Internet Of Things Prospers Globally, Investment Ramps Up

Internet of Things (IoT), which enables any physical electronic device with a valid IP-address to transfer data seamlessly over a wireless network, is the latest in the league of service and business models that have been gaining rapid market traction. According to a recent report by research firm International Data Corporation (IDC), worldwide spending on IoT is slated to grow 14.6% year over year to $772.5 billion in 2018.

Moreover, the IoT space will witness a compound annual growth rate (CAGR) of 14.4% to reach nearly $1.1 trillion in 2021. The next-generation superfast wireless networks (4G LTE, LTE-A, upcoming 5G) will provide the primary impetus to the telecom industry. In this context, IoT has the potential to be the numero uno factor driving future growth in this space. Notably, IoT is a network of physical objects embedded with electronics, software, sensors and connectivity that enable it to achieve greater value and service by exchanging data with other connected devices.

As per the IDC report, industries that are likely to make the largest IoT investments in 2018 are manufacturing ($189 billion), transportation ($85 billion) and utilities ($73 billion). Consumer IoT purchases, which was the fourth largest market segment in 2016, is poised to become the third largest by 2020, according to market researchers. Manufacturers’ investments will focus primarily on offerings that support manufacturing operations and product asset management, while two-thirds of transportation spending will be on freight monitoring.

At present, the deployment of innovative connectivity platforms to deliver seamless, fully integrated mobile communication with global networking is crucial to the success of wireless service providers. Massive growth of 4G LTE (Long-Term Evolution) and LTE-A (Advanced) networks across the globe will lead to a smooth transition from 4G to the upcoming 5G network standard. Superfast 5G mobile networks will be of utmost importance for efficient management of exponential IoT growth.

U.S. telecom behemoths like Verizon Communications Inc. (NYSE:VZ) and AT&T Inc. (NYSE:T) , U.S. national wireless carrier T-Mobile US Inc. (NYSE:T) and UK-based global telecom operator Vodafone Group plc. (NASDAQ:VOD) are better poised to benefit from the IoT boom. Except Vodafone, the other three stocks mentioned above currently carry a Zacks Rank #3 (Hold). Vodafone sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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