The Internet of Things, or IoT -- where formerly unconnected "things" communicate with each other and their users -- saw some big changes in the past year. For Intel (NASDAQ:INTC), it meant starting a dedicated Internet of Things division, while Sierra Wireless (NASDAQ:SWIR) partnered with three major cities for a smart city lighting project. General Electric (NYSE:GE) announced it will generate $1 billion in IoT revenue this year.
But all of these companies shared one major Internet of Things ambition this year -- each one released their own IoT platform.
What Intel's been up to
After launching its first IoT division last December, Intel has gone on an Internet of Things blitz.
Over the past 12 months, the company:
- Purchased the wearable tech company, Basis Science, and recently released a new smart watch under the brand
- Teamed up with Google to provide the new chips for an upcoming redesign of Glass next year
- Created a wearable tech bracelet with Opening Ceremony (called the MICA)
- Used one of its chips to power a new BioSport smart headphone set by SMS Audio
But one of the biggest IoT moves Intel made this year came just earlier this month when the company teamed up with Accenture, Dell, SAP, and others to launch the Intel IoT Platform. The move comes as other companies are starting to build software to manage IoT connections. Though it's still too early to tell how successful Intel's platform will be, the company has secured some strong partnerships that should be eager to try out the new software.
Aside from all the Internet of Things partnerships and platforms, one of the most telling things about the company's IoT pursuits was its revenue. Doug Davis, vice president and general manager of Intel's Internet of Things group, expects the company to end the year with $2 billion in Internet of Things revenue. Considering the IoT group didn't even exist a year ago, the company has made impressive gains.
The conglomerate that wants to dominate IoT
As a massive global company, General Electric's approach to the Internet of Things (or the Industrial Internet, as the company calls it) has to be much different than smaller companies.
To expand its IoT presence, GE realized that adding sensors to its equipment wouldn't be enough, so at the end of 2013, the company launched its own Internet of Things platform called Predix to "provide a standard and secure way to connect machines, industrial big data, and people."
After a year of testing Predix with select partners, GE announced in October that it would make the software available to any company. SoftBank just became the first to license Predix in order to create apps for shipping, manufacturing, and more. The two companies will share revenue from the apps, which are expected to total $200 million over the next five years in Japan alone.
Predix is important for GE -- the company believes increased efficiencies from the Industrial Internet will add $10 trillion to $15 trillion to the global GDP over the next 20 years. Predix apps already monitor aircraft, power plants, and railroads. At just a year old, the Predix platform is expected to generate $1 billion in revenue for GE by year's end. By 2017, the company hopes to boost that number to $5 billion.
A banner year for Sierra Wireless
Sierra Wireless' business is built on making small, wireless embedded modules for the Internet of Things, and the company continued its IoT lead with the shipment of its 100 millionth module in September.
This year, the company also kicked off a smart city lighting project in London, Prague, and Rotterdam, Netherlands. Sierra Wireless is supplying its wireless modules in lighting fixtures which allows the cities to control lights individually, or in pairs, and to receive status notifications when a light fails.
Like Intel and GE, one of the most important moves Sierra made in 2014 was introducing its own machine-to-machine or M2M platform, called Legato. The system allows companies to quickly create apps for M2M connections, use an open-source framework on the platform, and get professional tech support and training from Sierra Wireless.
It has also been a great year for Sierra's earnings. For the third quarter, the company increased earnings by 118% year-over-year and revenue increased 28%. That easily beat analyst expectations and added to what has already been banner year for Sierra investors. The company's stock is up nearly 70% year-to-date.
While each of these companies made significant progress in 2014, next year will bring increased competition as more companies develop their Internet of Things strategy. Getting a foothold in software platform space will be a key area for companies looking to make money from the Internet of Things.
Due to the sheer number of connections (estimated to reach 50 billion by 2020), the three companies realize that collecting and analyzing the data produced by every "thing" could be a very lucrative way to tap into the IoT. And as promising as the Internet of Things may have been in 2014, next year is likely to prove even more interesting.
Chris Neiger has no position in any stocks mentioned. The Motley Fool recommends Accenture, Google (A shares), Google (C shares), Intel, and Sierra Wireless. The Motley Fool owns shares of General Electric Company, Google (A shares), Google (C shares), Intel, and Sierra Wireless. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.