The phrase “Internet of Things” (IoT) was coined by Kevin Ashton in 1998. He described the IoT as “a standardised way for computers to understand the real world”. Gérald Santucci, Head of Internet of Things and Future Internet Enterprise Systems at the European Commission in his text “The Internet of Things: A Window to Our Future” estimates that the IoT will primarily expand communication from the seven billion people around the world to an estimated 50 – 70 billion machines. Sophie Curtis writing in Techworld estimates the number of Machine-to-Machine (M2M) connections to be as high as 50 billion by 2020 and for these connections to reside within virtually every major market category – from healthcare to transportation and energy to agriculture.

In what is called the Internet of Things (IoT), sensors and actuators embedded in physical objects — from containers to pacemakers — are linked through both wired and wireless networks to the Internet. When objects in the IoT can sense the environment, interpret the data, and communicate with each other, they become tools for understanding complexity and for responding to events and irregularities swiftly. The IoT is therefore seen by many as the ultimate solution for getting fine-grained insights into business processes — in the real world and in real-time. (IoT 2012 Organizing Committee, 2012)

Machine-to-Machine (M2M) is the technology behind the Internet of Things. This is the technology that will enable the smart cities in the future. Already a global organisation to set up standards for efficient deployment of machine-to-machine communication has been set up.

Deployment of physical information system has already started with some of them already working without any human intervention. Patients with chronic ailments can be fitted with sensors and monitored continuously giving doctors early warning of conditions that might result in expensive hospitalisation and care. This alone could lead to savings of billions of dollars by reducing hospitalisation and treatment costs. Businesses will be able to track the movement of their products and in theory never run out of stock. The car industry is already developing systems like braking systems that can detect imminent collisions and take evasive actions.

The Internet of Things has great promise. There are still a lot of business, policy and technical challenges to overcome before it becomes widespread. Challenges like data privacy and security, legal frameworks for bad decisions by automated systems, the cost of sensors and actuators is still high and needs to fall further to a point where it sparks widespread use. Networking technologies also need to improve to a point where there is free flow of data between sensors, computers and actuators.