What you need to know about the Internet of Things

Connected vehicles, virtual assistants, intelligent refrigerators and smart robots: The Internet of Things impacts everyday life in all kinds of areas. But what does the term actually mean? And what are the advantages and challenges of the IoT?

Every morning the shutters open at the appointed time, the heating in the bathroom is turned on automatically and the coffee machine starts brewing the first cup of coffee. When you set off for work, the garage opens by itself and the alarm system is activated. The connected car receives information about a traffic jam as you drive to work and suggests a new route on its own. And the production plant at the company communicates directly with the ordering system and logistics to ensure the relevant goods are made. All these connected, smart devices and machines are part of the Internet of Things.

Definition: What is the Internet of Things?

The Internet of Things (IoT) unites physical objects with the virtual world. Intelligent devices and machines are connected to each other and the Internet. They capture relevant information about their direct environment, then analyze and link it. The devices perform specific tasks on that basis. A sensor, for example, measures the temperature outside and the smart device it is installed in responds by turning up the heating. All of that is done automatically, without users taking any actions themselves. Users can still control the IoT devices remotely if they wish, for example, using an app on their smartphone.

That is made possible by the interplay between connected components, such as microcontrollers, sensors and actuators, which convert electrical impulses into pressure, motion, temperature or other mechanical parameters. IoT systems are complex: They combine individual devices, databases and gateways linking multiple networks with each other. They are connected to the Internet, usually over a wireless interface, and send data or receive commands.

Why are sensors that important for the Internet of Things?

Why are sensors that important for the Internet of Things?

Whereas humans can perceive their environment with their senses, machines need sensors to do that, which is why sensors are the most important suppliers of data in the Internet of Things. They come in different types, for example, for determining the temperature, humidity, motion, light, mechanical pressure, CO2 content, ultrasound or air pressure. The sensor on an object ascertains the status of its environment, and the microcontroller in the system processes the collected data. This data is then transmitted over the network to a software application. The sensor can be linked via Bluetooth to a smartphone app with which users can read the data. Or the information is sent over the Internet to a cloud platform on which the data is analyzed. If, for example, a sensor in the smart home indicates that it is getting dark, the shutters are lowered. Temperature sensors can be used in industry to precisely control heating or cooling valves, for instance. They measure how warm or cold a room or hall is and the valves react accordingly.

The rise of the IoT – it all began with a toaster

The Internet of Things emerged as a technological infrastructure in the 2000s. Yet there was an everyday object that was able to transmit information on its status wirelessly before that: In 1982, computer science students in Pittsburgh, U.S., monitored how full a beverage vending machine was over the precursor to the Internet. The first connected home appliance followed in 1990, in the early days of the World Wide Web – even before the first website, which was launched 1991: The U.S. software and network expert John Romkey and the Australian computer scientist Simon Hackett connected a toaster to the Internet during a conference. It could be turned on and off online. That toaster is now regarded as the first-ever IoT device.

The term “Internet of Things” was coined by the British researcher Kevin Ashton back in 1999. The expert for sensor and identification technologies at the Massachusetts Institute of Technology used it to describe passive RFID tags. RFID (radio-frequency identification) is a technology where a device can read and store data from a tag in a non-contacting manner. Here, too, physical objects were therefore connected with the virtual world, albeit in a narrowly defined area. A little later, in 2000, the electronics company LG presented the idea of an Internet refrigerator: It notifies owners when the cheese, butter or eggs in it have run out.

Connectivity has expanded significantly since then: The network specialist Cisco calculated that by 2008 there were more devices connected to the Internet than people on Earth. That includes not only smartphones and computers, but all sorts of objects. More and more devices will be smart in the future: Around 75 billion devices worldwide will be connected to the Internet in 2025.

Advantages and application areas of the Internet of Things

Smart devices can now be found in private households, factories, vehicles, the healthcare sector and cities. Their aim is to make our everyday life easier and production processes more efficient, reduce power consumption thanks to greater efficiency, yet also help preserve the environment, optimize traffic flows or simplify life in megacities.

Industry 4.0

Industry 4.0 is the Fourth Industrial Revolution: The steam engine, electric power and computerization of production are now being followed by networking of machinery, goods and systems. The entire value chain is becoming digital and hence more efficient. Products communicate with devices in largely automated processes, for example, and can initiate the next manufacturing step by themselves. Machines detect malfunctions and request maintenance work on their own. Production robots and transportation vehicles communicate automatically with warehouse logistics. The result is not only greater efficiency, but also more safety for employees: If forklift trucks or machines are equipped with sensors, they scan their environment and stop before an accident can occur. This means of capturing and analyzing data is also spawning completely new services. For instance, a company can make its portfolio more flexible and offer further services with the aid of the Internet of Things.

Processes are easier to plan and goods can be produced faster in the connected infrastructure of Industry 4.0. That saves time and cuts storage costs: Enterprises expect their efficiency to increase by an average of 19 percent over the next five years, according to a study by the auditing firm PwC. Moreover, the time to market for new products is expected to be reduced by an average of 17 percent and production costs by around 13 percent.

Smart home

The lighting switches itself on and off in the evening, while smart electricity meters record and regulate power consumption: Various everyday objects are connected in a smart home – coffee and washing machines, refrigerators, thermostats or light switches, for example. The various devices are linked by means of a central control unit, termed a hub or gateway, and connected with the Internet. IoT devices can not only enable greater convenience and energy efficiency in the smart home, but also more safety: Connected surveillance cameras and smoke detectors, for instance, automatically pass information on to the user’s smartphone and directly contact the emergency services if needs be. Users can also control the light or music in the smart home, have the weather forecast or news read out to them or order goods online by issuing voice commands to digital assistants.


Wearables, such as fitness wristbands, smart watches or fitness trackers, are worn on the body and can record health data, such as your pulse or blood pressure. That data is analyzed by an app and presented in the form of vivid charts or graphics. There are also already smart medical devices, such as pacemakers or blood glucose monitoring systems. If they detect a problem, they alert the user or emergency services right away. E-health devices can thus ensure that the elderly or ill can live more safely in their own four walls: Smart pill boxes ascertain whether patients have taken their medication or fall detection sensors in the carpet report if they’ve stumbled over. Connected medical devices are also used in hospitals: Smart beds supply information on the occupancy rate, for example. Results from the laboratory and measurements from various devices are then combined and automatically recorded at a central point.

Connected vehicles

Most cars are already equipped with hundreds of electronic control units and semiconductors, including radar sensors. They measure speed and distance to determine how close another object or person is. Since April 2018, every new car in the EU has also been fitted with “eCall,” an emergency call system that can automatically summon help after an accident thanks to an integrated SIM card. Connected vehicles are also linked via WiFi or mobile communications, meaning drivers are notified about traffic jams, for example. Vehicles can also be serviced faster over the Internet and with the aid of software updates over the air (SOTA) – without having to be taken to a workshop.

Cars will also drive autonomously in the future. Various sensors are also required for that: Ultrasonic sensors identify obstacles, radar sensors detect other road users and measure their speed and position, while video sensors supply additional information. Among other things, connected vehicles are intended to improve road safety. According to a study by Bosch, safety systems and cloud-based features could prevent 260,000 accidents involving injuries in Germany, the U.S. and China alone.

Smart city

The UN predicts that two-thirds of the world’s population will live in cities by the year 2050. And by 2030 there will likely be 43 megacities with more than ten million inhabitants. That will pose challenges, for example, in terms of infrastructure or air quality. Consequently, the cities of the future must become more sustainable and safer so that our quality of life is enhanced. The buzzword “smart city” subsumes ideas and concepts that are supported by connected technologies. They originate from diverse areas, such as energy, mobility, urban planning, administration or communication. Traffic lights then switch the required lane to green as soon as a fire engine or bus approaches. Streetlights switch themselves on and off as and when required or could ensure more safety with the aid of integrated cameras. Digital systems control the infrastructure in local public transport, but also that of water, waste water and recycling systems. Administrative agencies can offer their services to citizens online to save time and paper.

How machines communicate with each other

How machines communicate with each other

Devices must be able to communicate with each other without any human intervention so that processes in the Internet of Things can be automated. A machine-to-machine (M2M) infrastructure enables information to be exchanged between vehicles, systems, machines, containers, electricity, gas and water meters, or robots – and also with a control center. M2M needs a data endpoint (DEP), in other words, the device or machine, a communications network and a data integration point (DIP), such as a server. One example: A plant produces goods and sends the quantity of raw materials to the server via WiFi. The server remotely monitors whether the machine requires servicing or new raw materials. To enable communication, the devices not only have sensors, but also a transmitter to send data over the communications network – via mobile communications, WiFi, a fixed-line network, Bluetooth, satellite or RFID. The receiver is a central system, such as a server. It gathers the information, processes it and initiates an action.

Challenges in the IoT

Many examples illustrate how smart devices in the Internet of Things help make our everyday life easier. Yet they also entail diverse challenges that should not be ignored.

Big data and IoT Security

The quantity of data collected worldwide is skyrocketing: Whereas 16.1 zettabytes were generated in 2016, that figure is expected to be 163 zettabytes – ten times higher – in 2025, according to IDC’s market researchers. Devices in the Internet of Things will account for a large slice of that. They collect vast quantities of data. And that creates challenges when it comes to protecting and securing data. Whereas data security focuses on preventing unauthorized access to data, data protection involves safeguarding our privacy.

Basically speaking, data is the foundation of the Internet of Things. Evaluating and analyzing it is vital to making our everyday life smart. But when devices are connected to the Internet, they are also vulnerable to attack. Cybercriminals can take over control of them, sniff out data or even sabotage industrial plants. Two attackers broke into the infotainment system of a connected car in 2015 simply to show that it was easy to do so. They turned the engine off and the radio on. In the worst-case scenario, criminals can even paralyze the infrastructure of a region or a whole country – as happened in Liberia at the end of 2016, when the Internet was shut down. According to reports, hackers corralled millions of IoT devices into a botnet and then conducted distributed denial-of-service (DDoS) attacks. In such DDoS attacks, requests are simultaneously sent by many devices to a server until the latter is overloaded and can no longer respond. Attackers can also control surveillance cameras, spy on users or switch off transmission. IoT devices in the smart home are often inadequately protected, since there are no consistent security standards here. Companies face the threat of production outages if criminals paralyze the smart machines or steal sensitive data.

New challenges are also arising when it comes to protecting data. The question is: What happens to all the data and where is it stored? The manufacturer of a fitness tracker, for example, could create a precise user profile from the information collected and link it to other data. As in an industrial enterprise, the information has to be protected effectively against being accessed by unauthorized persons. If not, there is the risk of the data being stolen: Criminals can also assume the identity of private users or specific employees and, for instance, access bank accounts or e-mailboxes.

But how can such attacks be prevented? It is vital for communication between the devices and servers to be secured. Effective protective measures include reliable access management with security authentication and encryption of the transferred data. Smart devices, connected vehicles and Industry 4.0 plants must therefore always be protected when in operation in order to counter the threat of data theft, fraud, manipulation or other attacks effectively.

Lack of compatibility and increasing performance requirements

One further challenge for manufacturers of IoT devices is to develop multi-device and multi-platform applications. At present, sensors, platforms or operating systems often work only with specific systems. The requirements demanded of a device’s individual components therefore vary. Ideally, it needs cross-platform hardware and software solutions, as well as specific software for particular applications. The demands made of the devices are also increasing, which poses further challenges for manufacturers. Sensors and semiconductors are expected to be more and more powerful, smart and secured and only have small latencies. Yet they should also use less power and be as small and inconspicuous as possible.

Infineon’s contribution to the Internet of Things

It is vital for connected devices in the Internet of Things to be smart, energy-efficient and protected. That’s only possible with technologies that semiconductor companies like Infineon have developed or driven. Sensors, for example, are the basis of the IoT, since they collect important data from their environment, whereas power semiconductors convert data into electronic signals and microcontrollers regulate entire systems.

The diverse semiconductors made by Infineon are used in many areas of the IoT: The company’s LED technologies power professional lighting systems in smart cities, for instance. Sensors and microcontrollers are used for smart infrastructure and transport systems, but also in the smart home. In Industry 4.0, not only special sensors, microcontrollers and power modules, but also security chips fulfill industry’s high requirements. They help protect systems and devices in the smart factory against attackers. Infineon also equips connected cars, for example, with radar sensors. Semiconductor technologies are also deployed for authentication and encrypted data transfer.

Infineon uses innovative materials, such as silicon carbide (SiC), for these solutions. They can handle higher loads and voltages, yet also consume less energy.

Outlook: The future of the IoT

The Internet of Things will keep on growing. Connected cars will find the quickest and safest routes in the future. Connected streetlights will record data on traffic, safety, lighting and even the air quality. Connected air taxis will take people in cities from A to B. This development will be driven by expansion of the new high-speed mobile network 5G, which enables faster and more stable data transmission. That will be a must, since the greater the number of devices that communicate with each other, the greater the volume of data there will be. The 5G mobile network standard can cope with that torrent of data and process it in the cloud.

Edge computing could also grow in importance moving ahead: IoT devices will then be able to process data directly on the device where it is generated. That means data can be analyzed faster, for example, in the connected car, than in the cloud. Artificial intelligence (AI) will also drive the Internet of Things. Computers and algorithms will then be able to handle problems on their own and become better and better (“machine learning”). Four-out-of-ten industrial companies already use data analytics and AI for digital product development. It is therefore likely that the Internet of Things will only be able to unfurl its full potential when it is combined with artificial intelligence. Companies already learn how to improve their products by analyzing data. However, they can boost that ability if machines and algorithms can detect patterns on their own.

The most important questions and answers on the IoT

The Internet of Things (IoT) unites physical objects with the virtual world. Smart devices and machines are connected to each other and the Internet. They capture information about their direct environment with the aid of sensors, then analyze and link it and make it available in a network. The devices perform certain tasks on the basis of that.

Everyday objects in the smart home, as well as connected vehicles or medical devices that record health data, are part of the Internet of Things. The IoT also includes smart city concepts. Plant and machinery are connected in production and at enterprises; the term used for that is Industry 4.0 or Industrial IoT (IIoT).

The Internet of Things is intended to increase productivity and make our life in general more convenient and efficient. Connected devices and machines automatically capture relevant data from their environment and supply analyses. Users and enterprises thereby obtain new information, save time and cut costs. Devices perform many of the tasks automatically – from turning the heating or lights in the smart home on and off to in-time production of goods in Industry 4.0.

If devices and machines are connected to the Internet, they can also be attacked from the Web. Private users and enterprises therefore have to try and ensure that criminals do not gain control of the devices – for example, to steal data or sabotage plant. The devices also collect an enormous amount of data. It has to be protected when stored. Up to now, however, there are hardly any consistent security standards for IoT devices – or for their compatibility. Sensors are also expected to be more and more powerful, smart and secured – yet consume as little energy as possible.

More and more devices and machines will be connected in the future. 5G, the next generation of mobile communications, and advances in artificial intelligence will give the Internet of Things a further boost. As a result, companies will be able to develop new and improved products; and the everyday life of many users will be more convenient and safer.

Last update: July 2019