As the Internet of Things becomes more and more a reality, and as the world sits up and takes notice, we can expect an increasing amount of capital to flow towards the underlying technologies. A recent report from Technavio, a London-based technology research and advisory company, predicts that the machine-to-machine (M2M) market worldwide will grow at a compound annual rate (CAGR) of over 25% from 2012 to 2016.
There are currently many industries using M2M devices and services, such as RFID readers for product tracking, location-based services for fleet management, and M2M sensors that track inventory in the manufacturing sector. When you add to that the applications now coming online like smart meters, security cameras, vending machines, and even home appliances, there are clearly abundant investment opportunities opening in the near future.
The Technavio report points out that one of the main driving forces behind this rapid growth of the Internet of Things and M2M communication is the drop in prices of the devices themselves, as well as the costs involved in connecting them. As chip manufacturers continue to miniaturize their products and reduce costs, the price of the hardware shrinks to insignificance. At the same time, according to the report, the cost of M2M services is also going down.
However, the report states that there is still one aspect of the Internet of Things that presents challenges: data integration. Simply connecting all of these devices presents challenges, as many of them are not capable of sustaining a TCP link to the Internet. Even for those that can connect, there are dozens of communications protocols in use, and no agreement yet on which is best. And finally there is the question of how to manage all the data traffic that results from so many connected devices trying to talk to each other.
Despite these integration challenges, investment in the Internet of Things makes a good deal of sense. Significant growth is expected in the electronics and semiconductor sector, and for those seeking greater opportunities, investing in technology that can provide the core requirements for real-time cloud computing might prove to be a wise decision.