The Internet of Things Is Worth Trillions Of Dollars And Here To Stay
NEW YORK, NY / ACCESSWIRE / March 21, 2017 / It’s time for spring-cleaning, so forget cloud computing, and definitely forget solar. If the multi billion markets of cloud computing and solar excited you, take a look at the cloud computing of the future: The Internet of Things, the fastest market to hit a Trillion Dollar valuation.
What is the Internet of Things? The Internet of things refers to the growing network between almost everything electronic. A technological eventuality, the exponential growth of the Internet over the past decade has culminated in the sudden connection between our phones, computers, cars, buildings, and nearly every electronic device with a sensor.
With sensors and devices collecting information 24/7, the opportunity in the Internet Of Things results from the transformation of this noise into action. Examples include “Smart Homes” that begin heating the house as you drive home from work or “Smart Grids” that automatically adjust traffic lights to improve congestion. With experts estimating 50 billion objects in the Internet of Things by 2020, the possibilities for improvement are endless.
As the Internet of Things continues to take the world by storm, its valuation is expected to be worth trillions by 2020. Similar to every other tech revolution like personal computing, cloud computing, and solar energy- early stage companies and startups carving out their niche in this new market are starting to take off.
Salesforce is Hungry For Innovation, Hungry for The Internet Of Things
In order to keep up with this explosion in innovation, tech giants such as Salesforce (CRM), Alphabet’s Google (GOOGL), and Intel (INTC) are going on an acquisition spree. Salesforce in particular, acquired 120% more companies in 2016 than it did in 2015.
John Somojai, the head of the company’s venture arm, indicated an interest in the acquisition of companies in Artificial Intelligence, enterprise mobility, and big data spaces, which are all important pillars supporting the growth of the Internet of Things. It’s fair to say that Salesforce is clearly interested in the Internet of Things.
All Macro Signs Point Towards Salesforce Targeting The Internet of Things As Its Next Acquisition
Salesforce fundamental strength lies in its expertise in data analytics, robust data centers, and enterprise solutions. With a sales model that focuses on business-to-business transactions, the company stands to benefit tremendously from the disciplined acquisition of a business providing Internet of Things solutions. Over the next five years, experts project nearly $6 trillion will be spent on IoT solutions. More importantly, businesses are expected to be the top adopter of this new technology paradigm. The benefit of these solutions is expected in the improvement of bottom line through lowered operating costs, ease of expansion to new markets, and improvements in productivity. As artificial intelligence grows increasingly sophisticated, government adoption should ramp accordingly to capture tangible improvements in citizen quality of life.
It’s clear how an acquisition in this new field would grant Salesforce substantial exposure to this multi trillion-dollar opportunity. Moreover, there’s a strong case to be made for Salesforce’s ability in quickly adopting and leveraging any acquired platform due to the clear synergies between its technological expertise and the demands of IoT technology.
Arkados Group, Inc. (AKDS): A Compelling Player In The Internet of Things
Although the Internet of Things has grown rapidly to become a trillion dollar market, it has largely gone unnoticed by the majority of investors. Similarly, many companies pioneering the development of this field have gone unnoticed. This is the case for IoT Company Arkados Group, Inc, which trades at a $16 million valuation.
Arkados offers a suite of software and network solutions that leverage the benefits expected from an IoT system. Utilizing the scaling capabilities of cloud services, the company’s software platform allows for intelligent real-time monitoring of devices with the capability for energy management. This represents an ideal solution for industrial businesses, creating a number of efficiencies through the applications of smart manufacturing, smart building, and smart machine.
Arkados’ end-to-end smart system solutions allow for meaningful improvements on the bottom line with its focus on management, optimization, and saving. These system solutions are highly adaptable, capable of creating advanced networks of commercial buildings, factories, and other machines that can benefit from systems management and surveillance.
The benefits of Arkados’ products are particularly noticeable in energy conservation services. Catering directly to the needs of commercial, institutional, or industrial clients, the company is able to implement automation that accounts for mission critical tasks while substantially reducing the activity of idle process that consume large amounts of energy. Interestingly, the reduction of idle and wasteful processes slow down the depreciation of equipment. With these changes naturally increasing the ROI, Arkados’ solutions become a necessity for businesses.
Solar’s Salvation Lies In the Internet of Things
Despite the phenomenal growth in solar energy and demand over the past few years, where solar installations in the US increased 97% in 2016 alone, the largest players in the solar industry have continued to die off. Sungevity is approaching bankruptcy, SolarCity is scaling back, and SunEdison crumbled last year from its debt of $11 billion. Which begs the question, what’s going on?
Well the answer is simple, large solar companies simply lack the margins to profitably conduct business. With the majority of large Solar players now gone like the wind, all eyes are now on First Solar (FSLR). With its valuation dwindling lower by the day, the company is in clear need of a solution. Fortunately, First Solar has over $2 billion in cash, so there’s no major rush.
That being said, the solution may lie in Arkados’ software. In the pursuit of stronger margins, Solar companies have continued to beat their heads against the wall in the hopes developing a solar panel with improved conversion efficiency. Despite the allocation of hundreds of millions of dollars towards this endeavor, engineering and scientific constraints have stifled progress. That being said, the solution may lie in Arkados’ software. The IoT company has reported an increase in the ROI of solar PV systems through the long-term operating and maintenance services provided by its Arktic software platform. The proven benefit in the reduction of energy consumption and operational efficiency may represent Solar’s Salvation.
The economics of Solar businesses can be vastly improved by bundling solar panels with a software platform that improves their performance. This is the eventual direction Solar should be expected to head, regardless of breakthroughs in solar panel development.
Arkados appears to be already ahead of the curve. Yesterday, the company signed a letter of intent to acquire the assets of private company SolBright Renewable Energy, LLC, for $15 million in a combination of cash, debt, and stock for 100% of the assets of SolBright. With the deal anticipated to close by the end of the month, this acquisition will be a case study that illustrates the synergy between solar and IoT companies. SolBright is a renewable energy design and development company based in the US, offering turnkey solutions in solar installations for commercial, industrial, and military markets.
SolBright’s solar installation business is well established, ranking in the top 100 in Solar Power World’s prestigious list of North American Solar Contractors. Their services are in high demand, demonstrated by the $40 million backlog of engineering, procurement and construction services projects that Arkados acquired with its $15 million transaction. This backlog represents a tremendous opportunity for Arkados in the expansion of its energy solutions business. Successful implementation of the company’s software offerings will highlight the synergy between solar and IoT. More importantly, if Arkados is able to deliver returns greater than the sum of its parts, there would finally be a winning formula for Solar companies, turning Arkados into a highly compelling acquisition for First Solar.
With that being said, regardless of potential acquisition by Cisco or First Solar, Arkados remains highly undervalued. The company is poised to generate over $45 million in revenues over the following months as it begins filling the $40 million backlog acquired from SolBright. With a valuation of $16 million, it’s clear that this revenue has yet to be priced into the company. As near term revenue continues to price into Arkados’ valuation, the company stands to benefit from unique macro events.
These macro events include the rapid growth of the Internet of Things Industry, which General Electric estimates will reach $60 trillion worldwide over the next 15 years. Solar too, is expected to triple over the following five years. If the company is able to execute and continue demonstrating the operational benefits of its software services, Arkados holds the potential to become the leader in this emerging market.
About One Equity Stocks
One Equity Stocks is a leading provider of research on publicly traded emerging growth companies. Our team is comprised of sophisticated financial professionals that strive to find the companies and management teams that will outperform the market and deliver investment returns to our subscribers. We are not a licensed broker dealer and do not publish investment advice and remind readers that investing involves considerable risk. We anticipate we will be compensated $3200 to distribute this article. One Equity Stocks encourages all readers to carefully review the SEC filings of any issuers we cover and consult with an investment professional before making any investment decisions.
SOURCE: One Equity Stocks, LLC
