What Is the Internet of Things? A Product Management Perspective

It’s estimated that 15 billion devices are already connected to the Internet. By 2020, that figure will rise to over 50 billion connected devices.

This is the Internet of Things (IoT), the latest industrial revolution that will have an enormous impact on business and daily life.

Each industrial revolution has created the need for a new kind of engineer who can implement, maintain, and innovate on its new technologies.

The First Industrial Revolution of the late 18th and early 19th centuries gave birth to the field of Mechanical Engineering.

As electrification began to spread across the world during the Second Industrial Revolution of the late 19th century, universities started to offer programs in Electrical Engineering for the first time.

The same need emerged in the 1960s and 1970s with the Digital Revolution (the Third Industrial Revolution). The rapid explosion of the computer industry gave birth to new degrees in Computer Science.

The Internet of Things is considered by many to be the 4th Industrial Revolution. But unlike the first three, it is not a new technology—it is a new way of combining existing technologies. As a result, it will not require a new kind of engineer.

If you think the Internet of Things is just about connected toasters and coffee machines, think again. The biggest impact of the Internet of Things will be on industrial applications (not consumer ones). Companies are already working to tackle the most significant problems of our generation by applying the Internet of Things to modernize the electrical grid, transportation, food production, water supply, health care, and other critical infrastructures.

But even with all it’s potential, many professionals today struggle to define what is the internet of things. Without a clear definition of IoT, companies and professionals are missing the shared language necessary to align people (internal or external) with their IoT vision.

At a high-level, embarking on an IoT transformation sounds exciting and it makes for a great PowerPoint presentation for the Board of Directors. But the reality is, the lack of shared definitions is one of the biggest roadblocks Product Leaders face when attempting to move past the hype and develop an actual Product Strategy or IoT Product Roadmap.

That’s why in this post I’m going back to the basics and offering my answer to “What is the Internet of Things?”

In other posts, I continue to define key terms, including “What is an IoT Product Manager?” 

These definitions will create a shared language to help you communicate the value of IoT within your organization.

The Internet of Things is Much More Than Smart Toasters

When people ask me, “What is the Internet of Things?” They usually expect an answer that includes a “smart toaster,” capable of sending text messages, or a smart toilet like the one revealed at the 2018 CES conference. Although those products do exist, the truth is the Internet of Things is much more.

The Internet of Things has the potential to address some of the world’s biggest problems. For example, IoT solutions are helping integrate renewable sources into a Smart Grid; combat global warming; save water, and increase yields at smart farms; and are the backbone of autonomous vehicles. And that’s just the beginning…

Some of the industries where the Internet of Things is having a big impact include:

• Energy
• Water
• Waste management
• Smart homes
• Smart buildings
• Agriculture
• Smart cities
• Healthcare
• Military
• Transportation
• Manufacturing

If you are working in any of these industries (and many others), your company might already be working on IoT Products or they will start soon. The question is, how will you, the Product Leader, be ready to make the most out of the IoT revolution that is already upon us?

So, What Is the Internet of Things (or IoT)?

There are many definitions out there, so in this post I’ll offer a product-centric definition.

The easiest way to define the Internet of Things is to think of it as a network of interconnected systems.

These systems are usually complex technology solutions, designed to address a specific application. I call these solutions IoT Products, and when you interconnect millions of these IoT Products together, you get the Internet of Things.

It’s important to note that IoT is not new. The ability to gather data from sensors and store it in a centralized location has been available for several years. In fact, I’ve been doing this for nearly 20!

The difference is today IoT leverages the natural evolution of all technology trends from the past 50 years, enabling us to develop very powerful systems with relative ease and at a relatively low cost. Twenty years ago, it would take months to create the software and hardware components to connect a manufacturing robot to an on-premise server, just to monitor its state. Now, a junior engineer can do that in one day.

This readily available, extremely powerful, and low-cost technology is what makes the IoT trend so viable. We can do things now, that we only dreamt about 20 years ago—and at a  fraction of the cost.

Some of the key trends that are fueling the Internet of Things include:

• Computing power has increased exponentially, while significantly reducing its cost.
• Our ability to store data is cheaper than ever, and continues to decrease.
• Sensors are smaller, cheaper, and more accurate.
• Network bandwidth has experienced rapid growth.
• Data processing technologies such as the Cloud, Machine Learning, Artificial Intelligence are becoming ubiquitous and affordable.

As you can see, these technology trends will continue to grow, fueling the evolution of the Internet of Things. IoT is not a passing trend and it will not go away. We need to think about it as the current state-of-the-art technology and ensure that as Product Leaders we are prepared to capitalize on this next generation of products.

Now, there are countless visions of what the Internet of Things will become. Most of these visions are either too far into the future or are created by Marketing teams to feed the hype.

One prediction is that the Internet of Things will connect everything to everything else. Some people call this “the Internet of Everything” or IoE. This vision is exciting and makes for great press coverage, but in reality, we are far from that. Connecting everything to everything is extremely challenging and actually doesn’t make a lot of sense. For example, connecting a coffee maker to a wind turbine, while technically feasible, doesn’t make sense from a market or business perspective.

As Product Leaders, we need to understand the current state of technology, have realistic expectations of the types of products we can create today, and be pragmatic as we move forward.

Recommended article: What is an IoT Platform?

So now that you know the Internet of Things is just a vast network of IoT Products, let’s dive deeper and explore what an IoT Product is.

What Is An IoT Product?

The Internet of Things is comprised of a network of stand-alone IoT products developed with a specific goal in mind, such as devices to control the lights or monitor energy consumption in a Smart Building.

IoT Products are clearly the building blocks of the Internet of Things. And for the sake of our shared language, I want to share my definition of an IoT Product:

An IoT Product is a product that combines hardware and software, measures real-world signals, connects to the Internet, transfers data to a centralized location, and provides value to a customer.

Every time I share this definition with professionals in my IoT courses, I get many “aha!” moments from people telling me, “I didn’t know I was working on IoT!”

By the way, there are several other names for an “IoT Product,” including:

• Internet of Things product
• Internet of Things device
• Edge device
• Connected product
• Internet-enabled product
• Internet-connected product
• Smart product
• Smart device
• Smart thing
• IoT product

In this post, IoT Product is synonymous with all of these terms.

Interested in learning more? Check out: 

• An IoT Primer for Product Managers
• What is an IoT Product Manager?

Breaking Down the Definition of an IoT Product

You’ll notice that in the previous section, I highlighted a few sections of the IoT Product definition in red. Those characteristics make IoT Products unique AND more challenging to manage. Let’s look at those areas in more detail:

A Combination of Hardware and Software

Every IoT Product includes hardware and software, making it a cyber-physical system. This is the primary reason managing IoT Products is so complex. Many Product Managers, and companies for that matter, have experience building either hardware OR software, but they struggle to manage an end-to-end product that has both hardware AND software.

I’m using the generic term “software” here, but that’s an oversimplification. IoT Products leverage many layers of complex software including firmware, embedded software, networking software, cloud software, cloud and edge APIs, front-end applications, Artificial Intelligence, and Machine Learning.

Measures Real-World Signals

IoT Products include sensors that measure real-world signals around their environment.

By real-world signals, I mean physical phenomenon such as temperature, sound, vibration, light, etc. In essence, this is “machine-generated” data collected from the physical world.

This is a key distinction between IoT Products and other types of products. Other types of products also collect data, but they do it via manual entry from users.

To learn more about IoT hardware devices and the process of acquiring data, I recommend my articles:

• How to Make Sense of IoT Hardware
• Data Acquisition: A Primer for IoT Product Managers

Connects to the Internet

This point should be obvious, but it has some nuances. The idea behind IoT Products is that they collect data locally (also called “at the edge”) and send that data to a remote location. The name “Internet of Things” implies that this communication happens via the open Internet, but that’s not always the case.

Depending on your application, your data might travel through private networks, proprietary networks, cellular and satellite links, etc. So keep in mind that not all IoT products need to use the public internet to be an “Internet of Things” product.

Some people focus on the term “Internet” to highlight the use of the IP protocol as a way to standardize connectivity across an ecosystem of products. That’s the right idea, but we are not 100% there yet. Many products (especially in well-established industries such as Energy or Manufacturing) don’t use the IP protocol or connect to the open Internet, and yet, I still consider them IoT Products.

In summary, as long as your product is able to collect sensor data locally and send it through some networking technology (or group of technologies) to a centralized location, then it qualifies as an IoT Product.

Aggregates Data In a Centralized Location

An IoT Product collects data and sends it to a centralized location for further analysis and processing. Notice I’m using the term “centralized location” as opposed to “the Cloud”. That’s because I want to make the distinction between on-premise solutions, private clouds, and public clouds.

Your choice of centralized location depends on your application. Most products leverage public clouds in the form of IoT platforms, but that’s not the only way to do it. Some applications in very critical industries such as Manufacturing, Energy, and Military often prefer to keep control of their data and utilize on-premise deployment or even private clouds.

To learn more about IoT platforms, I recommend these resources:

• Should I Use an IoT Platform?
• Podcast episode – Behind the Scenes of the Samsung ARTIK IoT Platform
• Podcast episode – Behind the Scenes of Microsoft Azure IoT

Provide Value to a Customer

This is the most important part of the definition, and it’s the part that many people take for granted when defining the Internet of Things.

The goal of any product—IoT products included—is to provide value to customers. Period. The products need to solve a problem, a pain, a need. But unfortunately, that’s where many IoT Products fall short today. In fact, many companies believe that IoT by itself is a silver bullet for generating more revenue and larger profits.

So many companies begin building IoT products without a clear understanding of the value they want to provide. And that’s why so many companies fail.

That’s also why the Internet of Things has a bad reputation in the media and why so many companies are losing money in this space, unable to realize the ROI for their initiatives.

I’ve written before on this topic in my article: People Don’t Buy IoT, They Buy a Solution to a Problem. That’s where the value of the IoT Product Manager comes into play. It is our role to understand our customer’s needs and leverage IoT as a tool to provide value.

The Bottom Line

The Internet of Things is here to stay. It represents today’s state-of-the-art technology and has tremendous potential both for companies and Product Managers to combat some of the world’s biggest problems.

Now that you can define the Internet of Things, the next step is to read about the 5 technology building blocks that are included in every IoT product.