The IoT market is huge, but one segment is racing ahead and this ASX stock is already on it
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Thanks to the arrival of powerful computer chips and 5G networks, billions of physical devices around the world will soon be connected to the internet.
Anything under the sun could in theory be turned into an Internet of Things (IoT) device, which continually merge our physical and digital universes.
From a lightbulb that’s turned on with a smartphone to the driverless car, all these fall into the IoT basket.
Not surprisingly, it’s one of the fastest growing sectors in the world, with the global market size already at US$212 billion and forecast to reach US$1.6 trillion by 2025, according to Statista. The fastest growing region for IoT is Europe, followed by North America and Asia.
This opportunity has led to hundreds of startups jumping on the bandwagon, including San Francisco-based Samsara which has hit a US$5.4bn valuation ahead of its IPO listing on the NYSE.
Samsara was number two (number one being fintech Upgrade Inc) on the list of Financial Times’ top growing companies in 2020, with a massive growth rate of 24,924% since launching in 2015.
The company collects data and provides insights to the logistics, energy and food production industries with its internet-connected sensor systems to improve efficiency.
And it’s this push to gain business efficiency that’s currently driving the early adoption of IoT.
The utility sector has been the earliest adopter of the IoT technology, where it is being used for smart meters, providing real-time information on energy consumption and transmission.
It’s the fastest growing IoT segment currently, expected to to grow from US$28.6 billion in 2019 to US$53.8 billion by 2024.
For utilities, monitoring the grid has become more difficult as homes increase and load expands rapidly.
IoT technology is now being used to power the utility industry to automate processes and make informed decisions from grid insights. Data collected are also being used to manage disagreements with end customers over usage.
An ASX-listed company that’s already jumped on this opportunity is X2M Connect (ASX:X2M).
X2M owns a patented technology that can be connected with water and gas meters, enabling utlities to obtain live data from the one platform.
“X2M has a really unique platform, to the extent that it can connect any device on the one platform and have any device talk to each other, and that’s the patent that we’ve got,” X2M CEO, Mohan Jesudason, told Stockhead.
“In a world that’s all about data, analytics and prediction, we provide much richer content of information than many other players,” he said.
X2M’s technology can even can take a device that doesn’t have communication capability, whether it be digital or analog, and retrofit it with a little chip to take control.
The company is focusing on APAC region countries such as South Korea, Japan and Taiwan, which Jesudason says are ahead of Australia when it comes to IoT adoption.
Jesudason says he likes the utility sector for a bunch of reasons.
“We want to to work with large enterprises that have millions in their customer base.”
“Secondly we’re looking for long dated contracts, five, eight and 10 years. The utility companies tick all these boxes,” he added.
Buddy Technology (ASX:BUD) is a provider of smart lighting solutions. The company’s suite of wifi-enabled lights are currently used in nearly one million homes, viewed as second only to lighting giant, Philips Hue.
Buddy Ohm meanwhile, is a resource monitoring solution that simplifies building operations by using data to reduce or mitigate risk and improve operations.
TZ Limited (ASX:TZL) is a smart locker software provider, with a plan to capture a larger share of the rapidly growing global IoT devices market.
New CEO Mario Vecchio believes TZ’s software technology has been undervalued by previous management, and he’s now looking to unlock this potential by focusing on monetising the asset.
Smart Parking (ASX:SPZ) makes parking sensors – including those coloured red/green lights which tell you when a parking spot is occupied or not.
It sells technology mainly in the UK, New Zealand, and Australia, where the total number of sites its technology is being used at has rapidly increased to over 600.
Spectur (ASX:SP3) provides remote-sensing surveillance cameras for public and remote places such as beaches, parks, bushlands and other isolated facilities.
Its AI technoIogy can process complex scenarios very quickly with a high degree of accuracy, with features including facial and object recognition.
At Stockhead we tell it like it is. While TZ Limited is a Stockhead advertiser, it did not sponsor this article.