Abstract. "Industrie 4.0" or the Industrial Internet of Things (IIoT) are two terms for the current (r)evolution seen in industrial automation and control. Everything is getting smarter and data generated at all levels of the production process are used to improve product quality, flexibility, and productivity. This would not be possible without smart sensors, which generate the data and allow further functionality from self-monitoring and selfconfiguration to condition monitoring of complex processes. In analogy to Industry 4.0, the development of sensors has undergone distinctive stages culminating in today's smart sensors or "Sensor 4.0". This paper briefly reviews the development of sensor technology over the last 2 centuries, highlights some of the potential that can be achieved with smart sensors and data evaluation, and discusses success requirements for future developments. In addition to magnetic sensor technologies which allow self-test and self-calibration and can contribute to many applications due to their wide spectrum of measured quantities, the paper discusses condition monitoring as a primary paradigm for introducing smart sensors and data analysis in manufacturing processes based on two projects performed in our group.