IoT Ecosystem – What Is It & What Are Its Key Elements

By: Anatolii Kramarenko, COO
21 Apr. 2023
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Today, more and more people integrate IoT systems into their lives for professional or personal use. As a result, the number of IoT devices is rapidly growing globally. Billions of smart gadgets with embedded sensors automatically gather and analyze vast amounts of data, transforming decision-making.

But an IoT device on its own without connecting to other physical objects or a platform isn’t so effective. Data transfer is carried out only if network components are interrelated. And this is what is known as an Internet of things ecosystem. Since today there is almost no limit on the application of the Internet of things, there are endlessly coexisting ecosystems. Let’s take a closer look at the term IoT ecosystem and get acquainted with its major components.

What Is an IoT Ecosystem?

The IoT technology aims to enable new levels of automation, analysis, and decision-making by connecting multiple devices. And in order to understand how these processes are arranged, it’s worth analyzing in detail the Internet of things ecosystem term.

The Internet of things ecosystem is the interconnected network of devices that collect, exchange, and transfer data to the cloud or physical database. And like many other ecosystems, it is a complex environment where different components exist and interact. A simplified schema of its functioning is as follows: IoT devices collect data about the environment and physical parameters and send it across the network to a platform that processes and analyzes it.

And thus, we see that the IoT ecosystem consists of seven interconnected components, including different devices, network layer, security, network gateway, the cloud, application, and users. This is enough to describe even the most complex system, although most of them don’t need all these elements. You will find a detailed description of each component in the article’s next section.

The Key Components of an IoT Ecosystem

And before we dive more deeply into all layers, it is worth mentioning that there is no single, officially recognized structure of IoT ecosystems. But anyway, some components of IoT, like IoT devices, are obligatory, and others are optional. More elements make up a more complex system, where more attention is paid to the finer aspects of its functioning.

IoT Devices

The first layer consists of embedded components, sensors, and actuators. This is one of the most important blocks of IoT ecosystems. Their task is to measure physical parameters of devices and collect data about environmental conditions, like temperature, pressure, humidity, etc.

And if actuators act on things after receiving a command, sensors are responsible for data gathering. Standing at the beginning of the IoT ecosystem, they convert collected information into a digital form. There are wide varieties of sensors used in different industries for various purposes. Below is a short list of gadgets useful in industrial environmental monitoring:

  • hydrogen sulfide sensor;
  • infrared sensors;
  • photoelectric sensors;
  • chemical sensors;
  • ultrasonic sensors;
  • turbidity sensor;
  • ph sensor and others.

A simple example of sensors and actuator interaction is IoT-enabled smart lighting. First, motion sensors detect movement within their operating radius. Next, they transmit data to the cloud for further processing. Then an actuator receives from the system a signal to act and turn on the light. Similar IoT solutions can also be controlled through a smartphone or triggered by sound.

Practically, in the same way, a smart air conditioning system works. It can maintain a certain temperature throughout the day, constantly monitoring and reacting to temperature changes. Now let’s move on to the next section to figure out how data collected by the physical layer is transmitted within the IoT system.


But before we get to the connectivity layer, we must first say a few words about such an important component as security. Even one device connected to the Internet is vulnerable to cyberattacks. And IoT ecosystem of interconnected devices, thus, must be well protected from any cybersecurity threat. This issue is becoming more urgent yearly with the increasing number of new IoT breaches. The security level is responsible for the following tasks.

  • Access control. Today there is an acute problem of broken authentication. Any third-party user connecting to an IoT system gains access to all devices within it and, therefore, can potentially threaten the entire network.
  • Secure data transmission. To prevent leaks while transferring data across the network, it must be encrypted with such protocols as AES, DES, DSA, and others.
  • Malware scanning. Any detected vulnerability requires immediate patching of the software version. It’s necessary as hackers can run their code on an IoT device using software bugs.

To secure the Internet of Things ecosystem, businesses can use the services of firmware and embedded security providers, like Forescout, LynxOS, Symantec, Azure Sphere, Mocana, and others. But unfortunately, most IoT device manufacturers can neglect even the basic security guidelines, such as:

  • protection from running inappropriate code pieces during the device boot process;
  • use of cryptographic keys to run any command;
  • restriction of direct access to IoT devices outside the network with a gateway;
  • installing security patches for all IoT devices right after detecting a new security breach.

The Network

The connectivity layer is the next essential component of the IoT ecosystem. As the name suggests, it is responsible for all communications within it. This means that the IoT network layer establishes a connection between smart devices, the gateway, and the cloud.

A well-designed IoT ecosystem requires different connectivity layers – from low-power devices to edge computing. Each of them relies on various communication protocols which serve different purposes.

And there are two types of communication. The first happens locally, within a local area network (LAN) between smart objects and IoT gateways via short-range wireless communication protocols. This is not mandatory, as IoT sensors can link to the cloud directly. Nevertheless, the link via non-IP protocols consumes less power because IoT gadgets connect to local smart gateways instead of the main server in the cloud. Below are some widespread short-range protocols of the typical IoT ecosystem:

  • Wi-Fi;
  • Bluetooth and also Bluetooth Low Energy (for smart devices generating less data);
  • NFC (near-field communication);
  • ZigBee (for personal area networks with small, low-power digital radios);
  • RFID (radio-frequency identification);
  • Sigfox (for low-power objects);
  • LPWAN (a low-power wide-area network to cover long distances).

And the second way of communication is used to transfer data from connected devices to the cloud without a smart gateway or to link smart gateways and the cloud. The IPv6 protocol is basic here.

All the above options have different transfer rates and ranges. So, the optimal choice will depend on the specifics of deployment needs and tasks set for IoT technology.

IoT Gateways

This IoT stage serves as an intermediary between smart objects and the cloud. Gateways filter, aggregate, and synthesize traffic from different objects. Then they pass through preprocessed data flow to the cloud and in reverse. This is not a necessary component of the IoT ecosystem because devices can connect to the Internet without it.

In addition to data stream control, IoT gateways have the following functions:

  • commands transmission from the cloud to devices;
  • filtering, aggregation, summarising, and preprocessing of data;
  • devices energy saving by low-energy technologies;
  • acceleration of response time from devices.

IoT Cloud

As you read before, data generated from multiple devices is securely transferred to the cloud. This phase is responsible for data storage, analysis, and management. A cloud solution is easily scalable, which is a prerequisite for building an effective IoT system.

Cloud technologies transform large amounts of raw data from different sources of the IoT ecosystem into valuable information. And then it utilizes that information for decision-making. Data is processed with machine learning algorithms, mathematical modeling, and statistical knowledge. Once processed, it is stored in the cloud and thus accessed by all authorized users. Today, the most popular cloud computing vendors are AWS IoT and Microsoft Azure.

IoT Application

The next component of the IoT ecosystem is the graphical user interface to track analytics and reports, control processes, adjust settings, and manage devices. It is through IoT applications users interact with the Internet of Things ecosystem. The management is carried out via the device itself or remotely via smartphones, laptops, and tablets.

Even after efficiently raw data processing, the amount of information available to the end user can be massive. And graphs effectively illustrate the interactions within the IoT ecosystem between devices, sensors, and their environment. In addition, the user interface should be scalable for larger usage. All of this must be taken into account by a development company.

Custom IoT applications use the following technologies:

  • programming languages – JavaScript, C and C++, Ruby, Python;
  • development frameworks – Node.js, IoT.js, Eclipse IoT, Angular.js;
  • third-party APIs – Android Things, Google Assistant, Apple HomeKit, Alexa Voice Service, Google Vision, and others.

The current IoT market is full of different IoT applications used for a variety of purposes.

  • Business management. IoT technology helps companies increase their efficiency and productivity in several ways. It provides greater flexibility, enhanced customer service, effective utilization of assets, improved work safety, and other benefits. Efficient operation management by collecting and analyzing data reduces costs and improves competitiveness.
  • Personal health monitoring. Wearable medical devices are nothing new to us now. IoT in healthcare has grown in popularity over the last few years. Smartwatches and other devices provide users with accurate health and fitness data – daily activity, heart rate, blood pressure, sleep patterns, etc. Collected data can be displayed on the device itself or sent to smartphones or tablets.
  • Smart home. Certainly, many of us are familiar with the IoT ecosystem through their smart home applications. Smartphones, laptops, and other devices can control and monitor lighting, temperature, and household appliances.

In addition to the above examples, there is a high demand for IoI applications in agriculture, banking, logistics, retail, and other sectors.


And the final component of the IoT ecosystem is people. We mean all persons who affect the network and interact with its elements. Even though we put it at the end of our list, the user is above all components of an IoT ecosystem, as he manages and controls them. Users draw up goals, monitor the performance of tasks, and make decisions.

The term user of the IoT ecosystem is a broad one, and it can include:

  • people who use IoT-based gadgets for private purposes;
  • the staff of an enterprise interacting with one or more system components (drivers, warehouse workers, managers, engineers, doctors);
  • top managers.

Final Words

Today the Internet of things greatly influences business and private life, providing new opportunities for both organizations and consumers. It changes people’s habits and entire industries. Companies worldwide began to see IoT advantages and now use the technology to drive digital transformation and create new revenue streams and business models.

But the IoT ecosystem is highly complex as it consists of multiple devices, IoT protocols, cloud servers, and big data algorithms. It is only by understanding all components of an IoT ecosystem you can develop the right solution for your business needs. IoT adoption alone will not solve assigned tasks. Data flow is so large and requires proper processing to transform it into usable information. The success of IoT implementation also depends on security measures taken. For example, all connected devices must install security patches whenever a new vulnerability is detected.

The development of a successful IoT ecosystem depends to a large extent on a software development company. Clearly formulated objectives and needs will help developers to create the right solution for you. So start your IoT journey to unexplored opportunities together with Limestone Digital!

By: Anatolii Kramarenko, COO
21 Apr. 2023
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