ARM Holdings plc Partners With International Business Machines Corp. To Drive The Internet Of Things!

An exciting partnership between ARM Holding plc (LON: ARM) and International Business Machines Corp. (NYSE: IBM) could drive Internet-of-things take-up and boost ARM’s shares

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

When I first heard the phrase ‘the Internet of Things’, it seemed like a catchy buzz phrase that didn’t really mean much.

It trips off the tongue nicely, just like other catchy phrases such as ‘peak oil’, ‘commodity super-cycle’, or perhaps, ‘tech wreck’.

Getting serious

I used to think the Internet of Things was no more than a theory or device conceived to stoke up interest in tech firms to encourage investors to buy shares.

However, as news flow gathered pace over recent months I’ve changed my mind. Now I think the so-called Internet-of-Things (IoT) opportunity is a real potential driver of future profit growth for firms such as London-listed ARM Holdings (LSE: ARM) and IBM (NYSE: IBM.US).

Yesterday’s news from IBM gives me further reason to think seriously about the potential of the Internet of Things. A headline-grabbing announcement trumpets ‘IBM and ARM Collaborate to Accelerate Delivery of Internet of Things‘.

To me, that’s potentially big news. I’ve watched as ARM made a string of IoT-related acquisitions over recent months and then launched its IoT Subsystem, to ensure future generation IoT devices are designed with ARM technology inside.

Now, big players like IBM have noticed ARM’s progress and want to collaborate with the firm.

Another level

ARM’s IP has been in existing IoT devices for some time and it therefore seemed likely that the firm’s new ‘off-the-peg’ IoT solution would gain wide acceptance amongst manufacturers and businesses. That’s what is happening now, as IBM demonstrates.

IBM reckons it’s expanding its IoT platform — called IBM IoT Foundation — through integration with ARM by providing out-of-the-box connectivity with ARM mbed-enabled devices to analytics services. This fusion, IBM says, will allow huge quantities of data from devices such as industrial appliances, weather sensors and wearable monitoring devices to be gathered, analysed and acted upon.

ARM says that its collaboration with IBM will deliver the first unified chip-to-cloud, enterprise-class IoT platform, and that will empower companies of any size, big, small and in-between, with a productivity tool that can transform how they operate and the services they can offer.

Products powered by ARM mbed-enabled chips will be able to automatically register with the IBM IoT Foundation, and connect with IBM analytics services. That situation will unify the two firms’ offerings at the point where information gathered from sensors in connected devices is delivered to the cloud for analysis.  

It all boils down to an efficient structure to get the IOT vision working, so that washing machines can tell their owners when they are faulty, owners can open their garage doors two blocks before they arrive home, smart TVs can be operated remotely and security systems can talk directly with home and business owners, and whatever other applications we can think of.

What next?

The important thing for ARM investors like me is that the more ARM’s IOT solution gets into the supply chain the more revenue and profit the firm is likely to earn from the IOT trend.

Already, electronics manufacturers are adopting IBM’s cloud services to connect everything, and now ARM Holdings has secured its niche in the middle of that trade. Once again, ARM comes up smelling of roses and demonstrates how it keeps itself embedded in the latest trends and technologies of our time that keep driving the firm’s profit growth. 

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Kevin Godbold owns shares in ARM Holdings. The Motley Fool UK has recommended ARM Holdings. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Shot of a young Black woman doing some paperwork in a modern office
Investing Articles

With an 8% dividend yield, I think this undervalued FTSE stock is a no-brainer buy

With an impressive yield and good track record of payments, Mark David Hartley is considering adding this promising FTSE share…

Read more »

Passive income text with pin graph chart on business table
Investing Articles

£9,500 in savings? Here’s how I’d try to turn that into £1,809 a month of passive income

Investing a relatively small amount into high-yielding stocks and reinvesting the dividends paid can generate significant passive income over time.

Read more »

Businesswoman analyses profitability of working company with digital virtual screen
Investing Articles

Dividend star Legal & General’s share price is still marked down, so should I buy more?

Legal & General’s share price looks very undervalued against its peers. But it pays an 8%+ dividend yield, and has…

Read more »

Investing Articles

Dividend shares: 1 FTSE 100 stock to consider buying for chunky shareholder income

This company’s ‘clean’ dividend record looks attractive to me and I’d consider buying some of the shares to hold long…

Read more »

Investing Articles

3 of my top FTSE 250 stocks to consider buying before April

Buying undervalued UK shares can be a great way to generate long-term wealth. Here, Royston Wild reveals a handful on…

Read more »

Ice cube tray filled with ice cubes and three loose ice cubes against dark wood.
Investing Articles

Just released: our 3 top income-focused stocks to buy before April [PREMIUM PICKS]

Our goal here is to highlight some of our past recommendations that we think are of particular interest today, due…

Read more »

Investing Articles

Is this the best chance to buy cheap FTSE 100 shares in a generation?

I want to buy shares when they're cheap, and sell... never, just keep taking the dividends. And the FTSE 100…

Read more »

Man putting his card into an ATM machine while his son sits in a stroller beside him.
Investing Articles

Could NatWest shares be 2024’s number one buy for passive income?

For those of us looking to earn some long-term passive income, how does NatWest's 7% dividend yield sound? It sounds…

Read more »