Analyzing IoT players

Internet of Things (IoT) is the name given to a utopian scenario where inanimate "things" in our surroundings, will become network aware and will start interacting with each other.

IoT Analytics released a list of companies that they analyzed to be creating the buzz around IoT (http://iot-analytics.com/20-internet-of-things-companies/).

Here is the list...

As we can see, this includes some very large players that either became big because of the Internet and Smartphone revolutions, or lost out on it. They can be categorized either as platform companies,  infrastructure companies or consumer companies.

Companies like Intel (INTC) have of course learned that they need to allow a lot of startups and innovators to flourish that eventually become competitors to their partners, if they want to keep customers to keep coming back to them. In the past, Intel waited for partners such as Microsoft (MSFT) to innovate and as a consequence lost out on the smartphone revolution. They still managed to survive in the server space as x86 and x64 became the dominant platform. Microsoft has ofcourse re-established itself as the cloud and Office applications tool company.

Future of companies like Blackberry (BBRY) is more uncertain, who are now trying to become a Platform As a Service (PAAS) for IoT. Companies like Amazon (AMZN) that defined the cloud as we know it today, ofcourse are much further than most.

A big driver of IoT is likely going to be Autonomous and Connected Driving platforms that seem to be gaining a lot of traction in the US. With an aging population who have an unmet need for mobility in sprawling American cities, to the worthy goal of zero fatalities, US federal and state governments are quite rapidly aligning themselves around this initiative. This is a space that may see the first real true IoT implementations as everything from cars to roads and traffic signs all become "smart".

A few companies like Here, earlier owned by Nokia (NOK) who are creating the digital representation of the roads will be equally big. Now owned by a consortium of Mercedes, BMW and Volkswagen, it is clear that these companies are set on ensuring that their future fleets are seen as the epitome of luxury and technology advancement.

Intel: The road ahead

Intel is due to release quarterly earnings later this week. It is likely that due to falling PC shipments the overall revenue falls and has an impact on how the market sees the stock.

Based on Trefis analysis, Intel's current valuation is based on the following revenue components.

We can see that Server, Notebook and Desktop are nearly neck to neck. While server volumes seem to be going up slightly each year, it is unlikely that notebook and desktop replacements will provide the growth that is needed.

The current consensus is that EPS would come in at 2.12 which at Price to Earnings at 12.5 would translate to a target price of 26.5. An EPS of 2.5 or higher could only justify the current price.

This would become clear on Wednesday.