How does IoT work?

The IoT concept is simple to understand but the technology behind and how it works is definitely much more that meets the eye. Let us try and understand it in simpler terms here.

Components of IoT

To understand the working, it is essential to know what are the components that make the magic work. The main components are 1) Sensors/Devices 2) Connectivity/Network 3) Cloud 4) Analytics Engine.


The “things” in IoT come to life because of these sensors or devices. In cases where the heating of a machine is being monitored heat sensor is either a part of a system of sensors attached to a device or tag or is the tag itself. The tags are used as the identifier for the machine. To provide identity, the tag provides a Universal Id as well as IP address on the associated network. There are other intermediate devices called the gateways, which act like gatekeepers sensing the presence of the devices/tags and transmitting the same to the cloud.


These devices/sensors communicate with the cloud through the gateway. The devices communicate using multiple protocols like bluetooth, wifi, LoRaWan (low power WAN) etc to the gateways which have interfaces to these communication protocols. The gateways then act as the conduit to the cloud part. The choice of these sensors and the communication network are determined the solution and the type of application. Thus in an application where the tracking of the devices is needed over a large area like the case of tracking of people moving in terrain bluetooth based devices will not work.


This would be the server or central command center which would receive all the data transmitted. In some systems the communication is driven from this center. This cloud is the brain of these systems. Here based on the information and data obtained, the messages which may be of the type like data, control etc would be routed to the respective devices. Thus if it is determined that there a door to a temperature controlled room is opened by an unauthorized personnel then a message is send to the security. Now the cloud center would determine if the personnel is authorised and then based on the required action send out warnings to different devices.

User Interface

Lastly there needs to be an interface to this entire system. This may manifest typically as a mobile application and it can also be as a web based application. This will help to provide the Machine to People interface to the solution. This interface will help the user to interact with the system, like in case of a home automation the user interface provided will help the user to switch on or off the lights or fan in a specific room. In a industrial application, the shop floor manager can directly control a machine based on the data inputs.

How IoT components work together to deliver value?

Let us see how in a real scenario, these components together work to help the business outcome. A shopping mall would be happy to know where their customers spend more time, what items does the customer show interest ? ultimately they can even determine if the items are getting picked for buying.

Each customer entering the mall is provided with a shopping cart or bag which would act as tag. The shopping showcases would have their own gateways to know how many tags are coming near and spending time at the showcase. The tags would announce their presence as the customer walks around the mall. The gateways determine from the strength of the signal the distance or proximity to the showcase. This signal data captured by the gateways is sent to the cloud. The signals from the gateways (more than one gateway would be picking the signal) is used to determine which gateway (showcase) is tag (customer) closest. This would give information as to how to how many people came towards the showcase as well as how much time was spent by the customer. This can be even more enhanced with application of Artificial Intelligence and Machine Learning to learn more in terms of customer behaviors. The businesses can now conduct studies and come to some realistic conclusions based on actual customer choices and actions instead of depending on feedback and surveys which can be misleading.