Investment opportunities of the Internet of Things

Investment opportunities of the Internet Of Things
Photo by Mathias.Pastwa

Possibilities of the Internet Of Things or IOT have not been fully realized, at least not as an investment opportunity. IOT makes possible for manufacturers to add value into current products by adding “smart” capabilities. IOT is also a foundation that enables new, innovative products and services. The shift is gradual. In time, IOT becomes embedded as a part of other appliances and services like cars, electrics and healthcare services.

Things are evolving. The future of the internet is more about connections between devices and sensors. Communication is not only going the limit to us and devices, instead, everything is going to be connected. Companies have already been preparing to move forward on IOT.

Sensors make things smart

Sensors are in the center of IOT. The main function of sensors provides information about surroundings, location, temperature and more. Electric components are getting smaller, making possible to produce small and cheap sensor technologies and integrated chips. Various products can evolve smarter by using IOT.

Sensors make things smart
Photo by eurosporttuning

Thin Film Electronics is a Norwegian startup company specialized developing printed electronics. Printing process uses sheets or rolls. Printing makes possible to mass produce low-cost electric components as labels and other printed materials. Products include smart sensor labels, NFC-solutions, printed memory and article surveillance. Thin Film Electronics has over 250 patents involving printed electronics. At the moment the business is unprofitable and stock is highly volatile. Thin Film Electronics has long-term future opportunities as a leader in the field of printed electronics. Xerox licensed 2015 printed memory solutions which should give scalability opportunities.

InvenSense develops and manufactures micro-electro-mechanical systems, known as MEMS. The main product is gyroscopes. Biggest gyroscope customers for InvenSense are Apple and Samsung. Gyroscopes have future potential for many other applications as well, collecting data involving movement. The stock price has been plunged since Apple announced cuttings in component orders. Dependency to Apple is the main weakness of InvenSense, at least for now.

Ambarella‘s focuses on  system-on-a-chip or SoC solutions. Ambrella powers camera systems like GoPro action cameras and multiple drone camera systems. Ambrella’s technologies are also used in the automotive industry and surveillance industry. Falling demand for GoPro products has affected Ambrella’s stock price in spring 2016.

NXP Semiconductors makes chips for wireless communication solutions. NXP is providing NFC chips on many mobile phone manufacturers and has developed vehicle-to-vehicle and vehicle-to-infrastructure communication. Both technologies are crucial for autonomous vehicles. There is growth potential available in the payments as well, based on NFC technology. NXP merged with Freescale Semiconductor, making NXP one of the largest player in IOT semiconductor business. NXP has large product and customer base compared to Invensense or Ambarella. Stock can be seen as more robust compared to other companies in the IOT sensor market.

Skyworks Solutions sells communication sockets and telematics solutions for mobile phones, mostly to Apple. Skyworks is widening its income sources by selling chips to smart homes and cars and other IOT-systems. Skyworks stock has also been falling due the lower iPhone demand.

IOT infrastructure

Internet Of Things means an explosion in a number of Internet-connected devices. Research company Gartner estimates 21 billion Internet-connected devices by 2020. Growth in sensor data means growth in cloud-based services and Internet infrastructure.

infrastructure photo

Cisco Systems is a leader in providing network routers, switches, and other network devices. Today 80 % of internet data is going through devices made by Cisco. Front seat place in markets gives Cisco advantage in providing a network architecture that makes a platform for other IOT to build on. Cisco reported positive third-quarter results, which is a good sign. Cisco has paid increasing dividend for 5 years. Currently, dividend yield is 3.90%

IBM offers cloud services, enabling cognitive Watson analytic to be used for the sensor data. Combining and processing complex data, possibly from multiple sources is a complicated task. IBM provides services for this problem. IBM has had a falling revenue trend, due the low demand for industrial IT equipment. IBM has a lot of debt, debt to equity ratio being 3.052 on last quarter. Dividend yield for IBM is 3.80%. IBM has paid increasing dividends every year since the year 2000.


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