Evolution is here and by now you have heard of the “Internet of Things.” IoT. This is as big as the computer itself and it isn’t so much about the Internet as it is about all those “THINGS” that will communicate. Imagine that the Toaster can communicate with the Vacuum. The inanimate objects will now become animate.
No-one makes their own products and now they have to make toasters that think, (and they don’t make toasters in the first place!) and then they must monitor them somehow. Now things will work like software and companies that don’t do software will need to grow rapidly once consumers demand the newer smart appliance. In the IoT market, a collection of vendors, service providers and system integrator’s must co-exist and integrate products and solutions to realize success. According to Mark Swartz of Neural Corp., “The EMS sector will be required to evolve and deliver IoT solutions, or use Platforms which can differentiate them. What happens when a Tier 2 adopts a disruptive platform alternative?”
While billions of connected things will drive trillions in revenue; understanding where the revenue opportunities lie across different technology layers will be key.
In a new study, “Worldwide Internet of Things 2014-2020 Forcast Update and Revenue by Technology Split, it was projected the technology and services revenue from IoT would expand from $4.8 Trillion in 2012 to $7.3 Trillion by 2017.
Companies that can navigate the maze of existing systems and leverage standards based interfaces to abstract that complexity will be selling picks and shovels to those trying to mine the gold. It will be important to create a differentiating, “hard-to-copy” product, whether it is sensor, platform, or service.
Enter the EMS market. The Electronics Manufacturing Market is projected for growth by 2018 of nearly $700 Billion. We have been watching the EMS market closely and in particular Jabil, Flex and Sanmina.
Looking at Jabil, there is a Weekly Price and Relative Strength breakout that is occurring simultaneously as we see a massive base in another EMS Company, Sanmina, $SANM (whom is one of America’s largest corporation’s). The massive base on Sanmina’s Monthly Chart suggests much higher prices. The low in the bottom of 2009 on the monthly was around a dollar and the high at the top of the base is around $20; so with that said, there is a possible target of the $39 to $40 range.
The internet of things is real so one of the sectors to keep your eye on would be the Electronic and Electrical Equipment sector along with the sub-sector of Electrical Components and Equipment; just like all 3 ideas mentioned here.
In case you are needing a little primer on “Internet of Things” also refered to as IoT take a look at this excellent video by IoTWorks.
Have a great day,
Captain John & FortunaEquitis