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IoT in 2024: What it is, History, Use Cases & Functionality

Cem Dilmegani
Updated on Jan 11
5 min read

There are more IoT devices than people in the world. According to Cisco, the number of devices that are connected to IP networks is expected to be 3 times higher than the global population in 2023, compared to 2.4 times in 2018.

IoT can help us in:

Moreover, because of 5G’s faster speed compared to 4G, 5G-IoT integration can holistically change how people live and industries operate.

This in-depth guide will provide you with everything you need to know about the Internet of Things (IoT) technology in 2023.

What is IoT?

Internet o Things (IoT) refers to interconnected devices that are embedded with sensors, software, or other related technologies. By networking different devices or ‘things’ together, IoT enables machine-to-machine connection (M2M) with little or no human intervention. Through these networks, IoT devices can collect and share data about the environment they are operating in – with the central server or other devices. Through IoT;

  • Real-time data can be collected due to proximity to homes, factories, etc. For example, as a result, detecting where problems have occurred would be easier since every IoT device has a unique Internet Protocol (IP) address and transmits real-time data
  • Faster and decentralized decisions can be taken. Leveraging edge analytics and AI-based technologies, devices can autonomously make decisions.

What is the history of IoT? How was it developed?

In the early 80s, David Nichols at Carnegie Mellon University wanted to buy coke from the vending machine but felt too lazy to go there. He wanted to know in advance whether the machine had enough Coke bottles or whether they were cold or not. He came up with the idea of connecting the device to ARPANET, a pioneer of today’s internet. Together with his colleagues, he developed a program that checks the machine’s inventory beforehand which led to the invention of the first Internet of Things (IoT) device in 1982.

How does IoT work?

An image showing how IoT functions.
Source: Zibtek

There is not a single IoT architecture, however, the most basic and commonly agreed format is the three-layer architecture.

  • Perception Layer: It refers to the physical layer of the architecture. It involves sensors, actuators, and edge devices that are embedded in ‘things’. They collect data from the environment they operate.
  • Network Layer: It handles the transmission and processing of all collected data. Through routers and gateways, IoT devices could be connected to other smart devices, servers, and network devices.
  • Application Layer: It performs end-user services and consumer applications. It is the layer where consumers interact with the devices.

What are the common use cases in IoT?

A list of the common use cases of IoT. Factories stand to benefit the most from IoT.
Source McKinsey

For customers, most well-known IoT devices involve consumer goods such as voice assistants and smart wearables. However, IoT technologies have a wide range of uses in;

  • Consumer
  • Industrial
  • Public sector

IoT in Consumer Applications

Smart Homes

One of the most prominent benefits of smart homes would be achieving better energy management. Heating and electricity usage in homes could be adjusted by real-time data. For example, room temperature could be adjusted depending on current weather conditions, or electricity usage could be lower at times when residents are not home.

Consumers can make their lives more convenient through remote control appliances. It would be easier to control devices via voice, especially through voice assistants. By analyzing real-time data, devices could adjust themselves based on customers’ actions. For example, devices could prepare themselves (e.g. heating starting up, coffee machine starting to work) before an alarm woke up the homeowners. Customers could remotely monitor their homes for more efficiency and better security, even when they travel to different cities.

Smart Healthcare

Since they are closer to human skin, smartwatches and wearables can collect data on the current health status of customers. This can be especially helpful in determining cardiovascular health problems even before they occur. Since the start of the Covid-19 pandemic, access to one-by-one health care became more difficult. Remote monitoring of patients through IoT devices could enable receiving health services without the need for visiting health centers. However, there are challenges in achieving effective IoT applications in the health sector:

  • Device accuracy
  • Clinical validity
  • Privacy concerns over patients’ data collection

IoT in Industrial Applications

Smart Manufacturing

Manufacturing is one of the areas which IoT could have a large impact. The economic value of IoT in factories could be between 1-4 trillion dollars by 2025, according to McKinsey‘s prediction. Industries can leverage IoT especially through;

  • Predictive maintenance: Conducting maintenance work on a non-fixed schedule based on real-time data to prevent problems even before they occur
  • Manufacturing Analytics: Using historical machine data to predict and optimize machines’ future performance
  • Digital Twins: Creating digital/virtual replicas of physical entities (e.g. devices, systems, etc.) to make model-based decisions

Smart Logistics

In logistics, companies face potential challenges (e.g. delays, thefts and decay of transported goods) in every step. For example, most products including food and pharmaceuticals should be transported at a certain humidity and temperature. Through IoT;

  • Smarter fleet management could be achieved by tracking the exact location of goods and vehicles.
  • Damages and losses could be determined before the shipment arrives at the final destination.
  • Determining better and shorter routes based on real-time traffic data could save costs for companies.
  • Driver behaviors could be monitored remotely, eliminating human errors along the way.
  • Predictive analytics can be used to determine patterns that can cause loss and damage for companies in the future.

IoT in Public Sector Applications

Smart Cities

According to UN statistics, the number of megacities, where more than 10 million residents live, will rise from 33 to 43 in 2050. Also, nearly 70% of the world’s population is expected to live in urban areas. These lead to challenges like;

  • Resource management
    • Energy
    • Water
  • Waste management: Nearly 2 billion tonnes of solid waste is generated annually in the world. Also, at least 33 percent of that waste is not managed in an environmentally safe way. Smarter waste management and recycling could be achieved through sensors embedded in collections bins.
    • IoT technologies are mostly used for more efficient garbage collection. It is possible to check the fill level of garbage bins and optimize routes for garbage collection trucks. In 2009, the officials in Hague, Netherlands started to install sensor-enabled garbage bins to remotely monitor their fill levels and adapt their emptying schedule accordingly.
    • The next step in waste management would be developing “digital bins” that could differentiate and categorize materials through technologies like object recognition. This way, better efficiency in recycling could be achieved.
  • Security Management: Through cameras embedded in streets, house exteriors, and traffic lights, surveillance could be easier. Collected data could be shared with the police or public officers to detect and/or prevent crimes. However, especially using newly emerging technologies such as facial recognition raises concerns due to;
    • Lack of clear public policy over individuals’ rights
    • Bias in AI systems that power facial recognition could potentially harm minorities or disadvantaged groups
    • Mistakes that could cause false identification

On the positive side, smart city solutions are expected to be worth nearly 2.5 trillion by 2025, creating many business opportunities in the future.

For more detailed use cases, you can check our article 30+ IoT Applications/Use Cases of 2021.

What are the challenges of IoT applications?


As the number of IoT devices grows, security control over each device becomes harder. Also, many IoT devices do not share encrypted data with servers. This problem could be prevented with new machine learning approaches such as federated learning. This is especially important for healthcare applications since data privacy has greater importance in that industry.


As the number of IoT devices are expected to increase to 3 per capita, it becomes challenging to achieve interoperability between different devices and servers. However, world-leading technology companies including Apple, Amazon, and Google have formed the Connectivity Standards Alliance (CSA) to increase adaptation and standardization in the IoT industry.

If you would like to learn more about IoT-related topics, you can also check our related articles.

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Cem Dilmegani
Principal Analyst
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Cem Dilmegani
Principal Analyst

Cem has been the principal analyst at AIMultiple since 2017. AIMultiple informs hundreds of thousands of businesses (as per similarWeb) including 60% of Fortune 500 every month.

Cem's work has been cited by leading global publications including Business Insider, Forbes, Washington Post, global firms like Deloitte, HPE, NGOs like World Economic Forum and supranational organizations like European Commission. You can see more reputable companies and media that referenced AIMultiple.

Throughout his career, Cem served as a tech consultant, tech buyer and tech entrepreneur. He advised businesses on their enterprise software, automation, cloud, AI / ML and other technology related decisions at McKinsey & Company and Altman Solon for more than a decade. He also published a McKinsey report on digitalization.

He led technology strategy and procurement of a telco while reporting to the CEO. He has also led commercial growth of deep tech company Hypatos that reached a 7 digit annual recurring revenue and a 9 digit valuation from 0 within 2 years. Cem's work in Hypatos was covered by leading technology publications like TechCrunch and Business Insider.

Cem regularly speaks at international technology conferences. He graduated from Bogazici University as a computer engineer and holds an MBA from Columbia Business School.

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