IoT vs. IIoT - Differences between Consumer Products and Industrial Systems

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IoT vs. IIoT - Differences between Consumer Products and Industrial Systems

The term Internet of Things describes the connection of systems, devices and everyday things to the Internet. The term basically does not distinguish the exact way of connection or the resulting design of the application. Industrial Internet of Things (short: IIoT) is a collective term that describes the connection of industrial machines and production plants. The term IoT, on the other hand, is often used to refer to ubiquitous, consumer-oriented IoT products.

IoT and IIoT - A technical difference?

If you look at the application examples for the Internet of Things already known today, you can distinguish between two large categories with regard to the user target group: On the one hand, consumers and end users are in focus and use IoT-based applications. These are, for example, everyday systems such as smart household appliances, app-controlled lighting and heating in the smart home, services in the car or digital voice-based assistants. On the other hand, more and more machines in our industry are connected via the Internet and feed our visions of digital factories in the so-called industry 4.0 age. The addition of "Industrial" before the term "Internet of Things" often highlights a special application category (the so-called IIoT).

As we have already described in our definition of the Internet of Things, there is no significant difference in the technical core of both application examples. The often mechanical system under consideration in its electrical control is given the additional capability of recording environmental parameters by means of sensors. In addition, the actuators can be influenced. In both directions, applications on the Internet can gain knowledge from the collected data and pass it on or transfer decisions made to the actuators. From the point of view of the basic technical principle, there is initially no difference between a smart coffee machine in our consumer kitchen, which records and re-orders the filling level of the beans, or an industrial coffee roaster at our coffee producer, which records and controls the temperature as well as the degree and duration of roasting.

System integration vs. classical product development

The organizational framework conditions from which the innovation of an Internet-capable, networked system is to emerge differ much more than the actual technology. In the industrial context, the market was and is often characterised by so-called system integrators, who plan, assemble and ultimately put into operation integrative solutions for their customers from machines, machine components or system construction kits of the automation world. Often the classical switch cabinet construction, a classical 24V-based low-voltage network for industrial sensors and actuators as well as customer-specific programming in programmable logic controllers are characteristic for this environment. In our opinion, the challenges for the IIoT do not lie in the technology itself. System integrators certainly have a lot of catching up to do when it comes to dealing with Internet-based protocols and data connections, and the safety issue cannot be dismissed either. Nevertheless, almost all suppliers of programmable logic controllers and many suppliers of machine systems have long since integrated sufficient access options to the process images of the control programs. The mere reading out of data in the sense of an initially continuous monitoring is therefore, contrary to what is often claimed, less complex and often no witchcraft. The subsequent applications, i.e. how you as a user of IIoT-based systems, e.g. with your networked production line, become faster, more flexible and safer and thereby increase your turnover or significantly reduce your costs, will generally mean a greater effort than the technology.

The effort for the development of IIoT solutions is already different in classical product development. In many cases, the development teams have grown over many years in the development of electronic components, for example for existing products such as household appliances but also cars. In comparison to the often very individual production lines in the industrial context, these products are mass-produced and therefore have individual electrical circuits. Sometimes there are even industrial systems on the market that rely on their own electronic developments instead of programmable logic controllers. The technical hurdle to achieve a connectivity of the systems to the Internet in the first step is sometimes more difficult, since in development projects the connection to the Internet, be it via Bluetooth, WLAN or wired, often has to be implemented in the form of additional hardware. The connection of the protocols with which the data exchange of sensors and actuators with central IoT platforms is to take place also requires the adaptation of the software used on the microcontrollers. Due to the variety of approaches, the learning phase is usually not insignificant for connecting so-called embedded systems. As good news, however, more and more components are available on the market that make the start and subsequent implementation much easier. This is partly because the applications and business models that follow from connectivity can be successfully established for more and more companies and best practices can be copied.

Different tasks that IoT and IIoT should fulfil

IoT and IIoT therefore often have to fulfil completely different tasks in addition to the organisational framework in which the solutions are (or should be) created. Of course, a hard demarcation is not quite accurate, but the IIoT and Industry 4.0 projects are often very strongly directed inwards, into the own company and into the own processes. They aim at a progressive automation and thus at a further efficiency increase of the processes. It is therefore not surprising that frequent use cases include preventive maintenance, quality assurance or post-calculation of orders, i.e. those areas which often have high information requirements and which previously had to provide relatively complex and thus expensive support processes in industrial production due to a lack of information.

If systems are delivered to customers, who then continue to be operated to different extents, e.g. through maintenance contracts with the customer, remote monitoring has become almost unavoidable in order to avoid having to constantly carry out expensive service visits on site. To a certain extent, this already includes aspects of the product-oriented IoT systems.

IoT vs. IIoT Schematics

IoT projects and systems are much more outwardly oriented towards the customer. Services can be offered around a core product which, supported by the technical possibilities of connectivity, bundle the benefits in kind of equipment sales with those of services: The washing machine automatically orders detergents on demand, the refrigerator automatically orders new milk, the kitchen machine has integrated recipe books and the car offers the best routes to the best restaurants in town in its navigation system. The business models and the resulting income streams can change significantly due to the technology in products - and not only in the consumer-oriented business. However, they have a significantly different objective than inward-looking IoT projects and are much more difficult to assess in terms of profitability. At the same time, the chances of developing new unique selling propositions in the market or opening up completely new markets naturally increase.

Common challenges

Especially in the early planning phases in companies it is worthwhile to analyse the different characteristics of IoT and IIoT in detail and to deduce from this which type of project is actually involved. This is not necessarily the black-and-white distinction between IoT and IIoT, but the basic objective has an enormous influence on further steps and tasks that have to be considered in the context of an entrepreneurial decision. Therefore, make the following points clear to yourself:

  • What is the basic IoT strategy? Do you focus internally or/and externally?
  • If you focus externally, what kind of innovation do you intend? A product innovation for your customer? A service innovation? A process innovation for your customer?
  • In the case of internal application: What efficiency gains do you want to achieve? What does the ROI look like?
  • In the case of external application: How do you want to achieve turnover and profit? How do you differentiate yourself in the market? What does the business plan look like? What do you have to invest?
  • What technical basis do you have today? Do you use programmable logic controllers and can you make use of the IIoT innovations of the controller manufacturers? Do you have your own electronics that you need to make internet-capable?
  • How is your team set up, where does it come from? System integrators have different thinking patterns than electronics developers, but presumably both have know-how deficits as to how IoT can be implemented in their respective environments.
  • What applications do you need to achieve your business goals after the technical connection? Anticipate the if-then scenarios: "If I have the information on the operating cycles of the components on a machine, then 90% of the time I know which parts have to be replaced during maintenance due to wear and tear".

In all planning steps, consciously free yourself from past approaches and focus on customer benefits, whether internal or external.


No customer wants to set up a complicated VPN connection and then control a lamp in a special tool by keyboard input. You've probably already seen what "Alexa, switch on the light" does. Break through old patterns and concerns, especially in the planning phase, because the technology with which ideas can be implemented slimly and safely is developing rapidly. The IoT technology is therefore the bottleneck in IoT projects much rarer than often thought and what is not possible today will certainly soon be possible in consideration of the enormous technical progress. The distinction between IoT vs. IIoT does not make much difference here.

Our summary is therefore: Don't waste too much time defining IoT vs. IIoT, but take on the ideas and resulting tasks that lead to a long-term IoT strategy. Create the technical and organizational possibilities by connecting the components and training your team and then work step by step on the realization of your goals, regardless of whether it's about saving costs or generating new revenues, but don't mix everything up at will. Take the technical challenges seriously, but don't let them become an obstacle. Basically, the possibilities are limited only by your creativity and imagination. 

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