The Internet of Things (IoT) is going to be a catchphrase we will surely hear much more of in 2017.
The IoT is the concept of having everyday devices that are interconnected and feeding information to us and to other devices, typically to accomplish some everyday task to make our lives easier. The possibilities of how and where this could be applied are nearly endless, and the market is already starting to see IoT devices appear in stores.
Some examples include refrigerators that notify your smartphone when you’re running low on some ingredients, or your car notifying you by email or text message when something needs to be fixed, and even contacting the dealership to schedule an appointment–after checking your calendar, of course.
The IoT market is still very much in its infancy, but some industry experts speculate that the market could comprise over 50 billion connected “things” over the next few years with the market value measured in the trillions.
Meet Sierra Wireless: IoT pure play
Sierra Wireless offers a variety of embedded modules, gateways, and modems from 2G all the way through 4G LTE and Advanced LTE solutions. In short, Sierra’s software allows all of those IoT devices to connect to the web, and Sierra’s devices are the hardware used in those devices to connect to the web.
Sierra’s leadership in device connectivity has seen the company surpass some truly impressive milestones, including operating on more than 80 different networks around the world with solutions and support being offered to customers in over 130 countries.
Remember the trillion-dollar market with 50 billion things being interconnected? This is Sierra’s sweet spot, and as an industry leader, the company is well aligned to capitalize on IoT growth over the next few years.
Sierra in the automotive industry
One area where the company has been expanding of late is in the automotive industry. Automotive manufacturers are now requesting internet connectivity for new vehicles in growing numbers to host a variety of diagnostic, routing, and entertainment options.
This bodes well for Sierra, particularly over the long term as an increasing number of vehicles are including smart connectivity each year.
Sierra has already signed agreements with automotive manufacturers in both Russia and China with spillover deals into both European and Asian markets set to follow.
Is Sierra a good investment?
Based on the potential of Sierra as well as recent deals in the automotive space, the company is a great investment opportunity. Sierra is the market leader for embedded modules and gateway solutions that are required for the IoT vision we are moving towards. Even if Sierra were to comprise a minuscule part of that trillion-dollar market, the potential would be massive.
Sierra is a company in transition. The move towards becoming an IoT pure play has taken some time, and, during that transition, Sierra has posted a series of quarterly results that fell short of expectations. Recent quarterly updates have shown a slight improvement, but the company is still a work in progress.
The key point that investors should be mindful of when considering Sierra is that an investment in Sierra is best over the long term, where there is a massive potential for growth.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor Demetris Afxentiou has no position in any stocks mentioned. David Gardner owns shares of Sierra Wireless. The Motley Fool owns shares of Sierra Wireless.