The Internet of Things (IoT) is the network of physical objects accessed through the Internet. These objects contain embedded technology to interact with internal states or the external environment. In other words, when objects can sense and communicate, it changes how and where decisions are made, and who makes them, for example, Nest thermostats.

The Internet of Things (IoT) emerged as the third wave in the development of the Internet. The Internet wave of the 1990s connected 1 billion users, while the mobile wave of the 2000s connected another 2 billion. The loT has the potential to connect 10 times as many 20 billion “things” to the Internet by 2020, ranging from bracelets to cars. Breakthroughs in the cost of sensors, processing power and bandwidth to connect devices are enabling ubiquitous connections at present. Smart products like smart watches and thermostats (Nest) are already gaining traction as stated in the Goldman Sachs Global Investment Research report.

IoT has key attributes that distinguish it from the “regular” Internet, as captured by Goldman Sachs’s S-E-N-S-E framework: Sensing, Efficient, Networked, Specialized, Everywhere, These attributes may change the direction of technology development and adoption, with significant implications for Tech companies - much like the transition from the fixed to the mobile Internet shifted the center of gravity from Intel to Qualcomm or from Dell to Apple.

A number of significant technology changes have come together to enable the rise of the IoT. These include the following:

• Cheap sensors - Sensor prices have dropped to an average 60 cents from $1.30 in the past 10 years.
• Cheap bandwidth - The cost of bandwidth has also declined precipitously, by a factor of nearly 40 times over the past 10 years.  
• Cheap processing - Similarly, processing costs have declined by nearly 60 times over the past 10 years, enabling more devices to be not just connected, but smart enough to know what to do with all the new data they are generating or receiving. Smartphones - Smartphones are now becoming the personal gateway to the IoT, serving as a remote control or hub for the connected home, connected car or the health and fitness devices that consumers have increasingly started to wear.
• Ubiquitous wireless coverage - With Wi-Fi coverage now ubiquitous, wireless connectivity is available for free or at a very low cost, given Wi-Fi utilizes unlicensed spectrum and thus does not require monthly access fees to a carrier. 
• Big Data - As the loT will, by definition, generate voluminous amounts of unstructured data, the availability of Big Data analytics is a key enabler.
• Pv6 - Most networking equipment now support IPv6, the newest version of the Internet Protocol (IP) standard that is intended to replace IPv4. IPv4 supports 32-bit addresses, which translates to about 4.3 billion addresses - a number that has become largely exhausted by all the connected devices globally. In contrast, IPv6 can support 128-bit addresses, translating to approximately 3.4 x 1038 addresses-an almost limitless number that can amply handle all conceivable IoT devices.