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As the internet of things (“IoT”) industry rapidly expands, there are more IoT investment opportunities than ever for investors to get involved. But what is the IoT industry, how does it work, and how do investors find promising companies in this space?
In this article, we'll explain everything you need to know about the IoT industry, including how and where to spot investment opportunities.
What is the Internet of Things and how does it work?
The Internet of Things (IoT) is a network of physical devices, vehicles, home appliances, and other items that are embedded with electronics, software, sensors, and connectivity that enable these objects to connect to the internet and exchange data.
For example, Fitbits send data about your physical activity to your smartphone; the Nest thermostat can learn a user's preferences and program itself accordingly; and Amazon Echo can order groceries for you when you run out.
In short, the IoT is a way to make our lives more convenient, efficient, and safe.
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The IoT market by the numbers
One of the most important things to consider when researching investments (in any industry) is to look at past, present, and future metrics to get an idea of how much traction there is in the market.
The IoT industry has been growing steadily lately, and is expected to continue this trend for the next several years.
Let’s take a look at some high-level stats and then discover why this market is booming.
According to a report from Transforma Insights, over 25 billion IoT devices will exist by 2030.
Currently, there are about 7.7B connected IoT devices globally—nearly the same as the world’s 7.9B population.
In 2020, $749 billion was spent on IoT. By 2023, global IoT spending is projected to reach $1T.
In 2020, the number of IoT devices surpassed the number of non-IoT devices for the first time, and has continued to rise ever since (see chart).
So, what’s driving this market? A few of the factors driving IoT growth are:
The growing demand for connected devices
Manufacturing efficiencies making IoT sensors more affordable
The evolving trend of Bring Your Own Device (“BYOD”)—employees using their own devices at work instead of company-issued technology
The network effect: the more IoT devices there are, the better they work
In addition, the IoT market is being enhanced by the development of new applications such as smart homes, smart cities, connected cars, and industrial IoT.
With so many exciting opportunities on the horizon, it's no wonder that the IoT market is expected to continue to grow in the coming years.
How to spot IoT investment opportunities
When it comes to investing, there are no sure things. However, there are certain indicators that can help investors spot promising opportunities. One such indicator is the emergence of new and innovative technologies. The arrival of the Internet of Things is a perfect example.
IoT is already having a major impact on industries as diverse as healthcare, transportation, and manufacturing.
For investors, the rise of IoT presents a unique opportunity to get in on the ground floor of a potentially transformative technology.
But how can someone identify the best IoT investment opportunities?
Here are three things investors look for:
Companies that are developing innovative IoT solutions are able to create a competitive edge for themselves and seize opportunities in the marketplace. In order to develop these solutions, companies need to have access to reliable, affordable connectivity that can support large amounts of data.
Companies that are well-positioned to benefit from the adoption of IoT include those that have the ability to generate data and insights from connected devices and then use those insights to improve their products, processes, and services.
Companies that have the financial resources to weather the inevitable bumps in the road are more likely to stay in business until things eventually return to normal.
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Top publicly-traded IoT companies
These 5 publicly-traded companies are leaders in the development and implementation of IoT technology, and continue to capitalize on the growing demand for connected devices and services.
- Amazon.com (NASDAQ: AMZN) is one of the largest online retailers in the world, and it is also a major player in the cloud computing market. The company's Amazon Web Services division offers a robust platform for developers to build IoT applications.
- Cisco Systems (NASDAQ: CSCO) is a leading provider of networking equipment and services. The company has been working on IoT solutions for several years, and offers a variety of products and services that help businesses connect their devices and sensors. Cisco is also working on developing new standards for the IoT industry.
- IBM (NYSE: IBM) is a tech giant that offers a wide range of products and services, including cloud computing, analytics, and artificial intelligence. IBM is also a major player in the development of new standards for the IoT industry.
- Microsoft (NASDAQ: MSFT) is a leading provider of software and services. The company's Azure cloud platform is a popular choice for developers who are building IoT applications. In addition, Microsoft is working on a number of new IoT technologies, including a new wireless standard for connecting devices.
- Google (NASDAQ: GOOG) is a leading provider of internet services and products. The company's Android operating system is the most popular platform for smartphones and tablets, and it also offers a range of other products and services, including cloud computing, mapping, and search.
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5 IoT startups to watch
Startups are racing to develop products and services that will revolutionize the way we live, work and play. And investors are pouring billions of dollars into the IoT space.
So which IoT startups might have a bright future? Here are five that may be worth watching. (Note: These companies are not currently raising capital from the crowd.)
- Big Panda: Big Panda is a predictive analytics platform that helps businesses make better decisions about their operations. The company's technology can gather data from millions of devices and sensors, and then use machine learning to find patterns and insights that can help businesses improve their performance. They have raised a total of $317M to date.
- Ionic Security: Ionic Security is a cybersecurity company that offers a unique solution for protecting data in the IoT era. The company's software uses encrypted containers to store data, so even if devices are hacked, the data will remain safe. They have raised a total of $163M to date.
- Wyze Labs: Wyze Labs is a home automation company that offers a line of affordable, easy-to-use products that let consumers control their homes from their smartphones. The company's products include a smart camera, a smart doorbell and a smart plug, and more are in the works. They have raised a total of $155M to date.
- Helium: Helium is a startup that's trying to make it easier for businesses to deploy and manage IoT devices. The company offers a platform that helps businesses keep track of their devices, and it also provides a marketplace where businesses can buy and sell data collected by IoT devices. They have raised a total of $365M to date.
- Particle: Particle is an IoT platform that helps businesses build, connect and manage their IoT devices. The company offers a range of products and services, including a device management system, an IoT development kit and a data visualization tool. They have raised a total of $106M to date.
The Internet of Things is growing rapidly, and with that growth comes new opportunities for businesses to capitalize on.
But remember, as with any investment, there is risk involved. Do your own research (“DYOR”) and consult experts before making a decision.
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