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The concept of the smart city has been created in response to the increasing numbers of people living in cities. Just as the development of technology has evolved rapidly, smart life has also emerged. The goal of the smart city is one day to enable all affairs of daily life to be completed with the single touch of a finger through cutting-edge technology. New and innovative information must be applied effectively to the industry. With the industrial revolution, propelled by the Internet of Things (IoT), big data and the cloud platform have birthed the “smart city,” integrating the IoT and the cloud through mobile devices and applying technology to fields like logistics, finance, healthcare, recreation, surveillance, and traffic transportation, thus providing people with greater well-being and convenience. Following the era of the big data knowledge economy, the IoT has become an important pillar of national economic development. The IoT is expected to provide substantial support for continued and sustainable development of the smart city. Therefore, effective use of the IoT has become an important topic in smart city development. The purpose of this paper is to build a conceptual framework of service innovation, relying on the smart city case of Taiwan. Based on a literature review, in-depth interviews, and case interviews, the proposed conceptual framework of IoT is rooted in the market, policy, and technical aspects. It incorporates eight steps: composition of the project team, service idea generation, service idea screening, development concept selection, design and development, service testing, commercialization, and service quality, to generate new service value and thereby create customer satisfaction. In fact, the IoT is designed to support the smart city vision; thus, this paper describes the various innovation modes of the smart city. Furthermore, the paper presents and discusses the technical solutions and best-practice guidelines adopted in the Taiwan Smart City project. Finally, it discusses the meaning and future research direction of the smart city through the use of the IoT. With wave after wave of digital development civilizing the city's evolution and with the phenomenon of Internet access through mobile phones for each person, the smart city of human factors is clearly coming. [ABSTRACT FROM AUTHOR]