What is the Internet of Things (IoT)?

The term IoT, or Internet of Things, refers to the collective network of connected devices and the technology that facilitates communication between devices and the cloud, as well as between the devices themselves. Thanks to the advent of inexpensive computer chips and high bandwidth telecommunication, we now have billions of devices  connected to the internet. This means everyday devices like toothbrushes, vacuums, cars, and machines can use sensors to collect data and respond intelligently to users.  

The Internet of Things integrates everyday “things” with the internet. Computer Engineers have been adding sensors and processors to everyday objects since the 90s. However, progress was initially slow because the chips were big and bulky. Low power computer chips called RFID tags were first used to track expensive equipment. As computing devices shrank in size, these chips also became smaller, faster, and smarter over time.

The cost of integrating computing power into small objects has now dropped considerably. For example, you can add connectivity with Alexa voice services capabilities to MCUs  with less than 1MB embedded RAM, such as for light switches. A whole industry has sprung up with a focus on filling our homes, businesses, and offices with IoT devices. These smart objects can automatically transmit data to and from the Internet. All these “invisible computing devices” and the technology associated with them are collectively referred to as the Internet of Things.

How does IoT work?

A typical IoT system works through the real-time collection and exchange of data. An IoT system has three components:

Smart devices

This is a device, like a television, security camera, or exercise equipment that has been given computing capabilities. It collects data from its environment, user inputs, or usage patterns and communicates data over the internet to and from its IoT application.

IoT application

An IoT application is a collection of services and software that integrates data received from various IoT devices. It uses machine learning or artificial intelligence (AI) technology to analyze this data and make informed decisions. These decisions are communicated back to the IoT device and the IoT device then responds intelligently to inputs. 

A graphical user interface

The IoT device or fleet of devices can be managed through a graphical user interface. Common examples include a mobile application or website that can be used to register and control smart devices. 

What are examples of IoT devices?

Let’s look at some examples of IoT systems in use today:

Connected cars

There are many ways vehicles, such as cars, can be connected to the internet. It can be through smart dashcams, infotainment systems, or even the vehicle's connected gateway. They collect data from the accelerator, brakes, speedometer, odometer, wheels, and fuel tanks to monitor both driver performance and vehicle health. Connected cars have a range of uses:

  • Monitoring rental car fleets to increase fuel efficiency and reduce costs.
  • Helping parents track the driving behavior of their children.
  • Notifying friends and family automatically in case of a car crash.
  • Predicting and preventing vehicle maintenance needs.

Connected homes

Smart home devices are mainly focused on improving the efficiency and safety of the house, as well as improving home networking. Devices like smart outlets monitor electricity usage and smart thermostats provide better temperature control. Hydroponic systems can use IoT sensors to manage the garden while IoT smoke detectors can detect tobacco smoke. Home security systems like door locks, security cameras, and water leak detectors can detect and prevent threats, and send alerts to homeowners. 

Connected devices for the home can be used for:

  • Automatically turning off devices not being used.
  • Rental property management and maintenance.
  • Finding misplaced items like keys or wallets.
  • Automating daily tasks like vacuuming, making coffee, etc.

Smart cities

IoT applications have made urban planning and infrastructure maintenance more efficient. Governments are using IoT applications to tackle problems in infrastructure, health, and the environment. IoT applications can be used for:

  • Measuring air quality and radiation levels.
  • Reducing energy bills with smart lighting systems.
  • Detecting maintenance needs for critical infrastructures such as streets, bridges, and pipelines.
  • Increasing profits through efficient parking management.

Smart buildings

Buildings such as college campuses and commercial buildings use IoT applications to drive greater operational efficiencies. IoT devices can be use in smart buildings for:

  • Reducing energy consumption.
  • Lowering maintenance costs.
  • Utilizing work spaces more efficiently.

What is Industrial IoT?

Industrial IoT (IIoT) refers to smart devices used in manufacturing, retail, health, and other enterprises to create business efficiencies. Industrial devices, from sensors to equipment, give business owners detailed, real-time data that can be used to improve business processes. They provide insights on supply chain management, logistics, human resource, and production – decreasing costs and increasing revenue streams. 

Let’s look at existing smart industrial systems in different verticals:


Enterprise IoT in manufacturing uses predictive maintenance to reduce unplanned downtime and wearable technology to improve worker safety. IoT applications can predict machine failure before it happens, reducing production downtime. Wearables in helmets and wristbands, as well as computer vision cameras, are used to warn workers about potential hazards.


Sensor-driven analytics and robotics increase efficiency in automobile manufacturing and maintenance. For example, industrial sensors are used to provide 3D real-time images of internal vehicle components. Diagnostics and troubleshooting can be done much faster while the IoT system orders replacement parts automatically.  

Logistics and transport

Commercial and Industrial IoT devices can help with supply chain management, including inventory management, vendor relationships, fleet management, and scheduled maintenance. Shipping companies use Industrial IoT applications to keep track of assets and optimize fuel consumption on shipping routes. The technology is especially useful for tight temperature control in refrigerated containers. Supply chain managers make informed predictions through smart routing and rerouting algorithms.


Amazon is driving innovation in automation and human-machine collaboration in retail. Amazon facilities make use of internet-connected robots for tracking, locating, sorting, and moving products.

How can IoT improve our lives?

The Internet of Things has a wide-ranging impact on human life and work. It allows machines to do more heavy lifting, take over tedious tasks and make life more healthy, productive, and comfortable. 

For example, connected devices could change your entire morning routine. When you hit the snooze button, your alarm clock would automatically get the coffee machine to turn on and open your window blinds. Your refrigerator would auto-detect finishing groceries and order them for home delivery. Your smart oven would tell you the menu for the day — it might even cook pre-assembled ingredients and make sure your lunch is ready. Your smartwatch will schedule meetings as your connected car automatically sets the GPS to stop for a fuel refill. The opportunities are endless in an IoT world!

What are the benefits of IoT for business?

Accelerate innovation

The Internet of Things gives businesses access to advanced analytics that uncover new opportunities. For example, businesses can create highly targeted advertising campaigns by collecting data on customer behavior.

Turn data into insights and actions with AI and ML

Collected data and historical trends can be used to predict future outcomes. For example, warranty information can be paired with IoT-collected data to predict maintenance incidents. This can be used to proactively provide customer service and build customer loyalty.

Increase security

Continuous monitoring of digital and physical infrastructure can optimize performance, improve efficiency and reduce safety risks. For example, data collected from an onsite monitor can be combined with hardware and firmware version data to automatically schedule system updates.

Scale differentiated solutions

IoT technologies can be deployed in a customer focused way to increase satisfaction. For example, trending products can be restocked promptly to avoid shortages.

What are IoT technologies?

Technologies used in IoT systems may include: 

Edge computing

Edge computing refers to the technology used to make smart devices do more than just send or receive data to their IoT platform. It increases the computing power at the edges of an IoT network, reducing communication latency and improving response time.

Cloud computing

Cloud technology is used for remote data storage and IoT device management – making the data accessible to multiple devices in the network.

Machine learning

Machine learning refers to the software and algorithms used to process data and make real-time decisions based on that data. These machine learning algorithms can be deployed in the cloud or at the edge.

What is AWS IoT and how can it help?

AWS IoT brings AI and IoT together to improve business outcomes. It is the only cloud vendor that combines data management and rich analytics to create easy-to-use services designed for high-volume IoT data. 

AWS IoT includes services like security, data encryption, and access control to device data. It is built on secure and proven cloud infrastructure and IoT networks and scales to billions of devices and trillions of messages. AWS IoT also integrates with other AWS services so you can create complete solutions.

Build with AWS IoT

AWS IoT provides IoT services for industrial, consumer, and commercial solutions. You can rely on AWS IoT services to build applications that uncover new business value, run sophisticated analytics and detect and respond to events from large number of IoT devices.

Get started with AWS IoT by creating a free AWS account. New to IoT? Learn the basics and get started building simple end-to-end IoT applications.

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