The Internet of Things market has huge growth potential

The Internet of Things (or IoT) is a concept in which wireless devices connect to each other through the Internet. These devices include connected home devices such as air conditioners, washers, and refrigerators, security systems such as alarms and cameras, and energy devices such as thermostats. This market also includes connected devices used in automotive and healthcare sectors.

The IoT market has huge growth potential. According to a report from ABI Research and as the chart below shows, the installed base of active wireless connected devices is expected to increase from 16 billion in 2014 to more than 40 billion in 2020. By comparison, Gartner predicts that the installed base of smartphones, tablets, and PCs combined will reach only about 7 billion by 2020.

Tech players like Qualcomm plan to tap the Internet of Things

Technology players looking to invest in the IoT market

No wonder tech companies are investing heavily to tap the growth potential this market offers. Earlier this year, Google (GOOG)(GOOGL) made one of its largest acquisitions by acquiring the maker of smart smoke detectors, Nest Labs, for $3.2 billion.

Qualcomm (QCOM) recently acquired UK semiconductor company CSR for $2.48 billion. CSR specializes in making chips that go into connected devices. So it should complement Qualcomm, which is the leader in the mobile chipsets market. Microchip Technology (MCHP) had earlier tried to acquire CSR, but CSR rejected its offer.

A few months back, Apple (AAPL) also introduced new applications such as HomeKit to connect devices. HomeKit is a smart home technology that lets users control lighting, household appliances, and security systems from their smartphones. Cisco (CSCO) is another company that has promised to invest billions of dollars in this market as it looks to connect unconnected embedded devices.

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