Taking potshots at Google (NASDAQ:GOOG) (NASDAQ:GOOGL) and its bevy of far-flung innovation efforts is fairly easy. The list of failed, or at least stalled, over-the-top initiatives is a long one, beginning with Google Glass. Toss in driverless cars, nanotechnology, and those odd-looking Internet-beaming balloons as part of Project Loon, and it's no wonder some industry pundits have pointed to Google's borderline innovations as the reason for its stock's underperformance.
When Google CEO Larry Page recently announced the latest venture to invest in smart cities, called Sidewalk Labs, the groan from the Street was almost audible. Add to that the introduction of Google's new-ish Nest camera for smart homes and recent projections that suggest Google's smart-car solution, Android Auto, is poised for significant growth, and it becomes obvious Page and team have lost touch with reality.
Not so fast.
Unlike Glass or Project Loon, the Internet of Things, or IOT -- which includes smart cities, cars, and homes -- isn't some pie-in-the-sky notion: It's real, it's poised to explode, and Google is sitting on what could prove to be a treasure trove.
What's all this IOT stuff?
The gist of IOT is connecting virtually everything around us -- cars, stop lights, doorknobs, and home security cameras, to name but a few -- with sensors to track and monitor the usage off all those "connected" items. And that's just the first step in a truly IOT-connected world.
Utilizing IOT sensors, the items, or "things," as research firm Gartner refers to them, are automated to alert consumers through a smart device if someone has entered a home unexpectedly, for example, or alter stop lights based on traffic to make commutes safer and more efficient. The list of possibilities for implementing IOT-related technologies goes on and on, and according to Gartner and others, it's poised to absolutely explode.
This year alone, Gartner has forecasted the sale of nearly 5 billion IOT "things," and that figure is expected to balloon to 25 billion in just five years. Another report suggests that IOT will add $1.7 trillion to the global economy by 2019. It's abundantly clear that Google's IOT efforts -- along with those of other big hitters such as Cisco (NASDAQ:CSCO) and Apple (NASDAQ:AAPL) -- shouldn't be mentioned in the same breath as Glass or Loon balloons.
Spreading its IOT wings
The Sidewalk Labs initiative elicited some groans, but its focus on smart cities is spot-on. As big as IOT is expected to become, smart cities are projected to account for the most device shipments of any sector. That's why Cisco has spent so much time and money investing in its global "Innovation Centers" to tap regional talent and continue developing smart-city solutions worldwide. With deals already inked with cities including Hamburg, Germany, and Santiago, Chile, not to mention its new "Connected Roadways" solution that melds disparate transportation systems into one "smart" structure, Cisco is off and running.
But thanks to Sidewalk Labs, Google intends to give Cisco a run for its smart-city money. The plan is to make "transportation more efficient and lowering the cost of living, reducing energy usage and helping government operate more efficiently," and smart cities are just one arrow in Google's IOT quiver. A recent report from IHS maintains that over the next few years, Google and Apple will dominate the smart-car market, another fast-growing sector within IOT.
In five years, Google's smart-car solution, Android Auto, will find its way into nearly 40 million autos. Apple and its CarPlay platform won't be far behind, synced with over 37 million iFans' cars. The two longtime rivals will also battle it out for a share of the world's homes, but Google appears to have a jump-start with its Nest camera as its "smart" hub, along with its thermostat and smoke alarm. Imagine setting your Nest camera so it's connected to audio that will automatically shoo your dog off the couch while you're off at work or play. Like many things associated with IOT, the possibilities seem endless.
The line of investors pooh-poohing Google's many far-flung innovation efforts is a long one, but its IOT push doesn't belong on that list. In and of themselves, smart cities, cars, and homes have tremendous potential, not to mention that they could help Google diversify its ad-heavy revenue sources. But combined, Google's plans to dominate IOT across sectors may prove to be a game-changer.
Tim Brugger has no position in any stocks mentioned. The Motley Fool recommends Apple, Cisco Systems, Gartner, Google (A shares), and Google (C shares). The Motley Fool owns shares of Apple, 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.