The Internet of Things is not new. It’s been here along, but until recently all of the “things” in the Internet were dedicated devices like PCs, laptops and smartphones designed to help users to communicate and form a network to share information. The tremendous benefits of networking and sharing information led to the rapid growth of the Internet.
However, the growth of the Internet was limited by the fact that only devices that can communicate could join the network. The obvious solution to this problem is to enable more devices of all types to communicate so they can provide potentially important information. It took technology a few years to reach this goal, but now tens of thousands of Internet-enabled devices such as air conditioners, refrigerators, hot water heaters, coffee pots and alarm systems are connected to existing smart-home and smart-office networks every day.
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Goldman primer report on the Internet of Things
A new report from Goldman Sachs Equity Research focuses on the the Internet of Things as the latest technological mega trend. Goldman analysts Simona Jankowski and colleagues argue that the IoT is “the third wave in the development of the Internet.” They point out that the fixed Internet wave that began in the early 1990s connected more than 1 billion users to the Internet, while the mobile wave of the last 15 years connected another 2 billion people. The GS report suggests that the IoT could connect as many 28 billion “things” to the Internet by 2020, ranging from watches to baby monitors to cars.
Key early adopter sectors for IoT
Jankowski et al. point to five key early adopter verticals — wearables, cars, homes, cities and industrials — and argue developments in these sectors can be viewed as kind of real world test cases for what can be achieved with the IoT.
The report goes on to argue that the companies that will benefit the most from the IoT will be those that can web-enable new devices, offer common platforms on which they can communicate and come up with new applications to attract users. The GS analysts break these firms down into three categories: enablers, platforms and industrials.
Enablers include companies involved with Wi-Fi, sensors and low-cost microcontrollers.
Platforms means firms developing software applications for managing communications between devices, middleware, storage and data analytics.
Industrials includes companies developing home home automation (early opportunity), as well as those seeking to optimize the factory floor to increase efficiencies.