Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 101

Opportunities in the 'Internet of Things'

The tech boom renaissance which started in 2012 has seen the Nasdaq Composite Index move to new highs. The reason for this is not just the huge increase in Internet usage across both developed and emerging markets, but the exponentially growing number of devices connected to the Internet.

Citigroup believes that during 2008, the number of devices connected to the Internet exceeded the number of people in the world. Cisco goes further and estimates that in 2010 there were 12.5 billion devices connected to the Internet, by the end of 2015, it will be 25 billion and by 2020 there will be 50 billion devices connected to the Internet.

We believe that this will be the fastest growing thematic globally, regardless of economic growth. Companies which have tried to use Internet technology to replace old world processes have missed the point, which is the reason why so many corporates waste millions on IT spending. Now the smart companies are more client centric and solutions-driven reviewing customer needs and looking at ways that they can incorporate advancements in Internet technology and connectivity to innovate and better reach and service customers. Subtle, but getting this right will create a huge gulf between the haves and the have nots.

Cisco categorise these items as the ‘Internet of Things’. Devices are managed by intelligent systems, which are secure electronic systems that run a high-level operator system (HLOS). They autonomously connect to the Internet, execute native or cloud-based applications, and analyse data collected. Citigroup cite some examples of things pervading our everyday life and connecting with the Internet as follows:

  • Connected cars: can include emergency call systems with embedded sims as well as early diagnostic monitoring, telematics, and in-car entertainment systems including wifi
  • Remote healthcare monitoring: can perform continuous and real-time readings of vitals such as blood pressure, heart rate or sugar levels to notify caregivers and/or medical personnel in the event of elevated readings.
  • Personal fitness: with wearable fitness devices (i.e., Fitbit, Nike+ fuelband), users can track steps taken, calories burned, and hours slept for example and monitor results on their smartphone or personal computer, as well as link to (or create) social networks.
  • Public transit: local and municipal governments can use solutions to run, operate, and monitor public transit systems for fuel optimisation, fleet tracking as well as positive train and traffic control. Systems for monitoring and controlling train movement improve railway safety (train separation or collision avoidance).
  • Transportation: use connectivity to leverage telematics and RFID devices to monitor and control shipping equipment and cargo on a worldwide basis. Producers are able to monitor and analyse asset safety and quality across the supply chain. For example, transporting food from farm to fork is a sensitive process to ensure that foods do not spoil while in transit.
  • Smart utilities: use connectivity to monitor energy consumption by automatically measuring and monitoring home energy usage with adjustments when approaching severe energy shortage.
  • Discrete manufacturing: use robotics to further automate production of automobiles and other equipment.
  • Home security and monitoring: provides protection against home intrusion but also is capable of monitoring and controlling home environments, such as lighting and temperature.

The tech boom in 2000 was about ‘eyeballs’, revenue multiples and issuing essentially worthless shares to expand and grow, which is why it eventually crashed. The Internet of Things is about reaching clients through new channels, delivering products and services that make life easier and creating applications that replace what people are doing today. This is actually what consumers want, that is why Apple, Google, Microsoft and Verizon are holding the largest cash balances of US corporates.

Unfortunately it is difficult to access investments in Australia to participate in this growth wave and as a result we expect to see more Australian investment dollars moving offshore to diversify from banks and resources into one of the most exciting growth opportunities seen in a long time.

 

Michael Birch is Head of Equities at Mason Stevens. This article is general information and does not consider the personal circumstances of any investor.

 

2 Comments
Steve
March 22, 2015

Any thoughts on internt infrastructure to exploit the exponential data theme ...

ISPs - TLS, IIN, TPG, MTU have grown well over the years and could keep doing so, potentially at an increasing rate.

Data centres - eg. NextDC (NXT) which has just become cashflow positive. All the new technologies mentioned above have some cloud component which means storing the data somewhere - one might expect rapid growth in cloud demand.

Could be a bit like virtual infrastructure . ISPs are virtual tollroads with ever increasing traffic, cloud storage providers are virtual REITs with ever increasing tenants? Might be a safer bet on this theme than trying to predict who the commuters and tenants actually are.

John
March 19, 2015

struggling ASX stocks but with a story -

Connected cars: Connexion (ASX code CXZ) - software app for web connected motor vehicles. Their vehicle management service Flex provides fleet users with the ability to manage an entire fleet of vehicles from a central control point using cellular mobile connectivity

Personal fitness / OHS: DorsaVi (DVL) - Their device uses wireless biomechanical and electrophysiological technology to measure a worker’s movement and muscle activity to better manage their physical work demands and help reduce injury rates and work-­- related costs. The device can also aid the rehabilitation of injured employees and help them return to work.


Personal fitness / OHS: Catapult (CAT) - A global sports analytics company that provides elite sporting organisations and athletes with detailed, real time data and analytics to monitor and measure athletes. Its products have been used by more than 500 sports teams and organisations worldwide. Its product suite encompasses a range of hardware and software solutions across its two brands, Catapult and GPSports.

Transportation: Smart Parking (SPZ) - specialises in on-street and off-street technology and data transfer for parking space availability

 

Leave a Comment:

RELATED ARTICLES

A 30-minute article using OpenAI … and there goes my job

Is there an Uber or Amazon of wealth management?

banner

Most viewed in recent weeks

Raising the GST to 15%

Treasurer Jim Chalmers aims to tackle tax reform but faces challenges. Previous reviews struggled due to political sensitivities, highlighting the need for comprehensive and politically feasible change.

7 examples of how the new super tax will be calculated

You've no doubt heard about Division 296. These case studies show what people at various levels above the $3 million threshold might need to pay the ATO, with examples ranging from under $500 to more than $35,000.

The revolt against Baby Boomer wealth

The $3m super tax could be put down to the Government needing money and the wealthy being easy targets. It’s deeper than that though and this looks at the factors behind the policy and why more taxes on the wealthy are coming.

Are franking credits hurting Australia’s economy?

Business investment and per capita GDP have languished over the past decade and the Labor Government is conducting inquiries to find out why. Franking credits should be part of the debate about our stalling economy.

Here's what should replace the $3 million super tax

With Div. 296 looming, is there a smarter way to tax superannuation? This proposes a fairer, income-linked alternative that respects compounding, ensures predictability, and avoids taxing unrealised capital gains. 

The rubbery numbers behind super tax concessions

In selling the super tax, Labor has repeated Treasury claims of there being $50 billion in super tax concessions annually, mostly flowing to high-income earners. This figure is vastly overstated.

Latest Updates

Investment strategies

Trump's US dollar assault is fuelling CBA's rise

Australian-based investors have been perplexed by the steep rise in CBA's share price But it's becoming clear that US funds are buying into our largest bank as a hedge against potential QE and further falls in the US dollar.

Investment strategies

With markets near record highs, here's what you should do with your portfolio

Markets have weathered geopolitical turmoil, hitting near record highs. Investors face tough decisions on valuations, asset concentration, and strategic portfolio rebalancing for risk control and future returns.

Property

Soaring house prices may be locking people into marriages

Soaring house prices are deepening Australia's cost of living crisis - and possibly distorting marriage decisions. New research links unexpected price changes to whether couples separate or silently struggle together.

Investment strategies

Google is facing 'the innovator's dilemma'

Artificial intelligence is forcing Google to rethink search - and its future. As usage shifts and rivals close in, will it adapt in time, or become a cautionary tale of disrupted disruptors?

Investment strategies

Study supports what many suspected about passive investing

The surge in passive investing doesn’t just mirror the market—it shapes it, often amplifying the rise of the largest firms and creating new risks and opportunities. For investors, understanding these effects is essential.

Property

Should we dump stamp duties for land taxes?

Economists have long flagged the idea of swapping property taxes for land taxes for fairness and equity reasons. This looks at why what seems fairer may not deliver the outcomes that we expect.

Investing

Being human means being a bad investor

Many of the behaviours that have made humans such a successful species also make it difficult for us to be good, long-term investors. The key to better decision making is to understand what makes us human and adapt.

Sponsors

Alliances

© 2025 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.