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3 Reasons the Internet of Things Is a Big Deal

By Motley Fool Staff - Mar 1, 2015 at 8:30AM

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The Internet of Things is more than just an empty buzzword. This technology will soon change your everyday life -- and the transformation has actually started already.

Unless you've been studying endangered llama populations in darkest Peru for the last five years, you've probably heard about the Internet of Things already. It's the hottest new technology since sliced phones and smart bread (or was it the other way around?), so much so that you're probably tired of the phrase already.

Well, buzzwords may come and go, but this one refers to a real megatrend in technology, and you'll be hearing it even more in the future. Sorry, but it's true. If you still need convincing, we rounded up three of The Motley Fool's top technology contributors to explain why the Internet of Things is such a big deal. Here's what they said.

Tamara Walsh (Data, data, data): If the Internet of Things, or IoT as it is often referred to, sounds like a buzz phrase to you, think again. The Internet of Things is transforming everyday life as we know it and, in many cases, making life safer and smarter than ever before. From wearable devices that collect data on your health to wireless sensors in homes, the data collected from the networking of physical objects to the Internet has the potential to dramatically improve lives.

Google (GOOG -0.54%) (GOOGL -0.57%), for example, is developing a revolutionary contact lens that monitors a wearer's glucose levels. Using a tiny wireless chip and glucose sensor, Google's prototype can measure glucose levels in people with diabetes, thus creating a more efficient way of monitoring the disease. In other cases, doctors can better manage patients with chronic diseases by analyzing information collected from sensors in their homes. This could help lower treatment costs by as much as 20%, according to research from McKinsey Global Institute.

The IoT is transforming industries like healthcare, energy, and industrials today thanks in large part to the ability of connected devices to collect and analyze massive amounts of data in real time. In fact, "data from embedded systems will account for 10% of the digital universe by 2020," according to IDC. Moreover, there are seemingly endless ways to monetize and apply this data to the improvement of everyday life, thereby making the Internet of Things a very big deal indeed.

Anders Bylund (Always on): Once upon a time, telephones always had to be connected to a wall plug. Before that, you often had to walk five miles in the snow, uphill both ways, if you needed to make a call.

That's kind of where we're at with Internet connectivity today. The dual rise of the Internet of Things and ultrafast broadband will soon make the current state of the art look quaintly outdated.

In short, pretty much everything will soon be connected to the Internet, and exchanging massive amounts of data all the time. The boundary between the physical and digital worlds around us become blurred as the number of always-on sensors soars. Everything will be measured, reported, analyzed, and made to return useful takeaways.

It's already happening. General Electrics' (GE -0.33%) airplane engines collect some 14 gigabytes of operating data per flight, helping aircraft builders and airlines optimize their products to perfection. Strap on your running shoes and go for a jaunt; your wristband and the shoes themselves may record the details of your jog to build both route maps and health management profiles. Store shelves can scan customer faces walking by, tailoring digital advertising displays to your demographic data.

This hyper-connected reality may creep you out at first. But it won't be long before you simply expect everything to talk to everything else, all the time, and help you make better decisions (in business, in life, and everywhere else). Disconnecting from the ubiquitous Internet of Things will make you feel as naked as leaving the smartphone in your other pants.

There are already more Internet-connected devices than there are people on this planet. By 2020, Cisco Systems (CSCO -0.22%) expects at least 50 billion Internet of Things gadgets and trinkets. If that's not a big deal, then I don't know what is.

Keith Noonan (Big money): If all goes according to plan, the Internet of Things will revolutionize hardware, software, and data across consumer and enterprise segments, and bring about a new tech boom. Research company IDC anticipates that IoT revenues will reach $3 trillion in 2020, with 30 billion devices expected to be connected through IP.

Network and communications company Cisco is even more optimistic about the future of machine-to-machine connectivity, estimating that the IoT represents a $19 trillion-dollar opportunity through 2020, and that IoT-connected devices will reach 50 billion in that time frame. To put those projected scenarios in perspective, total U.S. GDP was around $17.4 trillion in 2014, and mobile tracker GSMA Intelligence shows that there are roughly 7.4 billion mobile and machine-to-machine devices currently in use.

Chip makers like Intel (INTC -2.43%) and Qualcomm (QCOM -3.59%) have the potential for big wins as the number of devices with cellular modems increases and the need for servers grows, while appliance makers like General Electric will be able to offer expanded feature sets to encourage product replacement. As the hardware revolution takes place, the software ecosystem will also evolve, and companies in otherwise unrelated sectors, and third parties, will have incentives to create special interfaces between products.

All the while, mobile platform holders like Apple (AAPL 0.03%) and Google will be able to take data collection wider and deeper than ever before. With such transformative potential, the Internet of Things might just change business and day-to-day life.

Anders Bylund owns shares of Google (A shares) and Intel. Keith Noonan has no position in any stocks mentioned. Tamara Rutter owns shares of Apple. The Motley Fool recommends Apple, Cisco Systems, Google (A and C shares), and Intel. The Motley Fool owns shares of Apple, General Electric, Google (A and C shares), and Qualcomm. That's a mouthful even for a Peruvian llama.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.

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