You've probably heard the phrase "Internet of Things" and simply assumed it's a complex, nerdy term for a niche industry. Google's $3.2 billion acquisition of Nest proves it isn't niche.

That doesn't mean Internet of Things isn't complex. The industry is emerging, evolving and welcoming new players by the second. It's the future; the movement that will supposedly change the world. But what exactly does this phrase mean and how does it apply to you?

Pocket-lint is here to supply the answers.

READ: What is Nest and why does Google want to buy it?

What is Internet of Things?

The Internet of Things (IoT, for short) is a phrase for when everyday objects are connected to the internet and participating together on a system, though it also means the convergence of conventional connected devices and smart appliances‏.

The Internet of Things was recently one of the stars of the 2014 Consumer Electronics Show in Las Vegas, where we saw many start-ups and manufacturers introduce web-connected products with smartphone apps or access to social networks.

Although these are considered connected devices, they're also basic IoT devices. You see, there are many IoT hardware and software platforms being developed that could allow such connected devices to collaborate. Companies spearheading these systems include, Arduino, ThingWorx3 and others.

The goal is to have people seamlessly retrieve knowledge and function on a day-to-day basis without having to sit down at a computer or talk to another human. It's like ubiquitous computing, but it goes beyond Google Glass and extends to every home, car, business, building and system in the world.

Who coined Internet of Things?

Kevin Ashton supposedly coined the phrase "Internet of Things" while working for Procter & Gamble in 1999. He later co-founded the Auto-ID Center at the Massachusetts Institute of Technology. Ashton talked in depth about IoT to the in 2009.

"Today computers - and, therefore, the internet - are almost wholly dependent on human beings for information. Nearly all of the roughly 50 petabytes of data available on the internet were first captured and created by human beings - by typing, pressing a record button, taking a digital picture or scanning a bar code," Ashton explained

"Conventional diagrams of the internet include servers and routers and so on, but they leave out the most numerous and important routers of all: people. The problem is, people have limited time, attention and accuracy - all of which means they are not very good at capturing data about things in the real world."

Ashton added that IoT had grown a lot since 2009, but he claimed it has still has much further to go. He's looking beyond your car notifying you of a bogged-down toll road. In fact, he said IoT had the potential to change the world, just like the internet did (or "even more so").

What is an example of Internet of Things?

So how does all this apply to you? This is best illustrated through examples. IBM's Smarter Planet team created a 5-minute video that wholly explains Internet of Things and provides a brilliant example. Watch the video for more details, or you can just read Pocket-lint's paraphrased summary below.

The Internet of Things could allow you to wake up and experience the "ideal" day. You'd wake up in the morning to an alarm clock, for instance, which went off at the right time because it looked at your calendar or diary to see the time of your first meeting. The alarm clock backtracked to see how long it would take you to get ready and even checked to see what time your ferry would arrive.

Your home heater would have been turned on 30 minutes before, so it could warm your bathroom or wherever. While taking a bath, you'd learn - perhaps through an audio announcement - about how temperatures dipped overnight. So your car was turned on so the ice on your windshield would melt, but you'll still need to leave the house five minutes early because of traffic conditions.

While en route to the ferry, your car will tell you the ferry is running late, so there's no need to rush. This type of information would be served up all day: your coffee machine at work could brew a cup before you arrive, for instance, or your laundry at home could start to wash and then dry around lunchtime.

All of these connected devices are being handled by automatic systems over a wireless network. The result? You have a smart home, thanks to smart appliances, as well as a smart car and a smart office. In a nutshell: you have a smart life. Say hello to the Internet of Things.

What is the Internet of Things Consortium?

The Internet of Things Consortium is a nonprofit group that wants to facilitate co-operation between hardware and software providers. Ten companies used CES2014 to announce the formation of the IoT Consortium. These companies range from Logitech to Ouya, though most of the members are lesser-known start-ups.

In order to reach the goal of having billions of connected devices benefit from communication with other devices and services, the IoT Consortium, according to its website, is focused on "internet enabled devices and related software services that directly touch consumers in the form of home automation, entertainment, and productivity".

What is an existing IoT device?

There are many IoT devices in existence, but Nest is probably the most popular at the moment. Nest makes smart thermostats and smoke and carbon-monoxide detectors, and has just been acquired by Google for $3.2 billion. Tech companies know IoT is the future, and Nest is one of the biggest players in the space.

Tony Fadell, CEO of Nest and "father of the iPod", explained to CNET how Nest fits into the Internet of Things space, and he summed up why Google is placing a bet on IoT by acquiring his company.

"When we first showed up two years ago, people were like, 'thermostats, poo-poo', and they didn't even talk about connected homes or the Internet of Things. We changed the landscape, and made them top of mind," Fadell explained.

"When it comes to the Internet of Things, we can take a large piece of credit for kick-starting that. What we're doing [with the Google deal] is we're changing the landscape yet again...[Google] is a major corporation saying, 'We believe in these products', and we want to help them succeed even further."

Want to know more?

The Danish Alexandra Institute released a comic book called Inspiring the Internet of Things, which illustrates the ins and outs of networking connected objects through 15 beautifully animated tales. The PDF version is available for download. Grab it and continue learning - free of charge.