IoT Ecosystem – What is it & What are Its Key Elements
Internet of Things (IoT)
Vishnu Narayan November 4, 2022

Over the past few years, we have witnessed an accelerated growth of the Internet of Things.  According to Gartner, 6.4 billion connected objects were used worldwide in 2016. It was 30% more than in 2015, and recent studies say that it will increase to 30 billion by 2025.

Another interesting fact here is Google Trends also reveals that the term “IoT” has gained steady interest over the past few years. Moreover, a recent survey by Statista found that 173 million smartwatches were shipped in 2022. Which is a clear indication of the flourishing growth of IoT. IoT and Big Data are two of the leading technologies businesses leaders use to help their businesses thrive and manage their money and resources efficiently.

IoT & Big Data to save money and resources

I mentioned these factors for one purpose: to demonstrate that people worldwide still continue to connect to the IoT, whether for business (manufacturers) or personal (smartwatches/wristband) use.

This, in turn, means that more and more people are becoming potential enthusiasts or users of IoT technology. So, this article is for such people. Have fun reading!

What Is an IoT Ecosystem & What Lies Behind the Term?

When we talk about an ecosystem, we are talking about a complex system of interconnected components and the environment in which they exist and with which they interact.

In fact, all components are connected by energy flow, certain cycles (e.g. nutrient cycles in biology) and their environment. So, the point of connection between all these elements and the environment is very important in an ecosystem. It distinguishes a system from an ecosystem. I.e. the system forms a complex and unified whole, while an ecosystem is closely connected to its environment.

We can use the term IoT ecosystem instead of IoT system because IoT devices (both Android and iOS) have no value without their existing environment. The main benefit that IoT devices bring to people is data. These data are related to environmental conditions or external phenomena but also something within the system. Regardless of the relationship with the environment, all devices are connected to each other. So, the data’s final destination is always the people who use it.

These three facts (environment, data, people) lead us to the definition of an Internet of Things ecosystem – a network of interconnected devices existing in a specific environment that collects data and transmits it to people who use modern technologies. To analyse them to achieve a clear goal like building a smart home.

While different groups of people create different IoT applications for their needs, IoT software development creates many IoT ecosystems. These ecosystems can be a simple network with 20 connected devices like a smart home or a multi-level structure with a complex and extensive network of devices that requires a sophisticated platform to manage all the layers.

Now let’s move on to our core subject, ‘the key elements of an Iot ecosystem’. Stay tuned and read on.Top IoT Services in UK

The Key Elements of an IoT Ecosystem

Let’s break down the most complex mid-tier IoT ecosystem into its building blocks.

As a result, we get the following pattern:

  1. IoT devices collect data and transmit it securely to an internet-connected gateway that compresses the data and sends it to them.
  2. This data is sent to the cloud for further analysis and then displayed within the app to provide users with meaningful information.

Therefore, we have listed the seven major components of an IoT ecosystem:

  1. IoT devices
  2. Security
  3. Network
  4. Gateway
  5. The cloud
  6. Application
  7. User

Okay, now let’s dive more deeply into these seven key components.

Also Read: How Can IoT Ecosystems Help Your Business Drive Productivity & Efficiency

1. IoT Devices

IoT devices are actually the layer of sensors, actuators and smart objects that collect data about the environment and measure physical parameters.

  • So, as we have already mentioned, the basic elements of the Internet of Things ecosystem are sensors and actuators (or simply “things”).
  • Sensors are the perception of the IoT system, whose main function is to extract information from the environment and convert it into data.

In the internet of things ecosystem, it is rare to find only one type of sensor or actuator. Because there are many types of sensors, each type has its subcategories.

So, we want to mention two of the most common and two of the most important sensors for improving the ecological state of the earth:

  • Temperature sensors: They are one of the most common and popular. A wide range of industries can use these sensors to measure the temperature of industrial machinery to monitor its condition, to monitor the temperature of a patient continuously, or to monitor the condition of a farmer’s soil.
    • Subcategories: Thermocouples, RTDs, Infrared Sensors, etc.
  • Proximity sensors: They are a popular IoT device because they save light in thousands of homes with these sensors when no one is around.
    • Subcategories: Inductive sensors, Photoelectric sensors, Ultrasonic sensors.
  • Water quality sensors – They are particularly important due to ocean pollution. Because these sensors can help monitor water conditions and detect sources of pollution in real time!
    • Sub-categories: residual chlorine sensor, turbidity sensor, pH sensor. 
  • Chemical sensors – these monitor chemical changes in the air, which is extremely important in large cities where air pollution problems continue to worsen. These sensors are also useful in industrial environmental monitoring, hazardous chemical detection and radioactive detection.
    • Subcategories: Chemical Field Effect Transistor, Hydrogen Sulfide Sensor, Potentiometric Sensor.

2. Security

It is the part that includes all the other parts, provides security for data transfer and prevents unauthorised connections outside the Internet of Things ecosystem.

In recent years, we also see that the number of IoT-based DDoS attacks has skyrocketed. Therefore, every IoT system needs a strong level of security that at least protects against the most common vulnerabilities.

The security level has a wide range of responsibilities, such as:

  • Access control to the IoT network: Anyone who connects to the network has access to all its devices, making broken authentication problems particularly acute. Moreover, IoT devices can also trust the local network so that no further authentication is required.
  • Prevention of data loss during data transfer over the network: The data must be encrypted through the IoT system using protocols such as AES, DES, DSA and others.
  • Look for malicious software: Software bugs can sometimes trick attackers into executing their code on the IoT device. Hence the software versions need to be corrected when a vulnerability is found.

The Internet of Things ecosystem is also safeguarded by a number of firmware and security providers, including Azure Sphere, LynxOS, Mocana, Spartan, Forescout, Symantec, etc.

But unfortunately, most Internet of Things vendors and IoT device manufacturers also need to pay more attention to basic security guidelines.

They are:

  • The device boot process should be protected from running inappropriate pieces of code.
  • Cryptographic keys must be used to execute all commands on devices. This is especially important when managing IoT updates.
  • All commands and control information must pass through a gateway to avoid direct access to the device outside the network.
  • All IoT devices must install security patches whenever a new security flaw is detected.

3. Network

The network is the logistical heart of the Internet of Things ecosystem. The network is also known as the connectivity layer. It is responsible for all communications within the IoT system: connecting smart objects, transferring data and commands between IoT stages, and connecting to the cloud.

There are two means of communication:

  • The first mode of communication:  Occurs locally in a local area network (LAN) between IoT devices and smart gateways via short-range wireless communication protocols. This communication mode is optional because the sensors can connect directly to the cloud via the Internet using the TCP / IP protocol.

However, connecting via non-IP protocols consumes less power because the devices connect to local smart gateways instead of trying to access the main server in the cloud.

So, the most popular short-distance protocols for IoT architecture are:

  1. Wireless internet access (WiFi)
  2. Bluetooth and Bluetooth Low Energy (or Bluetooth LE for less powerful devices that generate less data)
  3. ZigBee – a universal solution that connects all smart devices
  4. Near Field Communication (NFC)
  5. Radio Frequency Identification (RFID)
  6. Sigfox
  7. LoRaWAN

If the system needs to cover long distances in the range of miles, it can use Low Power Wide Area Network (or LPWAN) designed for long-distance wireless data transfer.

  • The second mode of communication: Occurs when the data of things are transferred to the cloud in cases where there is no smart gateway or in cases of communication between the smart gateways and the cloud. The network layer establishes a connection between the local network and the Internet. The basic protocol here is the IPv6 protocol.

4. Gateways

IoT Gateway is a physical or virtual platform that mediates between IoT devices and the cloud.

There are several main functions of IoT gateways:

  • Control the flow of data in the Internet of Things ecosystem. The data flow goes through the gateway from the devices to the cloud and in the opposite direction.
  • Ensure the security of the transmission of information in both directions. Also, transmit commands from the cloud to IoT devices.
  • Preprocess data before sending it to the cloud. Gateways filter, aggregate, synthesise, and aggregate traffic from different devices.
  • Save energy from IoT devices as communication over the internet is energy-intensive, unlike low-energy technologies such as Bluetooth Low Energy ( it is a wireless personal area network technology designed and marketed by the Bluetooth Special Interest Group aimed at novel applications in the healthcare, fitness, beacons, security, and home entertainment industries).
  • Reduce response latency to IoT devices. Some devices require a real-time response from the system.

5. The Cloud

The cloud is a computing resource responsible for storing, analysing, and managing data. In other words, it is a group of computers that people access over the Internet to use their computing power for a particular purpose.

The cloud is where a large pile of raw sensor data is converted into neat little piles of valuable information. The cloud can be powered by analytics software, visualisation tools, AI, and machine learning for in-depth data analysis and processing. And the most popular cloud computing providers are Microsoft Azure and AWS IoT.

Surprisingly one of the main advantages of the cloud solution is that it is easily scalable. It is an essential requirement for building an effective IoT system.

Also Read: Benefits of Cloud Computing in Fintech Sectors (Digital Payment)

6. Application

When software development companies build software products for the IoT ecosystem, they will cover all seven components. And will create a system that covers all the requirements at every level.

But even still, the IoT application is just the tip of the iceberg in IoT software development. Also, an application is where users can interact with the Internet of Things ecosystem. This interaction is only made possible by the graphical user interface, where the users can consult analyses reports, control the system and manage devices.

The list of technologies used in the development includes:

  • Programming languages: C/C++, Python, Ruby, JavaScript
  • Development frameworks: Node.Js (Node-Red for rapid prototyping), OT, IoT.js, Device.js, Eclipse IoT (Kura, SmartHome), AngularJS
  • Third-party APIs: Google Assistant, Google Home (Actions on Google), Google Vision, Apple HomeKit, MI Light, Cortana, Alexa Voice Service, Philips Hue, Android Things
Read Also: Which Are the Top 8 In-Demand Programming Languages in the UK?

7. Users

Its users are the most important component among the seven components of the Internet of Things ecosystem.

Here, users have two roles:

  • They use an IoT ecosystem for their needs. Here, the possibilities offered by the Internet of Things ecosystem are becoming a valuable database for all types of users. For example, sensors and IoT applications can become professional healthcare assistant that measures the patient’s biometry. This will help to make a more accurate diagnosis.
  • Secondly, the Internet of Things ecosystems should serve people. And meet their needs, and provide information that assists them in achieving their goals. Moreover, focusing on people’s needs, the IoT ecosystem was built by and for people. So, the users determine what the IoT ecosystem will do and won’t.

But who can be a user?

  • People who use IoT gadgets for personal use
  • Researchers
  • Personnel (doctors, warehouse workers, carriers, engineers, etc.)
  • Stakeholders and top managers

Most Popular Questions

Question: What are the 4 main components of IoT system?

Answer: IoT systems are all the same because they integrate four different components: sensors/devices, connectivity, data processing, and user interfaces.

Question: How does IoT ecosystem work?

Answer: An IoT ecosystem consists of interconnected devices that work together to achieve a goal, such as creating a smart city with all its amenities or bringing convenience to your home by connecting multiple devices.

Question: What is IoT structure?

Answer: What is IoT architecture? IoT architecture consists of devices, network infrastructure, and cloud technologies that enable IoT devices to communicate with each other. A basic IoT architecture consists of three layers. Input (sensors, devices, and other devices) Network (device-to-device communications)


This is all you need to know about the key components of an IoT ecosystem. If you want to learn more or create the Internet of Things ecosystem for your business, get in touch with a team of seasoned IoT experts at ThinkPalm.

ThinkPalm is a product engineering and software development company with a holistic approach and diverse industry expertise in the IoT and Telecom sectors. With nearly a decade of knowledge and experience in custom project management and software development, we deliver innovative custom software solutions that enable established and emerging companies to deliver exceptional customer experience and measurable success aligned with their business goals.

Best IoT Services in UK

Author Bio

Vishnu Narayan is a dedicated content writer and a skilled copywriter working at ThinkPalm Technologies. More than a passionate writer, he is a tech enthusiast and an avid reader who seamlessly blends creativity with technical expertise. A wanderer at heart, he tries to roam the world with a heart that longs to watch more sunsets than Netflix!