects of life. Some of this impact is good, and some may be bad. As with many things, good vs. bad will often depend on the implementation and how it is used.

Is IoT New?

A common question is whether or not IoT is something new and revolutionary or a buzzword for old ideas? The answer is “yes”…

Much of the foundation of IoT has been around for quite a while. SCADA systems, or Supervisory Control And Data Acquisition has been around since the 1950’s managing electrical power grids, railroads, and factories. Machine communications over telephone lines and microwave links has been around since the 1960’s. Machine control systems, starting on mainframes and minicomputers, have also been around since the 1960’s.

The big changes are economics, software, and integration. Microsensors and SoC (System on a Chip) technology for CPUs and networking are driving the cost of devices down – in some cases by a factor of a thousand! Advances in networking – both networking technology as well as the availability of pervasive networking – are changing the ground rules and economics for machine to machine communication.

The use of standards is greatly easing integration. Advances in software, software frameworks, and development tools, as well as the availability of functional libraries for many tasks, is creating an explosion in innovative IoT products and capabilities.

But the most significant new factor in IoT is economics. Technology, pervasive networking, and cloud computing are driving the cost of IoT down – in many cases by a factor of a thousand or more! New capabilities in sensors and actuators are opening up new areas of application. Cost reductions this large are often more important than new capabilities as they vastly broaden areas of application.

Another massive change is monetization of data. Companies are increasingly aware of the value of the data captured from IoT systems, especially after extensive analysis and datamining.

Further emphasizing the importance of economics are the new business models are emerging. For example, jet engine companies moved from selling jet engines to selling “thrust hours” – a service based model of supplying power as a service rather than selling hardware. A key part of this is extensive use of IoT to monitor every aspect of jet engine operation to provide more effective maintenance and support of the engines. As an example, Virgin Atlantic reports that their Boeing 787 aircraft produce 500GB of data per flight.