What Is the Internet of Things?

There is a term that has been popping up quite a lot recently: the Internet of Things, sometimes abbreviated as IoT. If you’ve been scratching your head and wondering what exactly the Internet of Things is, you’re far from alone. So what is this new phase of the Internet, and what does it have to do with you?

Defining the Internet of Things

Even though technology is my job, I was a bit stumped when I first ran across this term. Of course the Internet is made up of things. Isn’t everything? Is this like Web 2.0 or something? (Web 2.0 refers to the Web’s evolution from boring, static pages to its current dynamic, user-friendly emphasis. It’s also reflected in much cooler website design.) Is it really all that different?

The answer is yes. And also, no.

The Internet of Things is not some new information-retrieving protocol. It’s about the devices that connect to the Internet, how they interact, and how businesses can use them.

To really understand this phrase, let’s consider the Internet itself. What is it? Lots of information, all hyperlinked together, in a big, ever-changing web of ideas, images, and facts. The Internet is primarily all about the information running through it; where it originates is not really factored into the information itself.

Now, this is where the Internet of Things is different: the physical location of the data source is just as important as the data itself. Why? Because it has a major impact on how the data will be used.

Imagining the Internet of Things

Let’s parse this down even further. Imagine you run a printing factory. The presses you use already have loads of sensors and other gadgets attached to them. In the Internet of Things, the data from your presses’ sensors would feed directly into your computer system, in real time. Your computer system could then monitor that data, make adjustments based on current working conditions, analyze this information, and feed it back to you.

Turning to the automotive world, we find another example—the sensors offered by some car insurance companies. These little dongles monitor your driving style and speed, and some also track your location and how far you travel. (Your smartphone, GPS, and in-car navigation system may also track your location, but that’s another article.) In turn, this can net you a hefty discount on your premiums. It’s just one more way that data is being collected from lots of smaller points, analyzed, and used to make decisions.

Are you curious about other IoT applications? This article by McKinsey and Company, a global management-consulting firm, provides a helpful overview as well as some industry-specific applications. Hint: the IoT is already popping up, and in more places than you would think.

The Internet of Things and Your Business

So how can you, the smaller business, use the Internet of Things? As a matter of fact, right now the Internet of Things is probably affecting you more than you realize. We provide a steady stream of information about ourselves when we do a Google search, use Facebook and other social networks, and sign up for other ‘free’ services. This isn’t necessarily a bad thing; for example, advertisers use our information to customize the advertisements towards our personal tastes (or at least what we’ve recently been viewing). But for many companies, especially here in the US, directly implementing the Internet of Things will take some time.

When it does come, it will provide a new type of customer-centered data: data that instantly responds to changes in the real world. And for businesses, it will bring yet another dimension to the decision-making process.