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Applying technology to everyday items tends to make them smarter.
Take phones, for instance. The standard-issue phone became a smartphone. Now it's time for cities to replicate that transition and get smarter in the process. Acting on the rise in demand for smarter, more efficient, more capable cityscapes, several companies are making their moves. Let's take a look at how Fools can profit from the rise of smart cities.
Towns of the future
Recently, Panasonic (NYSE: PC ) announced plans to build a smart city from the ground up in Fujisawa, Japan. The project, named Fujisawa Sustainable Smart Town, will involve nine leading companies and the city of Fujisawa. The concept is to develop a town that is environmentally friendly for its residents and minimizes carbon emissions. The town also makes optimal use of natural resources like solar power.
The town will feature interconnected network and power solutions that will be operational from the start. The residents will, therefore, be able to enjoy infrastructure that is optimized to provide best performance. All the comprehensive technologies that are planned to be a part of the town will feature Panasonic's Eco Ideas model.
The smart town, in Fujisawa city, will span 19 hectares and house approximately 3,000 people. The total investment in the smart town is going to be around 60 billion yen (approximately $748 million) and is slated to make its appearance by 2014.
Apart from Panasonic, eight other companies will be involved in the making of this smart town. Each of these eight will contribute to certain parts of the town's infrastructure. For example, Accenture (NYSE: ACN ) will be involved in creating the concept of the smart town and provide support in overseas expansion. Orix (NYSE: IX ) will provide services for betterment of lifestyle and work toward a lowered carbon footprint. The other companies that are onboard include Mitsui, Mitsui Fudosan, Nikken Sekkei, PanaHome, Sumitomo Trust & Banking, and Tokyo Gas.
Computers for cities
Closer to home, IBM (NYSE: IBM ) has announced the IBM Intelligent Operations Center for Smarter Cities, which pulls together IBM's software used in cities such as Memphis, Tenn., and New York. Initially, tools will be offered in a licensing format and then later, they are likely to be sold as a software-based service. The main components of IBM's smart city solutions are public safety systems that provide analysis tools for safety workers and first responders, transportation management solutions that can analyze traffic flows and disruptions, and the capability to monitor and analyze water supplies. Not surprisingly, GE (NYSE: GE ) has also been heavily investing in research for technologies in urban development solutions of this type. As energy efficiency grows in importance in the coming years, this should make such lines of business a massive forward market.
What's in it for them?
What companies like Panasonic and IBM are going after is not just sustainable living and easier civic management solutions. There is a lot of money to be made in the coming years in the area of urban construction, especially smart cities.
According to a report by Pike Research, this decade will see as much as $108 billion in investment on smart city information and communication. By 2020, there is a possibility of investment of up to $16 billion annually on construction of smart cities. So there might be a lot of moola to be raked in here.
In the near future, there will be a lot of changes in the urban landscape. Concerted efforts like Panasonic's city in Japan are just the beginning.
For Panasonic and related companies, this could well mean that much-coveted first-mover advantage in this field. For the Foolish investor, it could mean a good investment opportunity in an area that is still in its nascent stage but is poised to take off very soon.