It's easy to be skeptical about new technology trends. There's always something new that tech companies are peddling, and their devices sometimes fall short of expectations. But when it comes to the Internet of Things (IoT) -- where formerly unconnected things are connected to the internet to track and analyze data -- there are plenty of reasons why investors should fight the urge to be skeptical.
The IoT is already prevalent, and it's transforming how many business keep track of their equipment, it's creating new products for major tech companies, and it's transforming how we interact with our homes. If you're still skeptical that the IoT is worth investing in, take a look at some the facts below.
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1. You've already seen IoT devices in action. If you've ever seen a smartwatch like the Apple (NASDAQ: AAPL) Watch or seen a commercial for Alphabet's (NASDAQ: GOOG) (NASDAQ: GOOGL) Google Home smart speaker, then you've seen the Internet of Things. These are just two examples of consumer products that were formerly unconnected devices and are now firmly part of the connected IoT.
2. The industrial sector will benefit the most from the Internet of Things. While consumer IoT devices grab all of the headlines, the industrial sector is expected to be a big part of the IoT as well, with a market size of $195 billion by 2022. Many companies are already building equipment for the Industrial Internet of Things (IIOT), and there will be 100 billion industrial IoT devices by 2021, according to research by PWC.
3. The IoT will generate massive revenues. Global spending on the Internet of Things will reach $1.29 trillion in 2020, according to IDC research.
4. It's going to save lives. Driverless cars, which are part of the broader Internet of Things market, will reduce accidents and make driving (or riding) much safer. When these vehicles become prevalent in the coming decades they'll likely save thousands of lives each year.
5. The planes you fly on are more efficient because of the IoT. General Electric (NYSE: GE) uses sensors to report how its airplane engines are performing and then sends data to its analytics software to figure out how the engines can be optimized for better efficiency, and to find small problems before they become big ones.
6. Entire wireless networks are being set up specifically for the Internet of Things. Most IoT devices only require a small amount of data to be sent through the Internet, and some telecom companies, including Verizon Communications, have already set up networks specifically for handling IoT data.
7. Farmers may know more about the IoT than you. Deere & Company (NYSE: DE) already equips some of its tractors with sensors, Wi-Fi, and cellular connections to keep track of where seeds have been planted, the pressure at which they were put in the ground, and how far the seeds are spaced apart. Some tractors can even follow a pre-planned planting route all on their own.
8. It's breathing new life into old tech stalwarts. Intel (NASDAQ: INTC) bought a key player in the Advanced Driver Assistance Systems (ADAS) market back in 2016, called Mobileye. ADAS helps form some of the necessary technologies (like automatic breaking) for semi-autonomous driving systems, and it means that Intel could become a key player in this growing IoT market. It was revealed last year that Intel is also a key chip supplier for Alphabet's self-driving vehicle company, Waymo, all of which means Intel is betting the IoT could spur on new chips sales.
9. The IoT will improve our healthcare. A company called Propeller Health has an inhaler for chronic obstructive pulmonary disease that's equipped with sensors and wireless connectivity to send data to a smartphone about when it was used and what the weather conditions were, and keeps track of how often the medication was needed to help people understand what might be triggering their attacks. The IoT healthcare market is expected to grow from $41 billion in 2017 to $158 billion by 2022, according to MarketsandMarkets.
There's much more to come
Investors looking for Internet of Things stocks may want to get started here and remember that the IoT is spread across so many industries that you virtually have your pick of sectors to invest in. Just keep in mind that, as with any investment, you should be looking for companies that are well positioned to benefit from the Internet of Things over the long term. And remember to be patient as these companies build out their IoT products and services. There aren't many IoT pure-plays out there, which means that any company investing in the IoT now will take some time to earn significant revenues from the market.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Chris Neiger has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Apple, and Verizon Communications. The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool recommends Intel. The Motley Fool has a disclosure policy.