Taking a look at trading opportunities based on a future billion dollar industry
Looking for the next big thing that will change the world? Autonomous cars? 3D printing of everything? The Internet of Things (IoT)?
All of these will soon change our world, if they haven’t already. But while cars that will be driven by software are being spearheaded by several companies, Google chief among them, the implications of 3D printing and IoT will have the largest effect on industries and businesses.
While 3D printing will definitely have a massive impact, changing who and how they produce components, whole structures or art, it’s cost will make it a mass phenomenon, something that a large number of individuals and businesses will have access to.
This is why IoT stands out as the potentially largest game changer for how we live and it will most likely come from the companies that are spearheading the development of the technology and business structure behind it. Experts have already called it a productivity movement that will drive the entire economy.
Estimates of how much it will be worth vary widely, which is quite normal given all the unknowns surrounding something completely new.
Let’s just throw in a clear definition of IoT, as there are many ways to describe it – it is the way machine-generated information is collected and analysed to improve a machine’s performance, and consequently our lives and work.
Some of the largest companies have started developing different niches of IoT. Apple has begun selling their HomeKit platform for a fully connected home. Google acquired Nest, a company making connected thermostats and smoke detectors for $3.2 billion last year. Samsung has vowed that all their devices will be connected by 2020. We personally look forward to the array of possibilities number 7 on this list will offer.
But these are only the tip of the iceberg. Global players like General Electric (GE), Cisco and IBM have had IoT or equivalent divisions and product lines for the last several years (GE have more than 800 “connected” devices for industrial and individual use and Cisco are not far behind).
And who forms the largest part of the iceberg? The chipmakers who actually produce the processors, radio chips and memory chips. They are the ones building the market itself and preparing to gobble up anyone who dares to challenge their supremacy. Intel and Qualcomm are shaping up to be the front runners here. At the moment their revenue from IoT is somewhere between 5% and 10% of their overall revenue, but with projections of a 13% average growth for the industry, these proportions might change quickly. Estimates for the value of the industry vary between $1.9 trillion to $19 trillion by 2030, not only because the demand for many of the current consumer products hasn’t been proven before a wide audience, but because the overall effect and influence of IoT can’t be defined precisely (hence the wide estimates).
This is because its possibilities range far from the individual and cross over into business. Almost all industries have hardware that is currently non-smart – unconnected, working by itself, breaking by itself and staying that way until a whole system shuts down. Imagine pipes being able to alert when there is a leakage, tyres that provide information about the road or connected oil rigs and factory lines that can anticipate problems.
There will probably be many winners in this “things race”, but if you spot one who manages to bind the technologies of construction, performance, communications and security then you’ll have a champion. It’s a long-term trade. But the future can come around really fast.
Cisco, Google, Intel,, Qualcomm and GE, as well as other companies in the IoT area like Bosch, IBM, Microsoft and SAP, are all available for trading in the Trading 212 PRO platform.
Our next article will be online tomorrow at 4:00pm – “Book of the Month – “The Big Short: Inside the Doomsday Machine” by Michael Lewis”.