The Internet of things

Nick Griffin looks at the proliferation of connected devices and the opportunities it opens up for savvy investors.

Some may remember the exponential growth math problem involving the wheat and the chessboard from early education. That is, if you place one grain of wheat on the first square, two on the second and four on the third and so on (doubling the number of grains on each subsequent square), how many grains of wheat would be on the 64th and last square?

9,223,372,036,854,775,808

So it is with technology and connected devices. What started with one mainframe computer in 1960 has grown to one connected device per person with personal computers, to two with mobile telephones, to three with iPads and laptops and is now rapidly on its way to 10-12 connected devices per person with the onset of connected cars, homes, TV's and other appliances.

If you do the maths on 7 billion people, from a connected device stand point, 2015 is the year we enter the second half of the chessboard where the numbers start to get really, really big.

Three things have contributed significantly to the proliferation of connected devices; the internet, cloud computing and Moore's Law, whereby the power of computing hardware roughly doubles every two years (or the cost for the same hardware roughly halves).

These three factors have allowed the proliferation of low cost connected devices that provide real time updates to their users across all aspects of daily life and commercial operations. This has in turn led to the rise of social media, mobile apps and data analytics.

As we move towards 50bn connected devices we see strong structural growth for those involved in the semiconductor industry and a collection of big winners who can unite platforms for cloud computing and social media.

In this video Nick discusses some of the companies he has invested in to gain exposure to this trend and shares his insights on current valuations in the tech sector: 

Insight by Nick Griffin, Head of International Equities, K2 Asset Management. Intelligent Investor has partnered with Livewire Markets to deliver you more market insights from industry insiders.

This content is provided by Livewire Markets Pty Ltd and does not represent the views of Intelligent Investor Publishing Pty Ltd. Content sourced from Livewire Markets is provided solely on the basis that individuals viewing the content use it only for personal, non-commercial purposes.

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