The "next big thing" already has a name. It's called the Internet of everything, and could become the most important technological innovation, after the invention of the smartphone. According to Cisco Systems (CSCO +13.41%), this concept will bring together people, processes, data, and things to make networked connections more important. By doing this, the Internet of things could become more central to society than the Internet as we know it today, according to Quartz contributor Christopher Mims.
Simply put, this paradigm plans to embed most objects -- from TVs to washing machines -- with connectivity sensors, given them the ability to stay connected to the Internet. There are plenty of implications for investors, including a boom in connectivity technology, and an increase in demand for data analytics tools, as machines will also be generating more data than people. Below three companies with attractive exposure to this new trend.
Source: Cisco IBSG, 2012
Cisco and the demand for connectivity
As the world's largest supplier of data networking hardware and software, Cisco is set to benefit enormously from the Internet of everything, where it is an early mover.
On September 2013, the company introduced its Network Convergence System, a network fabric family designed to deliver scalable, smarter, and more adaptable Internet. This proprietary technology is protected by more than 100 patents, and will try to monetize opportunities in certain key vertical segments, including smart homes, a promising market with a potential size of $850 billion, according to data from Machina Research.
Note that Cisco's rich and well-diversified product portfolio also includes solid presence in the Ethernet switch market. This means that with or without Internet of everything, the company enjoys stable cash flows. Furthermore, with more than $47 billion in cash, Cisco is well-prepared to invest in this new technology, and secure a leading position.
General Electrics, industrial Internet, and data analytics
Under the term "industrial Internet," General Electric Company (GE 1.08%) is deeply interested in the Internet of everything, and may focus on industrial solutions for manufacturing, medical and transportation companies.
For example, the company is developing an intelligent hospital robot system that automatically sorts and sterilizes surgical tools. It is also targeting companies engaged in the railway business, providing them with rail network optimization solutions, where General Electric uses analytics and sensors to provide real-time access to critical information of railroads.
How iBeacon will put the Internet of things in your pocket
As usual, Apple (AAPL 0.27%) will target the consumer segment with new gadgets, powered with iBeacon. This is an implementation of the Bluetooth Low Energy (BLE) technology, which enables micro-location triggers for events in iOS7 apps. iPhones equipped with iBeacon will allow users to know the position in space of their devices with centimeter precision.
Although the new feature has not received much attention by the media, it could disrupt interaction design, according to Wired contributor Kyle Vanhemert, because iBeacon can effectively tie digital content to the physical world. For example, with iBeacon, consumers could step inside Wal-Mart and have their shopping list transformed into a personalized map, showing them the most attractive deals.
Final Foolish takeaway
The Internet of everything is expected to enable businesses to generate at least $613 billion in global profits in 2013, according to Cisco. More importantly, this market will grow very quickly over the next decade, as the number of devices connected to the Internet increases from 9 billion at present to 24 billion by 2020, according to a study by GSMA.
The implications of such a massive tech trend are far reaching. A huge demand for connectivity, analytics, and gadgets enabled with smart Internet, is in the making. Cisco's Network Convergence System, General Electric's Industrial Internet, and Apple's iBeacon are among the most promising products.
