By William Patalon III, Executive Editor, Money MorningWhen you think of “mobile” or “connected” devices, you probably picture that new smartphone you just bought, and maybe your Apple Inc. iPad2.
Well, I’m here to tell you that you’re thinking too small.
Way too small.
By 2020, there will be 50 billion connected devices in use worldwide.
That’s not a typo. And it’s not a “hyped” estimate that we came up with internally. In fact, the estimate was made by Telefonaktiebolaget LM Ericsson, one of the largest telecommunications companies on the planet, in the research report “More Than 50 Billion Connected Devices.“
That creates a lot of significant risks. But for savvy investors, it creates one hellacious profit opportunity. And there’s one company in particular that’s poised to profit.
Still need to know more?
Well, consider a “connected future” in which:
The “connected” shoes of the elderly, or patients with health problems, can be monitored to make sure those folks are getting proper exercise.
Connected vehicles can be remotely controlled to maximize fuel efficiency and to minimize traffic jams.
You can use your phone to cool off your house via your connected air conditioner – as you drive home from work.
A connected vending machine can signal when it needs to be replenished, saving the vendor from unnecessary visits.
Your mobile device can be turned into a virtual wallet, or even a bank.
And connected trees can signal a lumber mill, which monitors them to nurture a better crop, and a more-timely harvest.
Business, consumer electronics, healthcare, government … they’ll all be affected, and in a huge way.
And the 50 billion estimate could actually be low, Ericsson says. By 2020, for instance, there will be:
3 billion subscribers with the means to buy information on a round-the-clock basis – either for a lifestyle improvement, or for personal security. In “mature” markets, these subscribers will typically have between five and 10 connected devices each.
1.5 billion vehicles in existence worldwide, many of them connected. And that doesn’t include buses or railroad trains.
3 billion utility meters (water, natural gas and electricity).
And a cumulative 100 billion processors shipped – each capable of being connected.
So, as a now-intrigued investor, how do you play this? Well, there are several possible paths to pursue.
You could, for instance, invest in the component makers. Or you could invest in the companies that make the actual devices. But the hottest opportunity is going to be security. Cybersecurity is one of the biggest growth areas for business in the years to come.
And with 50 billion connected devices, that opportunity is going to explode. Just think: How do you protect the networks, the devices themselves, and the bank accounts and credit cards that supposedly sit behind those billions of gadgets – which you know present a “target-rich” environment for scammers, hackers and those friendly letter writers from Nigeria.
Yes, for investors like you, security is where the action figures to be.
And while much of this growth is still down the road and in the future, there are actually several companies that are already very well positioned to benefit.
