Make no mistake, the Internet of Things is kind of a big deal. The Internet of Things is not really one industry, but rather the ability of devices and machines to communicate with each other over an internet network.
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This new technology should pave the way for increased speed, automation, and data collection for all enterprises and consumers in the years ahead. It's an exciting technology and opportunity. It's estimated that by 2020, there will be 50 billion connected devices and the market will be worth over $7.1 trillion.
While many investors looking to ride this technological wave are focused on the semiconductor companies that will make such communications possible, chip stocks are not the only plays on this trend. Here are three companies -- two you likely know, and one you probably don't -- that are making significant investments in the Internet of Things.
Not surprisingly, Amazon (NASDAQ: AMZN) looks to be a large player in the Internet of Things, both on the enterprise side through its Amazon Web Services division and on the consumer side through its Alexa product.
On the enterprise side, the AWS IoT platform allows corporations to send applications stored in the Amazon cloud to connected devices over the internet. AWS also has an interesting IoT product called Greengrass, a software product that allows AWS-connected devices to speak with each other, without having to communicate back to the cloud. Devices at "the edge" -- say, a piece of oil field equipment -- can perform both compute and cache functions locally while also syncing with other nearby devices, without having to send data back to a central cloud hub. That ensures devices will continue to function in sync even during intermittent connectivity and also helps minimize data costs for customers.
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On the consumer side, Amazon is looking to partner with appliance companies and embed Alexa voice-enabled functionality in their products. Early this year, the company partnered with leading household appliances company Whirlpool to allow Whirlpool products to respond to Alexa voice commands.
So rejoice! With Alexa-enabled devices, preheating your oven will no longer require the arduous task of walking to the kitchen and turning the knobs.
Many wireless telecoms are looking to get into the Internet of Things, especially since the U.S. smartphone market is approaching saturation.
The best-performing telecom company recently has been T-Mobile (NASDAQ: TMUS), and this month, the company is set to launch an IoT experiment in Las Vegas, according to The Wall Street Journal [subscription required]. The network will utilize a "narrowband network," a network that uses smaller-width swaths of wireless spectrum, good for low-bandwidth, low-power applications such as sensors. The company plans to connect hundreds of devices around Vegas, from air quality sensors to streetlights. To accomplish this, T-Mobile will be tweaking its network software specifically toward these IoT-related functions.
If the experiment is successful, T-Mobile plans to roll out the narrowband IoT network nationwide by 2018.
Finally, one IoT company with which you might not be familiar is Hortonworks (NASDAQ: HDP), which specializes in open-source Hadoop technology, which is able to store and process vast amounts of data well beyond the capacity of traditional storage solutions.
In addition to its Hortonworks Data Platform (HDP) for processing stored data (data at rest), the company also has a relatively new product called Hortonworks DataFlow (HDF) specifically geared toward the Internet of Things. HDF collects and processes purchase, sensor, and asset data in real time and feeds this information into either a data lake for analysis or directly into streaming applications.
In its most recent quarter, Hortonworks installed HDF in eight of its 10 largest new deals, showing that the platform has a lot of promise and that large enterprises are investing in IoT solutions. Hortonworks certainly looks to be in good position to capture its share of the IoT wave.
While much of the focus on the Internet of Things has been on the new chip technologies that will make it possible, these three software and network platforms also stand to benefit from the IoT opportunity.
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Billy Duberstein owns shares of Amazon, Hortonworks, and T-Mobile US. The Motley Fool owns shares of and recommends Amazon. The Motley Fool recommends T-Mobile US. The Motley Fool has a disclosure policy.