Intel (NASDAQ:INTC) filled out its Internet of Things, or IoT, portfolio a bit more this week with its purchase of German chipmaker and home networking company, Lantiq.
Lantiq makes semiconductors and software for carriers and companies to connect homes to the Internet -- via DSL or cable -- using networking gateways.
The aim for Intel here is to use its current home networking products in tandem with Lantiq's technology (and 2,000 patents) to advance its home Internet of Things ambition.
The connected home, coming soon
Intel believes that over the next three years there will be 800 million broadband-connected homes worldwide. And it wants to be part of not only connecting them to the Internet, but bringing new Internet of Things services, like home cloud networks, as well.
"The combination of our cable gateway business with Lantiq's technology and talent can allow global service providers to introduce new home computing experiences and enable consumers to take advantage of a more smart and connected home," Kirk Skaugen, senior vice president and general manager of Intel's Client Computing Group said in a statement.
And that's a smart move, considering that the connected home is one of the fastest growing Internet of Things spaces. A recent report by Acquity Group says that over the next five years around 30% of U.S. consumers will have a smart thermostat in the home and about 25% will have a smart refrigerator.
Intel will use the new purchase to bolster its own IoT pursuits with Lantiq's chips and software, which are already used by more than 100 companies worldwide.
A small part of a bigger picture
Intel's purchase of Lantiq is more proof that Intel is betting big on the Internet of Things. Just last year Intel's IoT division earned $2.1 billion in revenue -- after just a year in existence.
Over the past year, the company's been on an IoT tear. Towards the end of 2013, Intel purchased Basis Science and released a new smart watch under the brand. And just a few months ago the company announced a partnership with Opening Ceremony to help make its high-end wearable tech bracelet. On top of that, Intel's chips now power a set of SMS Audio smart headphones and the company recently partnered with Accenture, Dell, SAP, and others to make a new Internet of Things platform.
But the connected home is one of the holy grails of the Internet of Things because it's a place consumers spend a lot of time -- and money. Connected home devices are expected to be 25% of overall Internet of Things devices shipped this year, according to BI Intelligence, and valued at $61 billion in revenue. If that's not impressive enough, consider that that number is expected to jump to $490 billion by 2019.
That's why Google spent nearly $3.2 billion to acquire the smart thermostat company, Nest Labs, and why Samsung purchased the connected home company SmartThings.
It's just over a month into 2015, and Intel's already shown that the big IoT push it started last year will continue into this year -- and it appears the company's just getting started.
Chris Neiger has no position in any stocks mentioned. The Motley Fool recommends Accenture, Google (A shares), Google (C shares), and Intel. The Motley Fool owns shares of Google (A shares) and Google (C shares). 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.