Microchips and Milk: Small Caps and Machine to Machine Technology
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January 14, 2014 (www.investorideas.com newswire) In a recent LA Times article, author Chris O’Brien explains one of the hottest new trends at this year’s CES, a consumer electronics show that happened in Las Vegas last week. As O’Brien explains, this trend could very well represent the “future of consumer electronics”. He’s talking about connected devices - things like tennis rackets and cars - that upload information wirelessly to computers, smartphones and tablets.
While many such devices are targeted at consumers, there are plenty of business applications for these technologies as well. Milk cartons with microchips, for example, would help grocery stores order inventory more efficiently and could potentially be part of a larger network that tracks products you buy and things you own relatively seamlessly.
The increasing connectivity of our world, especially of inanimate objects, is referred to as the “Internet of Things.” And the phenomenon is already happening. Machine-to-machine (M2M) communication via wireless Internet or Bluetooth is bringing more processes online, sending actionable data to other machines. For example, this Forbes article explains how GE is using M2M technology to monitor potential issues in their power turbines to fix any issues preemptively.
Business and consumer applications of this technology may hinge on the work being done by small cap companies. This list of small cap companies that are helping to make the Internet of Things a reality is far from comprehensive, but includes a few companies that caught our eye recently:
Telit Communications Plc (LON:TCM), based in London, England, is an international small cap company that specializes in M2M technology. The application of their technology is broad, including products like smart surveillance systems, telemedicine monitors and fleet management. Telit is the third-largest M2M module supplier in the world. In December, they unveiled the world’s smallest and lowest power GPS receiver along with SiTime Communications. Smaller GPS receivers could be used in wearable technology and other space-sensitive applications. TCM closed January 14 at $177.95, down $8.98, with a market cap of $184.98 million. Its 52-week trading range is $53.00 - $197.25.
One important step toward the Internet of Things is developing technologies that can read and interact with products that have been tagged in specific ways. Socket Mobile, Inc (OTCMKTS:SCKT), based in Newark, CA, creates mobile handheld computers and other products for businesses of all sizes. Many of its devices work with third-party technology, such as smartphones, allowing these devices to capture data through barcodes, RFID tags and Bluetooth modules. By allowing small business owners to tap into the power of their smartphone to harness data, connecting objects and tracking them becomes a viable option for more companies. SCKT closed January 14 at $0.73, down $0.14, with a market cap of $3.55 million. Its 52-week trading range is $0.70 - $2.20.
The scale of the Internet of Things is tremendous. Cisco forecasts that more than 50 billion “things” will be connected to the Internet of Things by the end of this decade, up from 10 billion in 2013. Given the large potential for rapid adoption of M2M technologies on both the business and consumer side, small cap companies operating in the sphere could very well represent a wonderful opportunity for investors exploring new technologies.
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