Features > IoT
Answers to IoT, the Latest Trend in IT -Talk Service-Oriented IoT (1)-


Have you ever wondered what ‘IoT’, the term being used so often in the media lately, means?

IoT stands for Internet of Things, but what does it actually mean for things to be connected to the internet?

To answer these questions, I’d like to talk about the definition of IoT and its prospects in the market.

What is IoT?

IoT was definitely one of the hottest topics in the information and communications technology trends. CES, in which you can see the newest IT trends of the year, also introduced IoT products and services like smart homes, wearable devices, smart cars, robots, and drones. Sectors like virtual reality and 3D printing were also mentioned in the realm of IoT as they are considered the kinds of technology that facilitate IoT environments.

In this context, IoT seems to cover all the newest IT products and services, as everything that can be connected to the internet is taken as IoT in a broader sense. To specify the concept, ‘products that are connected to the internet’ basically mean ‘PCs, smartphones and things that are connected to the internet’. We can see that the category of ‘products connected to the internet’ has developed over the history of IT.


What IT, mobile, and IoT have in common

Recent IT services also feel like versions of IoT services. This is because IT services, mobile services, and the IoT services all have something in common: They create, transmit, and save information to provide it as a form of service to a third person.

What is the difference between recent IoT and more traditional technologies such as ‘ubiquitous computing’ in the PC internet and ‘M2M (Machine to Machine)’ in the mobile era?

As mentioned earlier, what they have in common is that they are all services which create, transmit, save, process, and utilize information. In the past, however, it was quite expensive to establish the technology and complicated to keep and manage the compatibility between products. Although these services were promoted as pilot projects in public sectors, they failed in creating a larger market and customers soon turned away

However, as the investment effect rises thanks to the evolution of communication environments and lowered costs, as well as the emergence of miniaturized, high-performance, and low-price sensors, the era of IoT is now upon us.


How the era of IoT was born

IoT, conceptually much like ubiquitous computing, now has better marketability and greater cost efficiency due to changes in the IT industry and recent technological advancements for implementation. Considering that many IT service companies had focused on ubiquitous computing to create a new business territory, it’s understandable when some say IoT is just another marketing strategy with different objects.

Nevertheless, it’s still important to remember that the focus of the system investment and operation is moving from infrastructure to services, along with technological developments and reduced prices. Let’s take a look at the field of ‘service oriented IoT’, then, with ‘intelligent services applied’ to the ‘things connected to the internet’.

Service-Oriented IoT

Service-oriented IoT is enabled through diverse devices with sensors. IoT based on services continuously collects meaningful information from sensors on various devices, stably transmits and receives information through wired/wireless networks connected directly/indirectly, and provides intelligent and automated services through cloud computing and big data analysis. This can basically be called a ‘data-based intelligent service’.


Service-Oriented IoT

The biggest characteristic of service oriented IoT is that four different technological factors (smart device, advanced network, big data analysis and cloud computing for automated intelligent services) as well as their insights for business are converged. When each and every one of them is combined, a real sense of IoT can be enabled.

The Current Status and Prospects for the IoT Market

Now that we’ve learned about the definition of IoT, let’s see how the IoT market is doing and what its prospects are like.

  • The market scale and growth 

Estimated IoT business revenue based on market growth
(Source: THE INTERNET OF EVERYTHING: 2015, BI Intelligence, Feb 2015)

According to Business Insider (BI), a market research institute, the global market for IoT will reach $600 billion by 2020, with an average annual growth rate of 44%. They especially emphasized that a large portion of this will be from software and services.


IoT service revenue estimation
(Source: Internet of Things Local Briefing, Gartner, Oct 2014)

Gartner has more of a conservative estimate for the scale of the global IoT market, expecting it to hit $328 billion by 2020 although service is still expected to take up 80% ($262 billion) of all sales.

Though each institute has a different prediction on how big the market will become, they agree on one thing: the software and service industry will take a majority of the market. Even though hardware like sensors is necessary as the foundation of IoT service, the keys to added value creation is software and services.

  • Market prospects for specific segments

Currently, IoT services targeting individual customers such as energy conservation, security, and health care services based on smart electronics tend to draw the most attention. Separating the public, private, and corporate sectors for various services, however, the markets for the public and corporate sectors are expected to take up bigger proportions.


Proportion of each segment in 2014 and 2018
(Source: IoT semiconductor sales by system segments, IC Insights, Dec.2014)

These are the major segments of the IoT market according to reports from IC Insight and Business Insight: connected cities (smart grid, intelligent streetlights, smart streets, etc.), industrial internet (distribution, healthcare, factories, etc.), wearable systems, connected vehicles, and smart homes.

IC Insights expects connected cities (37%), industrial internet (36%), connected vehicles (13%), connected homes (10%), and wearable systems (4%) to subdivide the market by 2018.

They also reported that the SCM (Supply Chain Management), distribution, and healthcare services within the corporate device sector will receive large investments. Companies will see great investment efficiency in aspects of operation efficiency, customer service, organizational cooperation, and strategic decision making processes.

IoT Service Implementation: LG CNS Smart Transportation System

So far, we’ve talked about the definition of IoT and its market prospects. Some of you might still feel quite distant from the topics like the industrial internet, connected cars, and smart grid. There’s one example, though, that shows how IoT can be used for some of the common services we see daily. Let me introduce you to LG CNS’ Smart Transportation system.


LG CNS Smart Transportation system

Under this system, the transportation card communicates with transportation terminal equipment through a standard wireless network. The terminal is then connected to the internet by mobile communication or wireless LAN. The information gathered here is used for calculating transfer discounts and more general intelligent services to optimize operations such as adjusting bus routes and intervals.

From transportation cards and terminal equipment to network and big data analysis, LG CNS’ IoT for end-to-end services is providing the ‘Smart Connect, Automatic Fare Collection, Fleet Management System’ solution. IoT doesn’t seem so distant, as over five million Seoulites use this system each day.

Today, we learned about the definition of IoT and its prospects in the market, as well as its service implementations in reality.

In the second posting ‘implementation of IoT’, we will go through how IoT is being utilized in our lives and how we can change the industry.

Written by Youkyoung Lim, senior researcher at LG CNS Technological Strategy Team

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