How to Invest Your Money in the Internet of Things

The Internet of Things is coming. Some might say it is already here.

Soon, everything from your thermostat to your household appliances and anything else you can imagine will be connected. These "smart" devices will communicate information to you, order their own repairs, and provide data that was previously unimaginable.

Picture an oven you can preheat remotely, a washing machine that orders its own replacement part (before the existing one fails), or a thermostat that can learn your behavior, maximizing efficiency. The IoT will turn nearly everything into a device with some level of computer-like functionality.

In some cases, it will be robust, and in others, it will be very narrowly defined. But, however you look at it, the amount of connected devices is set to explode, and one of the key ways to profit off that growth is to invest in the companies whose operating systems -- or at least some version of them -- will be at the heart of this rapidly expanding new field.

In some ways, the IoT turns billions of devices into limited-function computers. One of the best ways to invest in this opportunity is to own stock in the companies that make the operating systems that will power these tiny computeresque brains.

That makes the potential winners in the new, IoT-dominated world three companies that lead the current generation of computers tablets, and phones: Apple , Microsoft , and Google

How big is the opportunity? The IoT is going to be big this year, and it is going to get exponentially bigger in years ahead, according to research firm Gartner . The researcher forecasts that 4.9 billion connected things will be in use in 2015, up 30% from 2014 with the total number reaching 25 billion by 2020.

"The digital shift instigated by the Nexus of Forces (cloud, mobile, social, and information), and boosted by IoT, threatens many existing businesses. They have no choice but to pursue IoT, like they've done with the consumerization of IT," said Jim Tully, vice president and distinguished analyst at Gartner.

Those billions of devices will not come cheaply. Gartner estimates that IoT will support total services spending of $69.5 billion in 2015 and $263 billion by 2020.

Internet of Things Units Installed Base by Category (millions)

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How to Invest Your Money in the Internet of Things