IoT Ecosystem Explained

While “Internet of Things” has become a buzz word that gets loosely thrown around by various companies, startups, and journalists, only a few can name the core components of an IoT network. In an IoT network, the interaction between different entities forms a cohesive ecosystem. Corporate leaders dipping their toes into the vast, complex IoT landscape may benefit from taking a close look at the individual components that can make or break an IoT ecosystem in order to understand its potential. Every IoT ecosystem consists of IoT-enabled devices (categorized as either sensors or actuators), a connectivity protocol, and gateways. Although technically optional, almost every IoT ecosystem also includes a central cloud with powerful computing capacities.

IoT Devices

IoT devices, both gather the network’s data and perform certain actions based on data gathered from other IoT devices. Needless to say, they form the backbone of the entire data-driven IoT ecosystem. Data is the only reason the term IoT even exists and an IoT ecosystem’s sensors play a crucial role in ensuring corporate data is both accurate and credible.

While pretty much any device can be turned into an IoT-enabled device, all of them can be split up into two categories based on their role within the IoT ecosystem:


Sensors are the most prominent examples of IoT devices. They gather data and observe even the most minor changes in their surroundings. An IoT-device equipped with a sensor can provide the cloud with accurate, real-time data at preset intervals. Literally, every type of sensor can be turned into an IoT-enabled device, and nowadays, there are sensors to measure almost anything. Even the average smartphone can be considered an IoT-enabled device with sensors, as it is a device connected to a network and features sensors, such as tilt sensors, cameras, motion sensors, fingerprint readers, and GPS. Here are some examples of the most commonly utilized sensors in IoT ecosystems:

  • Temperature sensors
  • Proximity sensors
  • Water quality sensors
  • Infrared sensors
  • Pressure sensors
  • Chemical sensors
  • Gas sensors
  • Smoke sensors
  • Level sensors
  • Accelerometers
  • Gyroscopes
  • Optical sensors

This list only scratches the surface. There are many other types of sensors, and some of these sensors mentioned can be divided further into sub-categories based on how they collect the data. For instance, there are different types of proximity sensors (Inductive Sensors, Photoelectric Sensors, Ultrasonic Sensors, or Capacitive Sensors), which all have different pros and cons. There is no perfect sensor, but there is an ideal sensor for each situation. Some factors to consider when choosing a sensor for an IoT device soon-to-be deployed are: Their accuracy, their working range, their reliability of results, resolution of gathered data and how well it can deal with interference, for example, noise or environmental conditions which may manipulate data.


Actuators are the complete counterpart to sensors. Sensors gather data, while actuators act on data. While sensors mostly transmit data to the cloud of the IoT ecosystem, actuators receive data or commands, which it uses to perform a certain action. Not all IoT ecosystems incorporate actuators as many IoT networks serve a passive function, simply to gather large amounts of data used to make an informed corporate decision. To further elaborate on the previously mentioned smartphone example, smartphones are also equipped with actuators. For example:

  • Speakers: An incoming digital signal (i.e. an incoming SMS) triggers sound.
  • Phone screens: An incoming digital signal is turned into light.

While most actuators perform binary actions (i.e., turning something on or off), they can also perform more complex tasks, such as opening and closing valves to a certain degree in the utility sector or dimming the lamps in a smart home. The most popular actuators deployed in large-scale IoT ecosystems include:

  • DC rotation motors
  • Linear actuators
  • Relays
  • Solenoids
  • Stepper motors
  • Servo motors

Connectivity Protocols

An IoT ecosystem may consist of millions of hardware units, such as cloud computers, IoT devices, actuators, and sensors. However, they all need to be united by one or more connectivity protocol in order to transmit and receive data and perform a specific action based on certain triggers.

Once sensors have gathered valuable datasets, they need to have a way of transmitting this data to the central cloud in order for it to be usable. Unlike determining the ideal sensors for an upcoming IoT network, finding the ideal communication channel is not as straightforward since there are many more factors that need to be considered in order to make an informed purchase decision. In addition, researching the (frequently exaggerated) strengths and the (often ignored) weaknesses of certain protocols can be difficult, since many websites have a strong commercial incentive to push for widespread adoption of one protocol. Just like sensors, and actuators, there is no such thing as the ultimate connectivity protocol, but there is an ideal one for each use case.

Researching and Comparing Connectivity Protocols

There are five major parameters to research when considering a connectivity standard.

Power consumption

The power consumption and battery life of IoT devices is a crucial cost factor. Not in terms of electricity costs, but in terms of manual labour costs. Their power consumption is directly related to their data transmission intervals and the connectivity standard they utilize.


A connectivity standard has to perform reliably, even when the network becomes increasingly large, as most IoT networks are likely to grow as companies begin to reap their immediate benefits.


The range is simply the distance, over which a stable connection can be maintained. Many IoT projects need to place their devices in remote locations, such as underground mines, international waters, or in bunkers with thick concrete walls. Long-range and good wall penetration is crucial here. However, one often overlooked benefit of short-range communication is security. A network whose range does not exceed the walls of the building means it’s physically impossible to penetrate the network from the outside.


Bandwidth means the data volume, which is being transmitted within a given timeframe. Often declared as Kb/s, Mb/s or Gb/s. Every connectivity standard has predefined packet sizes used to transfer data.


More often than not, IoT devices will transmit confidential corporate data, which has to be protected throughout all transmission stages. IoT networks and their valuable data can be protected using port encryption, authentication, and port protection.

Some of the most notable connectivity standards form IoT


  • NB-IoT
  • CAT-M / LTE-M
  • LoRaWAN/Lora
  • Sigfox

Cellular Networks:

  • 4G
  • 5G


Gateways play an integral role in many networks since they provide various benefits. They are used to manage the traffic between connectivity protocols and networks. Raw data gathered by sensors has to pass through these gateways in order to end up in the cloud. They are also used to translate protocols. (i.e., the device sends the data to the gateway via. NB-IoT and the gateway forwards the data to the central cloud using 5G) and thus simplify the management of data traffic. Gateways can also provide encryption during data transmission. They can “filter” out a cyber attack before it reaches the cloud. Furthermore, they can minimize large datasets and may be able to relay only relevant data to the central cloud.

The Cloud

Data that's been gathered by the sensors and then sent to the gateway using a reliable connectivity standard gets filtered and relayed to its final destination, the cloud. This is where the data gets processed using various AI components. It is the brain of the IoT network. This high-end facility ties all the different IoT ecosystem components together.

It stores data, processes it, and uses it to make intelligent decisions that can affect entire industries. Massive amounts of data are being handled in mere milliseconds. IoT devices, gateways, network protocols, and storage are combined to allow for real-time analysis of large data by the cloud. The cloud boasts extreme computing powers, extensive storage capabilities, and sophisticated analytics components, which funnel raw data sets into information that is digestible for its consumer.

Nonetheless, deploying an IoT ecosystem without the cloud is possible using Edge computing. Across the IoT landscape, Edge deployment tends to be a rare sight, since it is only needed when data needs to be stored and processed locally on the IoT device itself.

  • When deploying an IoT network, companies need to invest in several different components that form a cohesive IoT ecosystem.
  • Since the main benefit of IoT networks is to allow for real-time data-driven business decisions to be made, IoT devices that gather this data form the backbone of the entire ecosystem. Sensors gather data, while actuators act based on gathered data.
  • A connectivity protocol enables the sensors to transmit this data to the gateways and, ultimately, the central cloud.
  • Gateways, translate and filter raw data, and relay them to the cloud allowing for easier data management.
  • The cloud stores the data, processes it and uses it to make swift, intelligent decisions.
  • The initial purchase decisions here (which sensors to use, which protocol they utilize, etc.) can make or break the feasibility of the entire network further down the line.