Internet of Everything (IoE)
is gaining more ground by the day as more and more devices connect to each
other. So, networking companies such as Cisco (CSCO) and Alcatel-Lucent (ALU)
are all set to prosper in a new area of growth, courtesy of the IoE.
What is the Internet of
Everything?
The backbone of the IoE is,
quite simply, internet and network connectivity. It’s no secret that the
internet has benefited nations, corporations, and individuals. Economic growth
through electronic ecommerce and business enhancements are proven facts about
the internet’s business capabilities. The internet further continues to evolve
in changing and improving the world.
With the Internet of Things
(IoT) quite popular nowadays, millions of devices are frequently being hooked
on to the internet. These things are generating demand for enhanced processing
power as more and more people, devices, and information are piling on the
internet. These are leading us toward an interconnected environment.
The market
The projected market size of
the IoE is estimated to be around $14.4 trillion in 2022. This is a huge
opportunity for the likes of Cisco, Juniper, Alcatel-Lucent, and many more.
This raw market of connecting gadgets will create manifold openings for network
equipment manufacturers, software-defined network solution companies, and
network security. Let’s see how these companies will benefit from the Internet
of Everything.
The growth areas for Cisco
and Alcatel
Cisco is a leading network
equipment manufacturer. In the IoE era, Cisco’s networking equipment will be in
high demand as the amount of data that needs to be transmitted, stored, and
processed, grows. The various types of connectivity applications in an IoE are
machine to machine, machine to person, and person to person.
Cisco, with its wide product
portfolio for network connectivity, should be a preferred choice for corporate
houses and governments for various connectivity needs in devices. Some of the
products of Cisco such as for optical networking, routers, switches, wireless,
networking software, etc. are key ingredients for deploying IoE.
From the financial aspect,
Cisco looks like a good bet to benefit from the Internet of Everything. At a
trailing P/E of 12, Cisco is very cheap. Also, Cisco’s dividend yield of 3.10%
is quite juicy. Looking forward, Cisco’s earnings are expected to grow at a
CAGR of 10% for the next five years, which makes it a good bet to benefit from
the Internet of Things.
Alcatel-Lucent, which is now
primarily focusing on mobile networks, will also gain in the era of IoE. Mobile
networks will be the backbone of IoE, and this is why Alcatel-Lucent will
directly benefit from this market. Alcatel, in the past, has concentrated
heavily on research and innovation, which puts it in a good position for the
future.
Ultra broadband is one of
the innovations of Alcatel and this will help it reap the benefits of the IoE
as high-speed connectivity for video and imaging will be in high demand.
Connectivity speed will be the key to implementing IoE and Alcatel provides
just that.
Alcatel-Lucent’s ultra
broadband has the potential to be the preferred choice for customers
implementing IoE. This is due to the fact that the ultra broadband solution
provides speed that is extremely fast with high performance IP networking with
high efficiency and negligible outage. It is the most cost effective in terms
of power per bits and enables a customer to connect seamlessly from multiple
devices to any kind of network.
Alcatel is also shedding off
its loss making businesses to stay focused on the mobile network market. The
company recently sold LGS Solutions for $200 million. It is also inviting
bidders for its enterprise business and is getting a positive response from
market leaders like Unify GmbH & Co. KG, a Gores Group LLC and Siemens AG
(SIE) venture.
With earnings expected to
grow 96% next year, Alcatel-Lucent certainly has a lot of things going for it
and IoE could be the icing on the cake. So, investors looking for a fast-growing
player in this space, should look at Alcatel.
How these companies can
benefit from this emerging market
As IoE seems to be in its
early stages, Cisco and Alcatel would enjoy the first-mover advantages. As IoE
is deployed by business, houses, and governments, the demand for equipment
should rise. Companies like Cisco that have been concentrating on this opportunity
can benefit the most.
Why Cisco & Alcatel
could benefit the most?
Deployment of IoE will be
most preferred by companies that provide total solutions. Cisco and Cisco’s
partners will be preferred in this regard since they can provide total
solutions. Processing speed and connectivity equipment manufacturers will also
gain highly from this market.
Cisco has already launched a
Network Convergence System (NCS), which helps consumers in handling growing
traffic. The product is mainly targeted at the IoE market and NCS might become
the most preferred offering since traffic is expected to increase highly
because of this market.
Videoscape, with enhanced
features, is another product that’s been introduced by Cisco for the IoE
environment. Videoscape is the TV in cloud and will be used by service
providers and media companies to reduce operating expenses by capitalizing on
IoE. The success story of this product is already exemplified with the 2014
Winter Olympics Using Cisco hardware and software for Videoscape.
The successful performance
of IoE will be based on networks with high speed and throughput. Alcatel-Lucent
is already claiming to provide the highest speed after conducting a few trials.
The trials were conducted with the joint approach of Alcatel-Lucent and British
Telecom, and the results were terrific with speeds up to 1.4Tb/s and a record
spectral efficiency of 5.7 bits per second on existing core network
connections. These are the types of speeds over a network that can place
Alcatel-Lucent above others.
Conclusion
Both companies are
participating in this huge market in different capacities. So, investors have a
wide range of choices to make the most of the Internet of Everything. This
market is growing and is expected to be a multi-trillion dollar market going
forward, giving investors all the more reason to invest in these two companies.
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