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

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. 

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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.