Important legal information

The content displayed on this website is exclusively directed at qualified investors, as defined in the swiss collective investment schemes act of 23 june 2006 ("cisa") and its implementing ordinance, or at “independent asset managers” which meet additional requirements as set out below. Qualified investors are in particular regulated financial intermediaries such as banks, securities dealers, fund management companies and asset managers of collective investment schemes and central banks, regulated insurance companies, public entities and retirement benefits institutions with professional treasury or companies with professional treasury.

The contents, however, are not intended for non-qualified investors. By clicking "I agree" below, you confirm and acknowledge that you act in your capacity as qualified investor pursuant to CISA or as an “independent asset manager” who meets the additional requirements set out hereafter. In the event that you are an "independent asset manager" who meets all the requirements set out in Art. 3 para. 2 let. c) CISA in conjunction with Art. 3 CISO, by clicking "I Agree" below you confirm that you will use the content of this website only for those of your clients which are qualified investors pursuant to CISA.

Representative in Switzerland of the foreign funds registered with the Swiss Financial Market Supervisory Authority ("FINMA") for distribution in or from Switzerland to non-qualified investors is Robeco Switzerland AG, Josefstrasse 218, 8005 Zürich, and the paying agent is UBS Switzerland AG, Bahnhofstrasse 45, 8001 Zürich. Please consult www.finma.ch for a list of FINMA registered funds.

Neither information nor any opinion expressed on the website constitutes a solicitation, an offer or a recommendation to buy, sell or dispose of any investment, to engage in any other transaction or to provide any investment advice or service. An investment in a Robeco/Robeco Switzerland product should only be made after reading the related legal documents such as management regulations, articles of association, prospectuses, key investor information documents and annual and semi-annual reports, which can be all be obtained free of charge at this website, at the registered seat of the representative in Switzerland, as well as at the Robeco/Robeco Switzerland offices in each country where Robeco has a presence. In respect of the funds distributed in Switzerland, the place of performance and jurisdiction is the registered office of the representative in Switzerland.

This website is not directed to any person in any jurisdiction where, by reason of that person's nationality, residence or otherwise, the publication or availability of this website is prohibited. Persons in respect of whom such prohibitions apply must not access this website.

I Disagree
The industrial Internet of Things

The industrial Internet of Things

26-11-2015 | Research

The falling cost of technology allows us to connect all sorts of devices to the internet at an increasing pace. The vast amount of generated data can be used to get insights and automate processes in our homes and workplaces. The Internet of Things (IoT) leads to a more connected and smarter world, where companies embracing change can make better-informed decisions and run their businesses more efficiently. This presents opportunities for investors.

  • Deyan Koychev
    Deyan
    Koychev
    Junior Equity Analyst

Speed read

  • The Internet of Things is creating a more connected world 
  • It provides companies with a better understanding of their customers’ needs 
  • This allows companies to offer solutions for their customers’ problems, rather than selling them a tool

The Internet of Things (IoT) has the potential to create a more connected world, where ‘dumb’ objects from our homes, workplaces, and environment become ‘smart’ by connecting to the internet and improving their functionality. Software and Big Data analytics are used to analyze the input data from the objects and generate actionable insights. Technology analysts expect tens of billions of devices, including cars, fridges, industrial sensors, and light bulbs, to connect to the internet for the first time by the end of this decade. We especially see investment opportunities in the industrial Internet of Things, where the technology delivers tangible benefits to enterprises. The consumer IoT, which includes the ‘Smart’ Home and Car concepts, is in an earlier stage of development. 

The idea of the industrial Internet of Things has been talked about for a long time but progress has been limited until recently. Industry organizations are now collaborating to set standards and improve interoperability, corporate executives are openly expressing their interest in IoT, and engineers are showcasing new IoT applications. Most importantly, companies from various industries have begun telling success stories about how IoT helps them improve efficiency and serve their customers better. We believe that in the following years we will see increased corporate spending and innovation in industrial IoT, which creates new opportunities for investors.

Stay informed on our latest insights with monthly mail updates
Stay informed on our latest insights with monthly mail updates
Subscribe

IoT provides a better understanding of clients’ needs

Industrial IoT has wider implications than helping to boost efficiency. The deployment of sensors in products and the environment allows companies from all sectors of the economy to gain better understanding of their customers’ needs and how their products are being used. Such insights allow companies to move closer to their customers and offer to solve their problems, rather than selling them a tool. This marks a shift from standardized products and services towards more customization and a larger service component in product offerings. Changes in value propositions, such as the move towards provision of solutions, are enabled by data and insights, and can change competitive landscapes. Examining how IoT adoption is influencing sectors of the economy is thus important for identifying potential winners and losers. 

Industrial automation is nothing new. Companies from all industries have been automating processes to improve efficiency and quality since the middle of the twentieth century. The industrial IoT is just the next step in the process, triggered by the spread of the Internet and the falling cost of connectivity and data processing. The IoT is therefore an incremental, rather than disruptive, innovation, which largely benefits existing players in the industrial automation business. The complexity of IoT solutions implies that veteran industrial automation companies and technology consultants are well positioned to use their industry-specific expertise to help customers embrace IoT.

Invest in a basket of companies providing the building blocks of industrial IoT

Our analysis shows that industrial IoT adoption will have positive effects across industries, and create value spillover to consumers. The clearest beneficiaries would be consultants, as well as software and hardware makers which help companies implement industrial IoT. As we are currently in an early stage of IoT adoption, there are few ‘pure play’ industrial IoT companies. As a consequence, we prefer a diversified investment approach in companies enabling IoT, from IoT platforms, through cloud and analytics companies, to makers of sensors and semiconductors. 

A network of connected devices by itself is unusable without the proper set of analytics tools. Valuable actionable insights for companies are generated in the Data Layer, where large amounts of data are pooled and analyzed. We expect much of the value of IoT to be captured by companies providing these analytics services, and this is where we see the best investment opportunities. Companies providing digital security also stand to benefit from the move of the physical world into the digital realm. Companies manufacturing sensors, analog and digital semiconductors, and networking equipment, are also well positioned to benefit from the accelerating adoption of the Internet of Things.

Subjects related to this article are: