The Brains Behind Our Smart Devices
Over the last decade, we have seen the proliferation of “smart” devices—devices that collect our data and track our usage patterns to enhance our overall experience. There are smart mobile phones, TVs, speakers, and cars, as well as smaller everyday items like toothbrushes, vacuums, and coffee brewers. You may be wondering how all of these products became smart, seemingly overnight. What changed?
A collective network of devices and sensors, called “The Internet of Things” (IoT), allows devices to communicate with the cloud and with each other—in essence, to become smart. Some sources estimate the number of installed IoT devices in 2021 was 35B and forecast it to reach 75B by 2025, illustrating how we will be even more connected in the future.
These connected devices have changed our lives. We need smart TVs, for example, to access and watch (or binge?) internet-hosted content, such as shows from Netflix and Amazon, on a television screen rather than a computer screen. According to Nielsen, in 2021 more than 81 percent of US homes said they had at least one device that allowed their TV to connect to the internet, compared with 72 percent of households in 2019. And in July 2022, for the first time ever, Nielsen reported that Americans spent more time streaming content than they did watching cable TV. (Streaming captured roughly 35 percent of total US viewing time during the month, and the amount of time people spent watching streamed content was 23 percent higher than a year earlier.) As the number of connected devices grows, so too will the need for infrastructure to support it, and we believe two of our holdings, NVIDIA and American Tower, are in strategic positions to capitalize on these trends.
NVIDIA (NVDA)
NVDA—often at the forefront of innovation—is poised to capitalize on the deployment of 5G and the increased reliance on edge computing as “edge Artificial Intelligence” (edge AI) use spreads across industries.
Similar to edge computing, edge AI is the deployment of AI applications that are processed locally, either directly on the device or near the device. Its value lies in the increased automation, efficiency, and safety it brings to industries such as retail, manufacturing, and healthcare (see table below). NVDA’s EGX platform provides the computation power and the high-speed, secure networking capabilities that edge AI needs to operate.
American Tower (AMT)
The fifth generation (5G) mobile network, which is currently being deployed globally, will be critical to the evolution of smart devices. 5G enables faster download speeds, more capacity, and fewer delays—characteristics that will benefit smart devices. However, the network is still in the very early stages of a years-long and expensive deployment (’21 and ’22 carrier capital spending will exceed $70B) in the US and Europe. As mobile network operators (aka wireless service carriers) focus on the scaled deployment of 5G, towers have proved to be the essential infrastructure for that network and should provide a tailwind for AMT for years to come.
While 5G provides a significant opportunity, it is not the only growth avenue for AMT. The amount of data being generated and stored by smart devices will grow exponentially for years and will necessitate the sizeable expansion of data center capacity. In November 2021, AMT acquired CoreSite Realty Corporation (CoreSite), which operates data centers in the North American market. As a result, AMT is not only a tower company; it is also a data company well positioned to capitalize on edge computing—the type of computing that allows smart devices to thrive. (Edge computing supports the processing of data close to the creation of data—within a smart device rather than in the cloud, for example. Keeping processing close helps data-driven enhancements run quickly and smoothly.
Edge computing and 5G will have a symbiotic relationship because edge computing will be essential to 5G’s next generation of applications. The total addressable market of mobile edge computing is estimated to be $2.2B by 2026, and the opportunity has a compound annual growth rate of roughly 31 percent. It represents a significant opportunity for AMT.
How Will Edge AI Benefit Industries?
This article was published as part of the LBA Fall Reflections & Observations.