The Internet of Things is officially a Big Deal. You know the story: Machine-to-machine networking is poised to unlock $19 trillion of economic opportunity over the next decade, and companies are lining up to claim a slice of that enormous pie.

But you don't know the whole story. I mean, nobody does.

On that note, I'm here to expand your view of the IoT market just a little bit. Along the way, you'll get a better feel for how technology giants such as Cisco Systems (CSCO -0.39%), (AMZN -0.17%), General Electric (GE 1.25%), and Alphabet (GOOG 0.72%) (GOOGL 0.83%) fit into the big picture.

RFID chip close-up.

RFID chips play a crucial part in the Internet of Things. Image source: Getty Images.

Four things the Internet of Things is doing today

  1. A sophisticated system of data management software and RFID tags has been tracking railcars and their contents for more than a decade. Other shipping systems have followed suit over the years. The next time you find yourself amazed by the speed and efficiency of modern shipping services, spare a thought for the RFID-backed and internet-connected management systems that made it happen.
  2. Any midrange or luxury cars bought in the last five years or so probably came with a remote connection system. Call it OnStar, BlueLink, UConnect, or Sync -- all of these connected-car systems work roughly the same way. Through a smartphone app, a web page, or even a verbal Alexa command, you can start or stop your engine, turn on the heater, lock and unlock the car, and pinpoint its location on a map. All of these functions are controlled via a central server and an always-on network connection. This is a fine example of the Internet of Things hard at work.
  3. General Electric has been using IoT concepts for years to track the performance of its jet engines. A plethora of specialized sensors report more than 14 gigabytes of operating data per flight. This information is analyzed by big-iron server systems on the ground, optimizing the maintenance process for each airplane according to the specific stresses the engines are experiencing. This lowers fleet maintenance costs in the long run, keeps planes in the air instead of the repair shop, and lowers the risk of unexpected failures.
  4. Many medications require their users to stick strictly to the correct dosage schedule. When missing a dose isn't an option, the Internet of Things can help you remember.

    Small companies have come up with various digital tools to help us manage our medication schedules, keeping the prescribed schedules on a central server. Internet-connected pill bottles can report when you take a pill, and light up warning signals when you forget. Some solutions even include a "refill" button right on the bottle cap, making it easy to call up your pharmacy when supply runs low.

    The pill bottle may be the most visible part of this medication helper, but the real work is done by that server in the cloud.

High-tech car concept.

Image source: Getty Images.

Three ways the Internet of Things will blow your mind tomorrow

  1. Self-driving cars are already a thing. Alphabet got the ball rolling, and now every car maker worth its salt is working on a self-driving solution. But the technology is still new and incomplete. Tomorrow's cars will be able to do much more than parallel parking and avoiding collisions, taking the wheel with no need for a human driver.

    No matter how advanced, no car-based system can do all of this on its own. The full-featured autonomous driving experience will rely on central systems tracking traffic, weather, and other environment data in real time. Some of the connected car systems you saw above already do some of this, but the data will get more complete and more up-to-date. Eventually, I expect IoT beacons to show up inside traffic signs, other landmarks, and maybe even the lane dividers painted to help the self-driving car get its job done safely.

    All of this is still many years or even decades away, but it's coming, and will depend on IoT concepts in a big way. Driving will be very different in the future.

  2. Google Glass was ahead of its time. The smart glasses of the future will add high-tech features to your everyday life without cramping your style. It's like having a voice-controlled smartphone on your face, ready to make a call or take a picture at a moment's notice.

    And that's just one example. Fitness tracker bracelets are everywhere today, and they're only getting smarter. Alphabet is working on internet-connected contact lenses. The Army has already deployed more than 20,000 smart earplugs that enhance soft sounds and dampen the eardrum-shattering noise of explosions.

  3. Smart cities are a big piece of that huge economic impact Internet of Things is expected to deliver. Estimates vary -- Frost & Sullivan sees a $1.5 trillion annual market by the year 2020, Persistence expects a trillion-dollar opportunity in 2019 to become a $3.5 trillion global revenue driver in 2026, and the Smart Cities America Challenge states that more than $41 billion will be spent on integrating IoT concepts into urban infrastructures over the next 10 years.

    The numbers may vary, but they are all huge. Cisco Systems and IBM have been pursuing this opportunity for years already, and both see smart cities as a significant growth driver for the long term.

    They also agree that hyper-connected cities will enjoy better water systems, improved traffic flows, lower energy usage, and a higher quality of life. IBM and Cisco are leading the way, but everyone's a winner here.

Secure data transfer concept, using a padlock around Ethernet cables.

Image source: Getty Images.

Two challenges the Internet of Things must overcome

  1. The Internet of Things requires lots and lots of internet connections, because every device must be able to send and receive data between itself and a central server.

    The old IPv4 system for internet address assignment is not up to the task since it supports less than 4.3 billion unique addresses. The IPv6 system solves that problem by providing 80 octillion (80 billion billion billion, or 8x10^28) network addresses for each IPv4 address -- but deployment of this larger name space is nowhere near complete yet.

    Furthermore, many Internet of Things devices rely on wireless connections rather than traditional data cables. The rollout of next-generation cellular network technologies is crucial to supporting large numbers of IoT devices in the cell network space.

    Today's 4G networks can support about 1,000 concurrent connections per base station, but the emerging 5G standards are calling for 1 million connections per station.

    Both 5G wireless and support for universal IPv6 addressing are needed to catapult the Internet of Things into the high-growth future everyone expects.

  2. When computers talk directly to other computers with no human input or judgment expected, data security becomes a priority. You don't want to leak health data from your fitness bracelet to random hackers, or allow anyone else to turn off the engine in your car while you're speeding down the freeway. Taken to the next level, hacking of IoT devices controlling the steering in your car, the security system in your home, or control rods in the nuclear reactor down the road could bring disaster.

    That's why top-notch data security is an absolute must for the Internet of Things. For some, this is a deal-breaker -- and not without reason. Remember the hack-attack in 2016 that brought down giants like Amazon, Spotify, Slack, The Wall Street Journal, and Pinterest for several hours? That was launched from IoT devices with questionable security, including internet-connected security cameras and baby monitors.

    Without trustworthy security models and regular software updates to counter new attack methods, the IoT shouldn't exist. This is important.