Why Cisco Is Bullish about Its Internet of Everything Prospects



The Internet of Everything opportunity is huge

The Internet of Things (or IoT) involves wireless devices that are connected to one other through the Internet. For example, home devices such as air conditioners, washers, and refrigerators could be connected. Security systems such as alarms and cameras, and energy devices such as thermostats, could also be part of the IoT.

The Internet of Everything (or IoE) is the next stage of the IoT. In addition to devices, processes and data will also be interconnected. Cisco (CSCO) believes that 99.4% of objects in this world are still unconnected. Only 10 billion out of 1.5 trillion “things” are connected currently on a global basis. The company also believes that the impact of IoE will be five to ten times greater than the impact of the Internet today.

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According to an FAQ document published by Cisco on its website on the IoE, the IoE opportunity for the public sector will be $4.6 trillion. For the private sector, it will be $14.4 trillion in the next decade, as the chart below shows. During the company’s fiscal 2Q15 earnings call, Cisco’s management mentioned that it believes that 50% of the data for the IoE will be handled at the edge of the network. And since Cisco is the leader in the networking market, this IoE revolution will directly benefit the company.

Tech players are looking to tap the growth potential of the IoE market

As well as Cisco, other companies such as Qualcomm (QCOM), BlackBerry (BBRY), and Verizon (VZ) have also gone ahead to tap this potential boom. A few months back, Qualcomm acquired UK semiconductor company CSR for $2.48 billion. We covered this move in an article titled Tech players like Qualcomm plan to tap the Internet of Things.

BlackBerry also recently announced that its IoT platform will be powered by QNX technology. Similarly, Verizon acquired Hughes Telematics to tap the fast-growing segment of connected devices or the IoT.

If you’re bullish about Cisco’s prospects in the IoE market, you could invest in the iShares Dow Jones US Technology ETF (IYW). IYW invests about 4.1% of its holdings in Cisco.


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