By this point you’ve no doubt heard about the Internet of Things (IoT).

In a broad sense, the term refers to the connection of everyday machines and appliances—anything from jet engines to coffee makers and oil rigs—to the Web.

Right now, the IoT mainly conjures images of wired homes, where you can turn on your lights or open your garage door with a smartphone—or even a smartwatch—while Wi-Fi-enabled thermostats like Google Inc.’s (NasdaqGS: GOOG, GOOGL) Nest “learn” your schedule and adjust your house’s temperature accordingly.

The possibilities seem limitless. Consider Lindsay Corporation’s (NYSE: LNN) FieldNet system, which lets farmers control and monitor complex irrigation systems, right down to individual pumps, with a smartphone or tablet. FieldNet also sends the user a quick smartphone notification in the event of a malfunction.

The benefit, as with most IoT systems, is greater efficiency, in this case in the form of fewer unnecessary trips to the field, as well as less downtime and lower repair costs.

Corporations Log On

In February 2014, Janusz Bryzek, a vice-president at Fairchild Semiconductor International (NasdaqGS: FCS), told the San Jose Mercury News that the IoT was “potentially the biggest opportunity in the history of people.”

Even though its potential is huge, the trend is still in its infancy, so it remains to be seen whether that lofty call comes to pass. But the numbers associated with the IoT are massive. Here are a few from a bevy of recent research reports on the subject: 

• 25 billion: That’s the number of machines that will be linked to the Web in 2020, according to a November forecast from IT research firm Gartner, a fivefold increase from a projected 4.9 billion this year. Cisco Systems’ estimate is double that, calling for 50 billion Web-enabled machines in five years’ time.
  
  Consumer demand will drive the number of connected devices higher, says Gartner, but the enterprise side will account for most of the revenue.

• 6.7 billion: That’s how many connected devices that will be shipped in 2019, according to a February report from Business Insider. By that year, BI predicts the IoT will be more than double the size of the PC, smartphone, tablet, connected car and wearable markets combined.
  
  
• $1.7 trillion: The amount of value the IoT will add to the global economy in 2019, according to BI, including all of the associated costs, including hardware, software, installation and management, as well as the efficiencies the IoT will create.
  

Despite these sunny forecasts, the IoT does still face big challenges. For example, headline-grabbing data breaches like last fall’s hack on Sony Corp. (NYSE: SNE) do nothing to encourage businesses and consumers to buy more Web-enabled products.

What’s more, there is yet no dominant set of standards for connecting different devices to each other and to a larger network (though some companies are trying to change that, as we’ll see below), creating a potential drag on the IoT’s potential.

Nonetheless, the world’s biggest tech (and some non-tech) names continue to buy in. International Business Machines (NYSE: IBM), for example, recently said it would invest $3 billion over the next four years in a new Internet of Things unit, while companies continue to adopt General Electric’s (NYSE: GE) Predix software platform for what it calls the “Industrial Internet.”

Late last year, the industrial giant said it monitors 50 million data points from 10 million sensors on $1 trillion of assets every day. In all, its IoT offerings generate about $1 billion of yearly revenue.

There are few pure play IoT opportunities for investors at this point, but there are some large cap techs with a growing presence in the area. Here’s a look at two recommendations from the pros at our Smart Tech Investor service.

The Infrastructure Builder

BI sees the majority of IoT revenue going to providers of software and infrastructure, and the latter is where Cisco Systems, Inc. (NasdaqGS: CSCO) shines.

The company supplies routers, ethernet switches and other gear that sends data across the Internet. Corporations also use Cisco’s equipment to run their own private networks.

Cisco is the leader in the market for service provider routers, with a roughly 45% share. It also controls 51% of the market for wireless local area network (LAN) equipment.

These strengths are one reason why Smart Tech Investor analyst Linda McDonough sees Cisco as a prime beneficiary as the Web spreads beyond computers and mobile devices.

“Cisco’s results should continue to ride the wave of consumers’ insatiable demand for the Internet of Things, where our cars, bank accounts, email, telephones and even our light switches are connected and accessible at our fingertips,” she wrote in a March 30 article.

Another thing she likes is Cisco’s strong cash flow: “In the most recent quarter, it produced $2.9 billion of cash, up 16% from the previous year. This generously covers the company’s recently increased $974-million quarterly dividend payment,” she added.

The company spent $3.1 billion, or 12.9% of its revenue, on research in the six months ended January 24, 2015. Recent IoT initiatives include a new research center in Tokyo and a memorandum of understanding with Hamburg, Germany, to set up pilot projects around areas like smart traffic and street lighting.

The Chip Champ

Another company leveraging its expertise to tap into the world of connected devices is Smart Tech Investor pick Qualcomm, Inc. (NasdaqGS: QCOM), the world’s largest mobile chipmaker.

The company continues to reach out beyond smartphones and tablets. Its chips can now be found in smartwatches, like the Samsung Galaxy Gear and LG G Watch, and infotainment systems in high-end vehicles like the Cadillac XTS and Maserati Quattroporte GTS concept cars.

In October, Qualcomm said it would buy CSR plc, a British maker of chips for cars, printers and portable speakers, for $2.5 billion. The deal is expected to close by the end of the summer. It also spent $2.7 billion, or 19.5% of its revenue, on R&D in the six months ended March 29.

Qualcomm is also doing its part to bring order to the chaotic world of the IoT through its Alljoyn open-source platform, which aims to let disparate devices find and talk to each other, no matter what operating system or network protocols they’re using.

Last year, the company made Alljoyn available to the Allseen Alliance, one of four consortiums looking to bring a common set of standards to the IoT (both Qualcomm and Cisco are among the organization’s 100 members).

There are already devices using Alljoyn, and the framework got a push late last year when Microsoft (NasdaqGS: MSFT), said it would build it into its Windows 10 operating system.

The Ignored Market Inside the Internet of Things

Smart Tech Investor chief strategist Jim Pearce has uncovered a tiny under-$8 tech stock sitting in the middle of an all-out brawl for a new $10-billion data market.

And here’s the kicker: it wins no matter what the outcome.

Pearce sees the stock as an easy double in the short term—and the potential for it to return over 21 times your money is very real.

That would turn every $10,000 invested into a staggering $214,290!

Intrigued?

Go here for the full story on this overlooked opportunity.