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.
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.
Just because the mobile revolution is already underway doesn’t mean that you’ve missed out on ARM Holdings plc (ADR) (NASDAQ:ARMH). In fact, since the company only licenses its chips and does not manufacture them the company is constantly in innovation mode, designing and licensing its chips to companies that use them in all sorts of projects. Freescale Semiconductor Ltd (NYSE:FSL) sells its ARM-based i.MX series of processors to a number of companies in the automotive, industrial and consumer device markets.
Freescale Semiconductor Ltd (NYSE:FSL) also sells an i.MX-powered touch sensing device called CRTOUCH that can be embedded into all sorts of products — refrigerators included. A compelling user interface is important. What’s the point of a device connecting to the Internet if you can’t easily use it?
And while our touchscreen-featured refrigerator is only one example, you can imagine the possibilities for other products that could benefit from having tiny computers in them. Connected to the Internet and loaded with software applications, there are a number of situations where items that we normally use today could become more useful. Just look at Cisco’s estimates for how much mobile data traffic there will be in 2017, and you get the idea.
As that happens, look for the aforementioned companies to reap the benefits of being early to this market. It’s unclear how consumer products companies will make money with this trend, but companies that provide components for the Internet of things stand a good chance of finding a large market for their products. This in effect is where the future of technology lies: not within a computer sitting on a desktop or in our lap but in the consumer products and appliances that we rely on everyday.
The article The Companies to Bet on for the Internet of Things originally appeared on Fool.com and is written by Daniel Cawrey.
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