The Internet of Things (IoT) is a general term for many of the devices that connect to the Internet that weren't connected before. Wearable devices like a fitness tracker or Apple (NASDAQ: AAPL) Watch are IoT devices, as are Amazon.com's (NASDAQ: AMZN) Echo smart speakers and General Electric jet engines that incorporate sensors to track performance and potential problems.
The Internet of Things doesn't get quite the same buzz as, say, artificial intelligence, but its impact on the technology sector is no less significant. By 2025 there will be 55 billion Internet of Things devices, and nearly $15 trillion will be invested in IoT technologies between 2017 and 2025, according to Business Insider Intelligence research.
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If you're still skeptical that the IoT will have a significant impact on tech companies, take a look at some of these Internet of Things facts and predictions.
Smart speakers will reach 125 million shipments this year
At the end of 2017 there were just 50 million smart speakers shipped worldwide. Now, just a year later, Strategy Analytics says that 125 million smart speakers will be shipped by the end of 2018. Amazon and Alphabet's (NASDAQ: GOOG) (NASDAQ: GOOGL) Google are seeing the biggest gains, with Amazon shipping 7.2 million of its Echo devices in the third quarter of this year, and Google Home devices following close behind with 5.2 million.
Both companies have tremendous opportunities in this space, as Google can use the devices to gather more information about its users and sell more targeted ads, and Amazon is using the devices to get users to buy more products from its e-commerce store.
1 in 5 Internet users will have a wearable device in 2019
Wearable devices may not be ubiquitous just yet, but they're gaining steam. The latest eMarketer data shows that in 2019 more than 60 million people in the U.S. will own a wearable device, up 9% from the previous year. Much of the growth is being driven by older Americans buying smartwatches because of advanced health features like electrocardiography (ECG) and fall-detection features.
Wearable tech sales still make up a small amount of Apple's total sales, but the company's wearable segment, which includes the Apple Watch, Beats headphones, and Apple's Airpod, is one of the company's fastest-growing businesses and increased its sales 75% in fiscal 2018.
Connected cars could reduce crashes by 600,000
Alphabet's Waymo, formerly known as Google's self-driving car project, just launched one of the first commercial autonomous vehicle ride-hailing services. That's important not only because Waymo could be worth $175 billion in the coming years, but also because autonomous vehicles will help usher in more vehicle-to-vehicle (V2V) connections, which will make roads safer.
V2V allows vehicles to communicate with each other and to send warnings or share critical information about traffic and accidents, and General Motors and Toyota Motor have said they'll be using V2V in the next couple of years. Allowing cars to communicate with each other could reduce car crashes in the U.S. by 600,000, according to the National Highway Traffic Safety Administration. This technology will be helped by the rollout of 5G wireless services already beginning right now, which will provide an improved network for more IoT devices, including cars, to use to communicate with each other.
Smart home devices will reach 939.7 million by 2022
Sales of everything from Internet-enabled home security cameras, light bulbs, and refrigerators is growing quickly and will reach $280 billion in 2022, according to the research firm IDC.
While smart speakers get most of the attention in this segment, it's video entertainment companies that have a massive opportunity in this space. IDC predicts that video entertainment IoT devices -- like smart TVs and digital media adapters like Roku's (NASDAQ: ROKU) streaming box and sticks -- will reach a staggering value of $201 billion by 2022.
Here's what investors should expect
The Internet of Things may not be a distinct business segment on the balance sheets of many tech companies, but there's no mistaking that it's having a tremendous impact on the companies listed above.
As the IoT grows over the next few years, investors can expect to see even more devices and services coming from Amazon, Alphabet, Apple, Roku, and many others. In a few years, it'll make sense for nearly every company to connect roughly everything it can to the Internet to collect and analyze data -- but the companies that are making this shift right now are the ones that will benefit the most.
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