Winners in the Internet of Things
The electronics industry tried once again last week to make sense of this phenomenon called the Internet of Things.The IoT, as it’s known, is a grab bag of every conceivable object in the world that can be stuffed with circuitry and network connections and software, numerous examples of which were seen in Las Vegas at the Consumer Electronics Show.A lot of this stuff seems gimmicky, and it’s questionable whether much of it will function as promised. But industry wants desperately to anoint a winner among the many hopefuls making these IoT gadgets, and so does Wall Street. Fitbit (ticker: FIT), which makes bracelets that track your steps, and now smartwatches, is one primary candidate in people’s minds.But it was clear by the end of the week who the actual winners will be. The companies that have the most to gain from all these connected gizmos are the cloud companies, most prominently Alphabet (GOOGL), Amazon.com (AMZN), Facebook (FB), Microsoft (MSFT), and Baidu (BIDU). They will be the hubs, the centers of all the data being collected by Internet-connected devices, and the pervasive knowledge they will gain will be valuable to advertisers and others.Many of the connected devices are brilliant, and several are bizarre, but most will probably achieve only limited success. They include any number of cameras that take constant video of your home and warn about moving objects in the video that might be intruders. Some are devices you slip under a mattress to measure your sleep pattern. There are “smart” fetal monitors that let a mother see a baby’s heartbeat on her smartphone. Sophisticated blood-pressure wristbands will quickly scan for several types of arrhythmia and store the stats as a personal history.There was even one startup last week, Innit, that spoke of “digitizing” food, by which it means using software and sensors in smart ovens, to “let the chicken tell the oven how it wants to be cooked.”The mind reels. Good, bad, or crazy, what all of these devices have in common is that they will connect to the Internet and store and analyze the data they collect from you and your neighbors.That should be both ominous to everyone on a personal level, and intriguing to investors. The thought of data about your home, your health, your baby, and all the rest being in the cloud seems like a privatized Big Brother. Several vendors of connected security cameras with whom I spoke assured me that their data collection is highly secure and that they aren’t in the business of peeking at users’ lives. They are probably very sincere, but still, one wonders how safe and how private all this ultimately is.FROM THE INVESTOR’S PERSPECTIVE, the complexity of the Internet of Things will probably seduce more and more people into giving the cloud companies more and more data, thereby increasing the power and value of the cloud companies. The IoT is like the old problem of programming the clock on a VHS recorder, magnified to tens of devices in your home. As one chip executive told me last week, “I don’t want to have to program my smart car, I want to ‘friend’ my car on Facebook,” letting the social network eliminate the friction of making it all work.Then, too, the data collected has to be made sense of.Lisa Su, chief executive of chip maker Advanced Micro Devices (AMD), whose company makes chips for all the cloud companies, put it succinctly: “This idea of technology everywhere has been the mantra for a number of years now, but the bottom line is, ‘What do you do with all that data to make it useful?’ ” That’s a job for cloud companies such as Alphabet, which analyze piles of data using artificial-intelligence techniques.The cloud companies have a rapacious appetite for data, and they have already found ways to make every individual who uses the Internet a kind of funnel to bring more and more data into their machines.
Take, for example, a software application for mobile phones owned by Alphabet’s Google division, called Waze. It lets drivers on the highway upload information about the traffic on their route. It’s a voluntary collaborative database, in which all the drivers provide a piece of the puzzle. Only Google, up in its cloud, sees the whole picture.Google last week announced it is partnering with China’s Lenovo Group (0992.Hong Kong) to develop a phone that can use sensors to measure the dimensions of whatever physical space you happen to be in. Think of every person in the world being a kind of human beacon to let Google construct a 3-D map down to the centimeter....MORE
"Could Tesla Become the Google of the Internet of Things?" (and coffee pots as content providers) TSLA; IoT
The Google of the "Internet of Things" (and Morgan Stanley's 96 page IoT report) SPLK; GE
If interested see "IBM Bets $3 Billion On Internet Of Things (IBM)" for more of our IoT links.