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What is the Internet of Things?

What is the Internet of Things?

If you use a smart thermostat or wear a fitness tracker – you are part of the Internet of Things (IoT). McKinsey defines IoT as “physical objects embedded with sensors and actuators that communicate with computing systems via wired or wireless networks—allowing the physical world to be digitally monitored or even controlled."

In this short explainer, McKinsey dives into what IoT is, its applications and economic impact, the platforms it operates on, and what dynamics impact IoT adoption. It also take a look at the Industrial Internet of Things (IIoT) and the Internet of Things B2B uses.

IoT's potential and its applications

Using a variety of technologies, IoT connects the digital and physical world. Physical objects embedded with (wireless or wired) sensors will monitor certain and things and act in response to the data collected. IoT therefore offers companies with access to data and analytics regarding their products, services, and efficiency of operations. The explainer estimates that the value of IoT could reach up to $12.5 trillion globally by 2030.

While IoT can be applied in a wide variety of settings, the article sums it up in 9 categories including human health, retail environments, standardised production environments and vehicles.

Choosing your IoT platform

To choose an IoT platform that is best suited to you needs, it’s important to know your company’ strategy. McKinsey outlines 5 characteristics to take into account to help make this decision: 

  • Application environment
  • Data management
  • Ownership of cloud infrastructure
  • Security
  • Edge processing and control

Learn more

Curious to learn more about what the Internet of Things (IoT) is, and how it is embedded in your daily life or could be applied to your company? Read the full explainer

Learning content

Target audience
Digital skills for ICT professionals and other digital experts.
Digital skill level
Geographic scope - Country