The term “Internet of things” was first coined in 1999 by Kevin Aston, an early pioneer of radio-frequency identification technology. Since then, the meaning has morphed from tagging everything with a computer chip to something a bit different. Now it is generally understood as items being Internet-enabled, constantly communicating and processing data.
Sound weird? It might at first blush, but it is a clear trend. Years ago people used to make jokes about the Internet of things. They said it would be ridiculous to have consumer appliances like a refrigerator connected to the Internet. Now you can go to Best Buy Co., Inc. (NYSE:BBY) and purchase a Samsung fridge with a touchscreen that has a Pandora streaming music app you can use to play music while you are in the kitchen.
Best Buy Co., Inc. (NYSE:BBY) is happy to offer products like this. It wants to sell tech savvy customers high-end appliances that offer increased profit margins. As it stands, the consumer electronics retailer is not doing well, with heavy competition coming from e-retailers. If potential customers have to come to the store and get an experience (like using a touchscreen on a fridge) out of going to Best Buy Co., Inc. (NYSE:BBY), the company might be more successful.
Of course, customers might do that and then go home to purchase on their computer. That makes Best Buy Co., Inc. (NYSE:BBY) as an investment a very risky proposition. Consider this: the company recently reported a huge loss and profits are way down from where they were just one year ago.
One company that stands to benefit from Internet-ification is ARM Holdings plc (ADR) (NASDAQ:ARMH). It designs low-power microprocessors called ARM Holdings plc (ADR) (NASDAQ:ARMH) chips. Unlike processors from Intel Corporation (NASDAQ:INTC), ARM Holdings plc (ADR) (NASDAQ:ARMH) chips are based on RISC architecture, which means that they have reduced complexity and require fewer transistors. As a result they use low amounts of energy and produce very little heat, making them useful in a wide array of applications. These chip designs means that ARM Holdings plc (ADR) (NASDAQ:ARMH) processors are at the heart of most smartphones and tablets that we use today.
Intel Corporation (NASDAQ:INTC) is struggling with consumers moving to mobile since the majority of mobile chips are ARM Holdings plc (ADR) (NASDAQ:ARMH)-licensed designs. But Intel is also preparing to utilize ARM ‘s designs in its own chips. If Intel can make headway into ARM-based business they would be served well.
Consider this: the field location-aware sensing intelligence to provide contextual information is something Intel is investing in. This could be very lucrative with the internet of things. A consumer product would be served well if it were “aware” and able to identify its surroundings and be able to communicate with people.