IoT Value and Product Strategy · Study deck

IoT Requirements: Definition and Value Flow

An IoT product joins a physical thing, local code, and an internet path.

Ada is your guide for this deck.

requirements

Ada, the module guide, in a scene from this chapter.

After studying this chapter

Learning objectives

You will be able to:

Test what is internet of things (iot) with a concrete scenario and pass criteria.
Validate iot connectivity tco with a concrete scenario and pass criteria.
Explain: Three Ingredients Test: Simple filter for deciding whether a product qualifies as IoT: physical thing, embedded computation, and internet reach.
Explain: The Internet of Things (IoT) is the concept of connecting everyday physical objects to the internet.

Major section

Key Concepts

Three Ingredients Test: Simple filter for deciding whether a product qualifies as IoT: physical thing, embedded computation, and internet reach.

Gateway Distinction: Local wireless is not the same as internet connectivity; many products remain merely connected unless a gateway gives them remote reach.
Five-Layer Architecture: Teaching model that separates physical devices, edge logic, connectivity, cloud functions, and applications.
Characteristic Prioritization: The eleven qualities of strong IoT systems are design goals that must be weighted differently by domain.

Framework for redesigning everyday objects into connected IoT products.

Major section

Definition

The Internet of Things (IoT) is the concept of connecting everyday physical objects to the internet.

These objects can range from household appliances to industrial machinery, enabling them to collect, exchange, and act upon data.
Simple Definition: At its core, the Internet of Things refers to the interconnection of physical devices with the internet.
This connectivity allows these devices to communicate with each other and with users, often improving functionality and efficiency.
Importantly, there is no universally "right" or "wrong" definition.

IoT ecosystem framework adapted from the Edinburgh Design Course.

Major section

Definition (continued)

While these definitions may vary, the central idea remains consistent: IoT is about connectivity and data sharing.

That meeting point is the chapter's answer to the definition question.
None of the four corners is wrong on its own.
A definition is only incomplete when it stops at one of them.

Major section

How IoT Works: The Complete Flow

The process step compares it against a rule and concludes that heat will be needed soon.

Two details carry the definition.
The third step is where judgement happens, so a device that only reports has stopped short of the loop.
Act: Cloud sends command to turn on heater + alerts your phone.

Four-step IoT value loop: sense, connect, process, and act.

Major section

Examples of IoT Devices

A smart plug adds remote switching, while a washing machine combines energy monitoring with a cycle-complete notice.

A coffee machine uses schedule and control; a truck senses location, fuel efficiency, and maintenance state; a recycling bin reports fill level so routes can change.
In both cases, the Internet link is only the middle step.
The connected capability differs because the original jobs differ.
Each object needs a physical signal, local or remote computation, and a workflow that can use the result; connection without that outcome is only added cost and risk.

Everyday objects that can become IoT devices.

Major section

Examples of IoT Devices (continued)

A 65 °F reading and 72 °F target leave a 72 − 65 = 7 °F gap; computation interprets that state, connection can supply wider context, and the system acts by heating and notifying the user.

Microwave: A connected microwave can be programmed via a smartphone.
Washing machine: A smart washing machine monitors energy use and sends notifications when cycles are complete.
Coffee machine: A coffee machine can be scheduled to brew automatically at specific times.

Major section

Complete IoT Architecture Layers

The edge sits directly above and does the thinning, filtering readings and running the rules that must not wait for a network.

Connectivity carries what survives, and the cloud adds storage, history, and analysis that a small device cannot hold.
The top layer is where a person finally sees something useful.
Example: an app shows energy savings.

Five-layer IoT architecture stack showing Physical, Edge, Connectivity, Cloud, and Application layers with data moving upward and commands returning downward — Five-layer IoT architecture stack from physical devices to user-facing applications.

Major section

Complete IoT Architecture Layers (continued)

The line at the foot matters as much as the stack: telemetry moves up and commands move down, so a break anywhere stops both directions.

Example: Wi-Fi sends a reading to the cloud.
Application layer: Mobile apps, dashboards, automation rules, alerts, and reports deliver user value.
Figure: IoT connectivity technologies organized by network range sorts the radios by how far they reach, then makes the point that reach and internet access are not the same thing.

IoT connectivity technologies organized by network range.

Major section

Minimum Requirements of IoT

These components ensure the object can perform smart functions and communicate effectively within an IoT ecosystem.

These objects are made "smart" by adding computational and connectivity features.
Computation: Objects must be enhanced with computational capabilities to process data, execute tasks, and enable intelligent behavior.
Internet Connectivity: Connectivity is the defining feature of IoT devices.

Major section

Device Classification Decision Tree

Without a physical thing you have software.

With a thing but no local computation you have an ordinary object, a plain lamp.
Each no is a real category with a real example.
The second is a controller that turns inputs into rules or actions, with parts like an ESP32 given as examples.

Decision tree for classifying software, embedded, connected, and IoT products.

Major section

Device Classification Decision Tree (continued)

Figure: The Three Ingredients Test classifies an IoT system gives the shortest form of the test: three ingredients, and what you are left with when one is missing.

The three cards in Figure: The Three Ingredients Test classifies an IoT system are joined by plus signs, so the test is a sum and not a menu.
The third is a path to remote services, either direct or through a gateway.
The band underneath does the useful work.

The Three Ingredients Test classifies an IoT system by the combined presence of a physical thing, local computation, and direct or gateway-mediated internet reach.

Major section

IoT Classification Check

Scenario: Your company is launching a smart lock product with annual revenue projections of $50M.

Key Insight: Understanding the difference between "connected" and "IoT" is critical for product positioning and customer expectations.
August Smart Lock (2017): Bluetooth local control; remote access needs a Connect bridge ($149 US launch price for the lock).
August Smart Lock Pro + Connect (2017): Bundled bridge provides Wi-Fi remote access ($279 US launch price).

Major section

Warehouse Tech Selection Check

Scenario: Your logistics company wants to monitor temperature and humidity in 50 warehouses (200,000+ sq ft each) across the country to protect sensitive pharmaceutical inventory worth $2.5B annually.

FDA compliance requires documented temperature control.
Approach A (Wi-Fi): $50 sensors, $10/month/warehouse, 30-second updates, requires Wi-Fi infrastructure Approach B (LoRaWAN): $80 sensors + $200 gateway, $5/month/warehouse, 10-minute updates, 10-year battery.
Key Insight: IoT technology selection depends on application requirements, not "newest" or "fastest" technology.

Deck summary

Key takeaways

Three Ingredients Test: Simple filter for deciding whether a product qualifies as IoT: physical thing, embedded computation, and internet reach.

The Internet of Things (IoT) is the concept of connecting everyday physical objects to the internet.
While these definitions may vary, the central idea remains consistent: IoT is about connectivity and data sharing.
The process step compares it against a rule and concludes that heat will be needed soon.
A smart plug adds remote switching, while a washing machine combines energy monitoring with a cycle-complete notice.

Retrieval practice

Recall check 1 of 4

Ada says: answer from memory, then check your reasoning.

Q1A traditional coffee maker with a timer that you program by pressing buttons on the device itself is:

AA smart device because its timer controls coffee brewing

BAn IoT device because it has computation (timer chip)

CA connected device because it can be scheduled

DAn embedded device because it lacks internet connectivity

Show answer

Answer: D The maker is a physical thing with a processor, yet no meaningful network route.

Retrieval practice

Recall check 2 of 4

Ada says: answer from memory, then check your reasoning.

Q2In the IoT data flow cycle (Sense -> Connect -> Process -> Act), which step is responsible for making intelligent decisions?

ASense - the sensors analyze the data

BConnect - the network routes decisions

CProcess - the cloud/edge analyzes data and determines actions

DAct - the actuators decide what to do

Show answer

Answer: C Sense gathers data, Connect transports it, Process evaluates it, and Act changes the world.

Retrieval practice

Recall check 3 of 4

Ada says: answer from memory, then check your reasoning.

Q3A smart recycling bin with fill-level sensors that sends data to optimize collection routes is an example of IoT because:

AAny object with a sensor qualifies, even without computation or an internet path

BIt has all three ingredients: thing, computation, and internet connectivity

CIt saves money on waste collection

DIt's a physical object

Show answer

Answer: B The fill-level device satisfies the three-part baseline: physical bin, onboard computation, and an internet route for collection planning.

Retrieval practice

Recall check 4 of 4

Ada says: answer from memory, then check your reasoning.

Q4A smart irrigation valve has a soil moisture sensor, a microcontroller to open/close the valve, and LoRaWAN connectivity to a cloud platform that schedules watering based on weather forecasts. Which of the Three Minimum Requirements does the LoRaWAN radio fulfill?

AThe Internet Connectivity requirement -- LoRaWAN links the valve to cloud scheduling.

BThe Thing requirement -- LoRaWAN is the physical radio hardware

CThe Computation requirement -- the radio processes data before transmitting

DNone -- LoRaWAN supposedly cannot connect a valve to a cloud service.

Show answer

Answer: A LoRaWAN provides the Internet Connectivity ingredient by connecting the sensor node to a gateway that bridges to the internet.

Print reference

Answers

Answer key.

D · The maker is a physical thing with a processor, yet no meaningful network route.
C · Sense gathers data, Connect transports it, Process evaluates it, and Act changes the world.
B · The fill-level device satisfies the three-part baseline: physical bin, onboard computation, and an internet route for collection planning.
A · LoRaWAN provides the Internet Connectivity ingredient by connecting the sensor node to a gateway that bridges to the internet.