The Big Data Tech Sector Will Triple by 2020... Are You Invested?

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Last week, I bought my wife a new car.
If you haven’t had the experience of buying a new car recently, let me tell you... there are a lot of bells and whistles that come with even standard models. We’re talking Wi-Fi, navigation systems, rearview cameras, lane assist, satellite radio...
But there was one feature that caused me to stifle a laugh.
“All you have to do,” the salesman explained, “is download our app to your smartphone. It connects to the car. And then all of your social media accounts and apps are visible here on the center console screen. You can scroll through Facebook without having to pull out your phone!”
That’s funny, right? In a world where we’re constantly fighting to get people to STOP using their phones while driving, our solution is to make the habit an integrated feature in vehicles.
Granted, this feature is meant to save lives. But I know my wife will never use it. (Fortunately, I also know she’ll never text and drive.)
It’s just another sign of how connected to our devices we’ve become.
Now our devices are connecting to each other.
That’s the idea behind the Internet of Things (IoT). Devices that weren’t connected to the internet before soon will be. And the growth potential for this market is staggering.

Reducing Costs, Increasing Productivity

Over the next four years, an anticipated 34 billion devices will be connected to the internet. That’s up from 10 billion in 2015. Which means there’s a projected increase of 240% by 2020.
And we’re not just talking smartphones and tablets...
Of those 34 billion connected devices, traditional tech gadgets will account for just 10 billion. The rest are emerging IoT technologies.
We’ll see approximately $6 trillion spent on this surging trend over the next few years.
At the forefront will be businesses. IoT can reduce costs, increase productivity and help a company expand to new markets. Even Microsoft (Nasdaq: MSFT) offers an Azure IoT Suite for businesses. (The product helps corporations connect their devices securely.)
But it goes far beyond traditional tech giants. For example, Monsanto (NYSE: MON) is part of the “Ag 3.0” era, which is all about modernizing farming.
That is, turning data into food. Some quick background...

Ag 3.0

The other two phases in agriculture were preindustrial and industrial. The industrial era of agriculture is claimed to have ended in 2010. This is when companies started moving to predictive analytics to increase yields, or Ag 3.0.
Monsanto is using IoT with its FieldDrive platform. This pulls yield, soil quality, moisture and positioning data from sensors on combines and tractors. That’s added to weather forecasts and other data points. And all of it is fed via satellite back to Monsanto’s “big data” center.
Growers use this information to make decisions on soil topology and combine routes. The result: improved harvest quality.
FieldDrive is so successful in North America that Monsanto is expanding it to Europe, South America and South Africa.
But beyond feeding people, it’s in our homes...

Consumer Tech

This year’s Consumer Technology Association (CTA) forecast highlights IoT driving U.S. consumer tech. This area is expected to generate $286.6 billion in retail revenue.
If you have a “dumb TV” in your home, you know just how annoying it can be. To watch Stranger Things on Netflix (Nasdaq: NFLX), you have to pull out a tablet or laptop.
Collectively, CTA forecasts consumers will spend $114 billion this year on smart TVs, smartphones, tablets, laptops and desktops. These devices still represent the lion’s share of consumer connected devices.
But we are seeing a shift here...
During Control4’s (Nasdaq: CTRL) second quarter results, it reported 22,500 of its EA Series controllers were sold. This was up 15% compared to the first quarter and up 17% year over year.
In case you’re unfamiliar, EA stands for “Entertainment and Automation.” These controllers are like a brain for your smart home. They integrate entertainment centers, lighting, security and everything in between.
Control4’s annual revenue is starting to heat up, growing 26.98% from 2013 to 2015. This year, it’s expected to grow 25.3%.
The entire smart home market - smart thermostats, smart smoke and CO2 detectors, security cameras, smart locks, etc. - will reach $1.3 billion this year. An estimated 9.5 million total units are expected to be sold.
It all comes back to my three C’s for technology investing. Again, that’s Connectivity, Content and Community.
The IoT is all about a connected world. It brings together the things we interact with each day. And as an investable trend... it’s simply massive.
Good investing,

Matthew Carr Of The Oxford Club