The Internet of Things is emerging as a third and potentially the biggest trend yet in the development of the Internet, says Goldman Sachs Group Inc (NYSE:GS) in a new report on the topic.

internet of things mega trend

Three stages of development of the Internet of Things

The investment bank looks at the development of the Internet in three stages: the fix Internet of the 1990s, using primarily desktop computers; the mobile internet of the 2000s, utilizing smart phones and tablets; and now the Internet of Things, which includes connecting wearables, cars homes cites and industrial concerns.  The first and second phase connected up to 2 billion people while the Internet of Things is expected to connect over 28 billion people and appliances, highlighting what is said to be the most explosive and important trend yet.

CommTech Internet of things Matrix

Goldman Sachs Group Inc (NYSE:GS) breaks down the Internet of Things into five primary verticals to watch: Connected Wearable Devices, Connected Cars, Connected Homes, Connected Cities, and the Industrial Internet. In terms of specific stocks and sectors that might outshine, the report cites several areas including sensor technology. “Sensors have outgrown other semiconductor units by five percentage points over the last two years, and we expect that trend to continue as they proliferate,” the report said. “Connectivity will also grow above-average, driven by Wi-Fi, Bluetooth, ZigBee, NFC, and other IoT standards. More devices will use ARM-based processors and microcontrollers given their lower price points and power requirements relative to the x86 microarchitecture.”

Internet of things heat focus

Factors driving Internet of Things trend growth

Goldman notes three factors driving trend growth. Health and wellness, as witnessed in the fitness band craze, is a key motivator for people to embrace the technology, as is the environment and safety.

Internet of things growht trend

While there is potential enormous growth potential, there are also significant barriers to adoption. Among the most significant concerns is security.

“Security concerns escalate to a whole new level with the Internet of Things,” the report noted, “given the potential for privacy violations or safety issues as a result of the ability to remotely manipulate physical assets.” This could include hackers controlling cars remotely, which is reported to already be the case, as well as privacy issues.

Citing “just early example of vulnerabilities,” the report noted that in one major security breach, hackers realized that they could access the live streams of any camera over the Internet, resulting in over 700 cameras’ live video feeds being streamed over the Internet. This included footage of babies, young children, and people engaging in daily life activities in their homes.

Other barriers to this trend being adopted were regulation and compliance concerns as well as standards that may be imposed as well as ease of use concerns.