The Internet of Things: a new battleground of the tech majors

Just a few years ago the Internet of Things (IoT) was a conceptive ideology that was professed by futurists, start-ups and projects on Kickstarter. In 2014, it already appears a multi-trillion-dollar industry that is about to take over consumer homes. One of the firmest confirmations of this sudden transformation is the growing entry of the world’s tech giants into the IoT environment, whether through acquisitions, new product launches or mergers. A knock-on effect of this new market is the demand for start-ups with ready-made products and ideas in the IoT space. As majors expand their IoT portfolio, business transfer agents should be well placed to help young companies from the segment gain more financing or a long-awaited exit.

All things can connect

The competition between firms such as Apple, Google and Samsung is moving from traditional segments such as smartphones and PC software to products with newfound connectivity, such as wristwatches and cars. Widespread recognition of IoT being the next big growth platform is driving acquisitions and search for human capital in the segment. The fact that this new market is so expansive provides opportunities for innovative start-ups that have already made a splash in this space, with corporate financing likely to flow into various products and platforms that enhance consumer connectivity outside of traditional models.

Google is already a frontrunner among the majors

Google was first out of the IoT gates, with its commitment made obvious by the large acquisition of Nest Labs in early 2014. Paying over $3 billion for a company that has made a smart thermostat and a smoking alarm demonstrated Google’s evaluation of the smart-home market potential. The company has followed this up with a similarly seismic announcement that it is developing a new Android platform for wearable electronics. While wearable tech has been a buzzword for the past year, the potential to link it with household devices has only recently captivated corporate decision-makers.

Apple opens up to IoT software

Apple’s recently announced iOS 8 operating system was perhaps most striking in that it was launched with specialised “kits” that manage connectivity with household appliance. The upgrade has also been tweaked to clearly encourage developers to create services to be used in iPhones and iPads. While the company has long been closed to third-party devices, this breakthrough is being led by the lucrative potential of IoT. However, tighter control and limited connections with non-Apple devices could potentially limit the company’s exposure to the wider IoT market. The plan is likely to concentrate on a few key areas and deliver on quality rather than quantity. Whether the company makes additional acquisitions in the segment in the near future will provide an idea of its strategy.

Samsung late to the party but holds the manufacturing cards

Samsung is jumping into the IoT fray with Tizen, an open-source operating system that could take on iOS and Android for connected devices. The company has the hardware to rollout a strong device-based IoT strategy but still lacks a software platform or a consumer relationship for online services. However, the company has been shown to be a major innovator, and acquiring a strong software player could provide the necessary boost to appeal to increasingly connect-conscious consumers.

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