(Mike Larson, editor of the Safe Money Report, is on assignment in Europe. Jon Markman, editor of the Tech Trend Trader, steps in to examine the latest trends in technology.)
[market-roundup]After a tough 2014, Amazon (AMZN) has been on a roll all year. The company just announced its second surprise quarterly profit last week. The stock price has nearly doubled for the year to date. Founder and CEO Jeff Bezos is now the third-richest American.
Despite flops like the Fire Phone, with its overhyped but underwhelming “3D screen” feature, the company is laying the groundwork for continued success as it continues to evolve.
From books to the dominance of online retail via scaled warehousing and logistics, to rolling its online presence into its wildly successful Amazon Web Services cloud platform, the next step is harnessing its cloud-based computing infrastructure to become the dominant platform for the Internet of Things (IoT).
And among the many companies fighting to become the ecosystem provider for connected smart devices — as Microsoft (MSFT) did for PCs and Apple (AAPL) did for mobile computing — AMZN has a head start thanks to its proven and inexpensive offering.
Now’s the time to act: As shown in the chart below, taken from the latest “hype cycle” analysis from researchers at Gartner, IoT platforms are still in the first “Innovation Trigger” phase. The battle for dominance still has, in their estimation, another five to 10 years to run.
Earlier this month, AMZN announced a partnership initiative to create an IoT platform with relevant supply-chain, hardware and semiconductor companies, giving them access to cloud-based AWS (Amazon Web Services) processing horsepower. These services operate from 11 geographical regions across the world. Companies in the partnership include Arrow (ARW), Avnet (AVT), Broadcom (BRCM), Intel (INTC), Marvell (MRVL), Microchip (MCHP), Qualcomm (QCOM), and Texas Instruments (TXN) among others.
Amazon’s existing in-house experiments with IoT are well known, such as the “Dash Button” that automatically reorders your baby food or paper towels at a press.
But this AWS IoT initiative is much bigger and bolder, trying to dominate the next phase of technology growth by harnessing its computing resources along with efforts like Amazon Machine Learning to make connected devices smart, fast, and secure. A feature called “Device Shadows” will allow users to control their devices without having specific knowledge of how to communicate.
Pricing for this service is based on the number of messages connected devices have transmitted: $5 per million messages in the United States and Europe, $8 per million in Asia Pacific. This is incredibly cheap. And will encourage and enable product designers and programmers to connect more everyday items and increase the rate at which they communicate.
Want to give this IoT thing a try for yourself? A number of starter kits offered by Amazon encourage tinkerers to give it a go, and it explains more about its new initiative on its blog post.
It all marks the fast pace of change in the technology sector and highlights the need to keep up on the latest developments if we are to turn knowledge into investment profits. Amazon shares continue to rise toward their 52-week high.
Are you an Amazon investor? Or do you feel the upside has played itself out? Many people watch for technology developments to know what products to buy this week. But do you watch developments to determine what investments will pay off in the future? Know of any great under-the-radar developments that could become the next Amazon, Facebook, Google, etc.? Let us know by clicking here and adding your comments to the website.
Best wishes,
Jon Markman
(P.S. This industry is about to explode from $32 billion today to $163 billion by 2020! Find out how to grab your share of the enormous profits in Jon’s report “The Coming $19 Trillion Internet Shockwave.“)
Yesterday’s column revolved around mega-mergers and the issue as to whether they reduce competition to the detriment of consumers. The majority of commenters expressed concerns about the trend and some called for regulators to prevent the moves.
Reader Gloria came out against the deals. “I am against the mergers of large companies buying up smaller companies of the same ilk. Like Walgreens merging with Rite Aid. What I believe is that though the companies purchasing smaller companies say it will reduce prices for consumers, I have not found that to be the case. I believe the larger company will allow for the CEO’s to come away with millions while the workers have almost nothing by comparison.”
Reader M. Evans points out that “The banks have merged and installed ATM’s with charges for using them, saying that they would save the consumer money by not needing as many tellers. What have they done with the savings?”
Reader Ira asks: “Does anyone really believe that the drug and beer mergers are being done for the benefit of consumers? And that big business has our interests at heart?”
But some readers said the mergers were the only solution in the face of increased government regulations.
Reader Norman said: “Regarding all the mergers: The flood of regulations coming out of Washington is creating a lot of extra work for companies. Because they are so complicated, an army of workers is required to understand and respond to them. So only big companies can support this overhead — small companies are out of luck. But when 2 big companies merge, it cuts the army in half. A big cost savings. And then there are the tax inversions. These get a double bang for the buck. Not only do they gain efficiencies in handling regulations, they also escape from double taxation.”
Click here to join the conversation on this or any other issue.
What would you do with $206 billion? That’s a matter Apple Inc. (AAPL) will have to deal with. According to USA Today, the tech giant’s cash and investments surged 33% from a year earlier to $206 billion. The paper points out that would be enough to give every American $646 apiece — relatively the retail price of an iPhone. The cash is mounting despite efforts by Apple to return it to investors — some $17 billion during the quarter in the form of stock buybacks and dividends.
It was a big day for data, and it was a mixed bag: The government said that the American economy slowed last quarter, with the gross domestic product hitting an annualized rate of 1.5%, in line with analyst expectations but a big drop from the 3.9% pace of the second quarter. Meanwhile, contract signings to buy previously owned homes unexpectedly declined in September by the biggest amount since late 2013, indicating that the real estate market is cooling off from its possibly overheated levels of earlier in the year. And new jobless claims were little changed, remaining near a 40-year low and indicating that the labor market continues to improve. All in all, there were no major indications to help us determine whether the Fed will raise interest rates at its December meeting.
The bid by Walgreens Boots Alliance (WBA) to acquire Rite Aid Corp. (RAD) is expected to draw heavy antitrust scrutiny because the company would grow to 12,700 and leave only big players, along with CVS Health (CVS) in the sector. But Bloomberg reports that the U.S. Federal Trade Commission will look closely at whether the merger will lead to higher prices for prescription drugs. “The FTC has taken an aggressive stance against consolidation in the health-care sector, particularly with hospital mergers,” Bloomberg reports.
Republican candidates took a break from attacking each other in last night’s debate and took on the media, and especially CNBC, accusing it of making “rude,” “nasty” and “biased” comments. It’s always difficult to pick winners and losers in a debate, but NBCnews.com says, “Jeb Bush’s Campaign on Life Support After Rough Debate,” while the Washington Post says, “The agony of Jeb Bush” and Huffington Post claims, “Jeb Bush’s Comeback Strategy Backfires at GOP Debate.”
What’s your take on the debate? Did Jeb Bush really do that poorly? Is the media really the problem? Were the questions that bad, or should presidential candidates be able to handle all questions, nasty, combative or otherwise? Have comments on any other issues to share with your fellow readers? Click here to join the conversation.
Best wishes,
The Money and Markets team
