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The Internet of Things changes the landscape for these tech stocks

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One of the hottest trends over the last few years has been the shift in electronics and tech to what is called the Internet of Things (IoT).

The IoT is a convergence of electronics and internet connectivity, in which virtually every electronic device and household appliance can be controlled through a single internet connection. It’s the next evolution of connectivity and has the potential to rival the importance of smartphones, tablets, and even home computers.

Research firm IDC estimates the market for IoT products could triple to $1.7 trillion in 2020 from just $655 billion in 2014. Another firm, Smart America Challenge, estimates that cities around the world will invest as much as $41 trillion over the next 20 years to integrate IoT infrastructure into city planning.

Most IoT investing has targeted the connected products themselves like wearables, connected-home devices and hardware — but success depends on finding the needle within a haystack of companies that could produce the next hot consumer gadget.

There’s one common theme that connects all IoT products — a theme that could mean a boom in earnings for one industry. Investing in the best-of-breed within this industry could allow you to benefit from the IoT trend without having to find the next consumer electronics breakthrough.

The One Thing All IoT Products Need

The common theme that ties all IoT products is the need for massive data analytics and processing. Data from these devices is collected, analyzed, and stored to provide a better user experience. The embedded software and sensors within electronics such as connected home thermostats and security systems will be constantly collecting data.

The IoT isn’t just for consumer electronics either. The trend could be a big part of how local governments operate in the very near future. For example, the city of Boston recently installed a sensor-based gunfire detection system that can alert police within seconds. In other cities, flying drones are being used for everything from analyzing traffic patterns to fighting fires.

Beyond granting the ability to allow users to control their physical world through technology, the inconceivable amount of data created is a gold mine for businesses seeking to understand their customers.

The real winners in all of this are the companies that provide those data processing, analytics, and storage needs…

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Article printed from InvestorPlace Media,

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