What is IoT and Industry 4.0?

The Internet of Things (IoT) refers to devices, appliances, and other physical objects that have network connectivity. They are “Smart” devices, from your smartwatch to complex machinery. This increased connectivity promises to both heighten economic efficiency and make our everyday lives easier. IoT is a key driver of what Klaus Schwab of the World Economic Forum calls “Industry 4.0”, a fourth industrial revolution characterized by machinery that both automates tasks and communicates autonomously through digital technologies (WEF).

The Promise of IoT

This digital transformation is not merely theoretical, but in progress and expanding. The number of connected IoT devices is expected to grow 14% to 21.1 billion globally by the end of 2025, and to 39 billion by 2030 (IoT Analytics October 2025). According to Mckinsey & Company the potential value of IoT could reach $12.5 Trillion by 2030 (Mckinsey May 2024). This metric represents the economic impact of increased efficiency in manufacturing, healthcare, human productivity, and other use cases. Widespread IoT is so highly anticipated because of the digital ecosystems it creates in smart factories, smart offices and smart hospitals. These ecosystems, with their plethora of data collecting sensors and software, lay the groundwork for digital and AI based implementations. Entire processes, supply chains, and even factories can be simulated digitally and optimized. Problems can be solved before they even happen, reducing unintended downtime of machinery through predictive maintenance. An IBM study found that smart manufacturing can improve product defect detection by up to 50% and yields by 20% (IBM May 2020), and predictive analytics has already reduced downtime in early adopters by 30% (Tago IO October 2025). According to Deloitte’s Smart Manufacturing Survey 2025, businesses that employ IoT and industry 4.0 tech in general report a 20% improvement in both production outputs and employee productivity (Deloitte May 2025).

What investors should know

            Low risk opportunities for direct investment in the cloud giants powering IoT include Microsoft (Azure IoT), Amazon (Amazon Web Services), and Siemens (MindSphere). Riskier pure play stocks include Samsara (NYSE: IOT), Impinj(NASDAQ: PI), and Alarm.com (NASDAQ: ALRM). One of the biggest risks that businesses incur when using IoT is more opportunities for security breaches. That’s why cybersecurity companies such as Palo Alto Networks (NASDAQ: PANW), Fortinet (NASDAQ: FTNT) and Cisco (NASDAQ: CSCO) are expected to benefit from the rise of IoT. For investors that want to invest in industry 4.0 at large, NVIDIA (NASDAQ: NVDA), ABB Ltd (NYSE: ABB) and Rockwell Automation (NYSE: ROK) are the most dominant leaders in the push for digital manufacturing optimization.

Sources:

1. World Economic Forum. “The Fourth Industrial Revolution, By Klaus Schwab” https://www.weforum.org/about/the-fourth-industrial-revolution-by-klaus-schwab/

2. IoT Analytics. “State of IoT 2025: Number of connected IoT devices growing 14% to 21.1 billion globally.” October 28, 2025. https://iot-analytics.com/number-connected-iot-devices/

3. Mckinsey. “ What is the Internet Of Things (IoT)? May 8, 2024. https://www.mckinsey.com/featured-insights/mckinsey-explainers/what-is-the-internet-of-things#/

4. IBM. “Smart Manufacturing” May 12, 2020. https://www.ibm.com/thought-leadership/institute-business-value/report/smart-manufacturing

5. TagoIO. “How IoT Improves Equipment Manufacturing Productivity.” October 2, 2025. https://tago.io/blog/how-iot-improves-manufacturing-productivity

6. Deloitte. “2025 Smart Manufacturing and Operations Survey: Navigating challenges to implementation.” May 1, 2025 https://www.deloitte.com/us/en/insights/industry/manufacturing-industrial-products/2025-smart-manufacturing-survey.html