The internet of things (IoT) is widely considered by those in the industry as the next game changing technology, with the potential to be as lucrative as any technological wave in history. 
While some are aware that it is now possible to turn on your heating from your phone, the IoT covers all sorts of machine-to-machine programs, including connected cars, smart utility metering, smart factories and precision agriculture to name but a few examples.
At its most basic, the idea is that everything that can be connected to the internet eventually will be, and that each ‘thing’ can become more useful or valuable by virtue of being connected to the network.
Ali Unwin, manager of the Neptune Global Technology fund, said: “There is a lot of hype to navigate in an emerging technology space, but some of the early real-world applications for the (IoT) are striking in their utility: cheaper bills, better traffic, better health.”
However, as a new technology, and one still has a long way to progress, finding a stable investment with the most growth opportunity can be challenging.
As such, Unwin has put together a list of five companies that investors in the technology space should be invested in if they want to gain access to the IoT.
“Many of the components of network-connected things will be low-margin, commodity-like items. In fact, they have to be very cheap for the internet of things to take off at all.”
“We need to look a stage beyond and understand the companies that can truly capture economic value as the [IoT] starts to gather pace.”
Accenture
“Accenture is among the leaders in large IT services companies in terms of exposure to digital trends,” Unwin said.
According to data from the firm, corporate management teams are generally positive about the opportunity in internet of things for their businesses, with 84 per cent expecting to generate long-term revenue streams from it.
However, only 73 per cent have made any investments in pursuing the opportunity, meaning there are plenty of opportunities for large companies already making waves in the sector.
And this is the case for Accenture, which is one of the largest professional service and digital technology providers in the world, and has a market capitalisation of $73bn.
“Accenture has very strong strategic and technological practices, and this combination means the company is well-positioned to help CEOs develop and implement their emerging IoT approaches,” Unwin said.
Cisco
The global technology giant, with a market capitalisation of $156bn, has been upping its exposure to the Internet of Things, and believes that there could be as many as 50bn connected ‘things’ by 2020.
According to the company’s latest earnings call, “the world’s largest networking company has been investing and acquiring to bolster its internet of things credentials, and now claims to be “the largest cloud-based IoT service platform”
The firm bought IoT platform provider Jasper for $1.4bn as part of this shift to growing their IoT business.
“Every single ‘thing’ in the IoT will need to connect to the network, which should increase the strategic value of a robust and secure network which Cisco believe they are uniquely positioned to provide,” Unwin said.
Telit Communications
Machine-to-machine communications company Telit offers more direct exposure to the internet of things in the short term, according to Unwin, and is the only UK-based firm on the list.
The £316m company makes cellular radio communications modules and receiver products which enable wireless machine-to-machine communication.
Unwin said: “Telit sells into smart metering projects, automotive suppliers, industrial products and many other verticals – anywhere reliable connectivity to the network is required. The company is transforming its business model to offer more services on top of their IoT modules.”
Performance over 5yrs
Source: FE Analytics
Over the last five years, the stock has almost tripled in value, gaining 293 per cent, however it dropped off towards the end of 2015 as it warned that first half sales would be lower due to a delay in the roil-out of its latest modules.
More recently, the firm upped its guidance for the second half of the year as it recovered from the delays.
Splunk
US-based software company Splunk owns a platform that can take-in and catalogue a vast amount of machine-generated data. Customers can then search through this and make sense of it.
“A large proportion of data generated by the internet of things will be the ‘digital exhaust’ of machine data,” Unwin said.
“There are numerous opportunities cross the IT operations, network security and business process space that can use Splunk’s platform to make sense of their data, rather than just collect and store it.”
The $8.7bn company is based in San Francisco, listed on the New York Stock Exchange in 2012, and has seen its share price climb 79 per cent since launch.
PTC
Owner of the ThingWorx IoT platform, PTC specialises in helping companies develop, deploy and maintain products for the Internet of Things.
“PTC has invested aggressively in acquiring and building out their ThingWorx IoT platform,” Unwin said, adding that “its legacy in providing software and services to manufacturers suggests they are well placed to help their existing customers move towards their ‘Industry 4.0 Smart Manufacturing’ approach.”
The $4.8bn firm is not just an IoT provider however, as its core business centres around 2D and 3D design software, with Creo as its flagship product, and it is also working on Vuforia, its augmented reality platform, releasing version 6 this week.
PTC was recently named IoT Platform Market Leader in two reports by two leading industry analyst firms, holding roughly an 18 per cent market share of the IoT platform sector.
