The IoT story

From the first “thing” in the 1980s to 27 billion devices today – the rapid rise of a technology that’s changing the world.

The Internet of Things (IoT) is changing the way we live. Having become ubiquitous in the consumer economy, IoT is now emerging as a force in all industries. This is no coincidence. The Internet of Things creates measurable value for private and public organizations alike.

The first “thing” on the Internet was created in 1982: a soda machine at Carnegie Mellon University in Pittsburgh, Pennsylvania, that reported on the number and the temperature of the drinks it  contained. It was unique back then, but by some point in 2008 or 2009, the number of things connected to the Internet came to exceed the world’s human population for the first time in history. Since then, the “Internet of Things” (IoT) has experienced a rapid expansion. Some 27 billion devices are now connected to the data network worldwide, including sensors, household appliances, machines, wind turbines, medical devices, and cars – with dramatic increases expected. According to predictions, the number of “things” will exceed 30 billion in 2020 and 75 billion in 2025. At that point, there will be almost ten things connected to the Internet for each human on earth. The IoT market will also explode, from an estimated $248 billion in 2020 to roughly $1.6 trillion in 2025.

Data is valuable

There’s a good reason why more and more devices are being connected to the Internet: Data is valuable. The raw data (which can be provided by a refrigerator, a car or an industrial valve) is processed to derive new information. Value is created as soon as the information is used to trigger an action such as placing a maintenance order, jamming the brakes, or closing the valve. Several examples show how value is created by the IoT:

  • PRODUCT IMPROVEMENTS: In the food industry, monitoring of food processing temperatures, as well as the age and chemical make-up of raw material, increases the quality, safety, and shelf-life of products.
  • MAINTENANCE EFFICIENCY: Unplanned down time in factories or in transportation systems is not only an efficiency killer; it is expensive and dangerous. By detecting sub-optimal asset functioning (factory equipment, for example), maintenance can be performed before the equipment fails.
  • WASTE REDUCTION: Real-time information about resource consumption, be it electricity moving through a smart grid, gas flowing through pipes or material required in a factory, makes it possible to apply resources as needed as well as identify leaks, thus reducing or eliminating waste.
  • SUSTAINABILITY: IoT-enabled smart cities use sensors to collect data about weather and air quality. When air quality is deemed poor, the city takes immediate action (such as offering free public transportation) and can easily measure the impact of corrective measures.
  • (ENERGY) EFFICIENCY: A solar paneled shopping mall generates some of the energy it uses. An IoT-enabled solution collects and analyzes data about weather, energy consumption, and energy market prices. The system then automatically determines the most cost-effective way to use energy generated by the mall. Options included consuming the energy, storing it, or selling it at a high market price.
  • OPTIMIZED PRODUCTION: The IoT also plays a key role in the future of manufacturing. Industrie 4.0 is creating a new paradigm for production halls. By networking of all parts of the supply and production chains, production can be optimized and instantly adapted to new requirements including the production of customized products (batch size one) at competitive prices.
  • DISRUPTIVE BUSINESS MODELS: Changing the way business is conducted in industries, e.g. “Pay per Use” or “As a Service” business models instead of selling the machines.


IoT and AI

The tremendous quantities of data supplied by the IoT often conceal valuable information that can’t be found using simple analytical techniques like statistics. Artificial Intelligence (AI), on the other hand, is generally very successful at accomplishing this kind of task. For example, it can independently recognize patterns in measured values from production and use the information to continuously improve the manufacturing process – making artificial intelligence one of the main reasons that the IoT is booming. At the same time, the Internet of Things is driving the continuous development of AI. Training neural networks requires huge volumes of data that in many cases weren’t available until recently. The IoT has changed all that, because the connected “things” have been supplying more and more data that’s used to develop, improve, and train AI algorithms.

Processing the data: Cloud and Edge

Processing the IoT data or training and executing AI models in industrial IoT is nowadays done in a combination of Edge computing and Cloud computing. The Cloud is typically hosted in a data center located somewhere in the world and connected to the data sources in the field via Internet connectivity. Edge computing provides remotely managed processing power for analytics or other complex tasks directly in the field. The Cloud is ideally suited to store and process huge amounts of data and to train AI models. Edge operates close to the data sources on the customer premise and hence can react faster, avoid costly transmission of huge amounts of raw data to the Cloud, protect data privacy by keeping the data local and avoid the reliability issues introduced by best-effort Cloud connections. Edge computing can be realized on dedicated industrial PCs as well as on any free compute resources for example in network switches, controllers or field devices. 

IoT feeds theDigital Twins

An integral part of the „Industrial IoT” concept is that its components are enhanced by “Digital Twins” in the virtual world. The Digital Twin is a virtual representation of functionalities and data associated with a device or technical system. It covers the full lifecycle of the product: For the design and engineering phase, it may contain physical properties of the device, CAD drawings, and functionality descriptions. For production planning, it contains for example the assembly instructions. In production execution, it starts to collect information about the circumstances of production of the actual product like its quality. During operation and maintenance, all relevant events like critical sensor readings, faults, and service events are recorded. It is the role of IoT to collect the data from production and operation and feed it into the digital twins to keep the virtual representations up to date.

5G as the driver 

The Internet of Things is expected to receive a tremendous boost from the next-generation mobile network. One benefit of 5G is that sensors can be connected to the Internet inexpensively, without consuming a lot of energy and with short response times – which makes it extremely valuable for industry and self-driving cars, for example. Until now, devices have usually been connected by cables or established radio standards like WiFi, Bluetooth, or ZigBee.

“Ignoring cyber risks could destroy business”

The greatest risks posed by the Internet of Things are spies and cyberattacks, because every networked sensor and every refrigerator connected to the Internet can theoretically be misused as a gateway into a network. Highly sensitive data could then be deleted or modified, with devastating consequences. Siemens sees this as a tremendous concern in its interactions with customers every day. Natalia Oropeza, Chief Cybersecurity Officer at Siemens, summarizes the economic risk: “Ignoring cyber risks could destroy business.” Siemens has developed a comprehensive cybersecurity approach for optimally managing this ongoing threat

Christian Buck, Chris Winkler - Jan 2020

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