Are Investments In Sensor Technologies Profitable?

In the dynamic business and innovation landscape of the Post-2020 era, the integration of intelligent sensor technologies has become a paramount necessity across multiple industries. We know this firsthand as a sensor manufacturer, and R&D entity ourselves. These remarkable innovations, in the form of more and more miniature, contactless data collection systems – have revolutionized our interactions with the world around us.

By enabling smarter and more efficient products, operations, and interfaces, these sensors have emerged as nothing else than catalysts of progress, as well as cause for concern in some cases.

In this blog, we will delve into the profound significance of cutting-edge sensing technologies, and shed light on the escalating market demand driving their widespread adoption.

You see, sensors, and especially the smart, tiny ones – are responsible for a lot today:

Enhancing Product, Part, and even Material Intelligence:

The integration of intelligent sensor assemblies has opened up a world of possibilities for product innovation. Miniaturized contactless sensors , in particular, offer unique advantages over traditional sensors, due to their small form factor and often, non-intrusive nature. This means that they can be seamlessly embedded into various devices and systems without altering their design or functionality. As highlighted in a blog post by Flex , these sensors are enabling the creation of smarter products that can gather real-time data, adapt to user behavior, and provide valuable insights to enhance user experiences.

Driving Smart Manufacturing:

Smart manufacturing had been a vision and a dream for many, and it has finally been gaining significant traction in recent years, as industries strive for greater efficiency, productivity, and cost-effectiveness now more than ever (unfortunately, some of the motivation and the push behind these incentives have been related to post-2020 events in the world). Contactless sensors have proven to be invaluable in this context . According to Providence Enterprise , these sensors ensure that designs are production-ready, helping manufacturers avoid costly mistakes. With their ability to monitor critical parameters, such as temperature, pressure, and vibration, miniaturized contactless sensors enable real-time quality control, predictive maintenance, and process optimization. This ultimately leads to improved productivity, reduced downtime, and enhanced overall product quality.

Applications across Industries:

The applications of miniaturized contactless sensors span a wide range of industries, from healthcare to transportation, and from agriculture to consumer electronics. In healthcare, these sensors can be used for remote patient monitoring, ensuring continuous and accurate data collection for better diagnosis and treatment. The transportation sector can benefit from contactless sensors to enhance safety systems, track cargo conditions, and enable predictive maintenance for vehicles. We at RVmagnetics have a separate focus namely on electric motors and Composites industries as well. The possibilities are truly endless, making contactless sensors an essential tool for a variety of industries.

• Energy and Utilities: can be utilized for monitoring and optimizing energy consumption in buildings, detecting pipeline leaks, and managing power distribution systems as such,
• Environmental Monitoring: Especially the contactless sensing plays a crucial role in monitoring air/water qualities, noise levels in urban spaces, wildlife tracking (research purposes), and so on,
• Retail and Logistics: inventory management through real-time tracking, monitoring product conditions (e.g. temperature-sensitive items, fragile goods), and improving supply chain efficiency as such,
• Aerospace and Defense: Miniaturized contactless sensors are used in aircraft for structural health monitoring (SHM), engine performance monitoring, and situational awareness – however most importantly the sensors should be extra accurate and extra small to enhance safety and operational effectiveness.
• Smart Cities: Perhaps the most IoT-reach, and well-known space for sensors is the smart cities: monitoring traffic flow, parking, waste management, urban infrastructure maintenance and control, etc.

Market Need and Future Prospects:

The demand for miniaturized, contactless sensors and sensing systems has an upwards trajectory, and as far as the finances are concerned – due to the increasing need for automation, connectivity, and data-driven decision-making – the demand is not going anywhere. Just like it was referred in Springer – “these sensors are experiencing a rapid growth trajectory”. The growth is fueled by advancements in tech and R&D, expanding Internet of Things (IoT) applications in all industry sectors, and the rising adoption of AI and machine learning algorithms.

What Do Investors Say About All This?

Several investors and financial institutions have expressed interest in and recommended investments in sensor technology. Here are a few examples:

• Vanguard Group: as one of the world's largest investment management companies Vanguard reports and analyses hint at increased interest in the IoT and sensors as part of their investment strategies. Their research and insights on IoT and related technologies are known to provide valuable information for investors.
• Goldman Sachs: a prominent global investment banking and securities firm, another big authority for current and potential investors. They have identified sensors and data acquisition solutions as key technology driving innovation and have published research reports on the topic.
• BlackRock: the world's largest asset management firm. BlackRock is known to recognize the potential of sensor technologies and the impact they can have on a variety of industries, thus they have extensive research and commentary on technology trends (can be beneficial for investors interested in sensor investments)
• ARK Investment Management: an investment firm that focuses on disruptive technologies. With their fund called ARK Autonomous Technology & Robotics ETF (ARKQ), which includes investments in sensor technology, they are now more known for their research and investment thesis on emerging technologies, including the sensor ones.

Miniaturized and Cost-adjusted Sensor Solutions: Paving Most Ways to Smart Solutions

It is widely noted in the investor platforms and ecosystems that investing in sensors is a wise choice for those looking to be a part of the technological advancements shaping our world, however, you might need to pave your own way in this difficult-to-conquer sector. It is clear that sensors are not only integral to the IoT and industrial production processes, but they also contribute to the intelligence of final applications for consumer use such as cars, mobile devices, environmental monitoring systems, robotics and so on. This only adds to the argument that while navigating the world of sensor investments, it is essential to explore different avenues, understand miniaturization, cost-sensitive factors, mass-manufacturing capabilities, automation prospects during integration, and a lot more to make sure the investments play out in a long run and are adjusted to future trends as well:

You might want to play it safe.

When it comes to conservative investors focusing on investments in sensors, there are a few key areas worth considering that have proven valuable in recent years, after they had positive prospects in recent decades. Here are some avenues for investment in sensor technology, that might be considered the safe choice:

• The IoT Sensors: This is one of the more inclusive spaces for sensor use – IoT sensors are used to gather data and enable connectivity in applications and industries with high demand for fast, lightweight, cheap, and good data such as smart homes, industrial automation, and agriculture. A famous provider of IoT sensors is Texas Instruments – already adjusted for mass markets, and able to supply high demands.
• Environmental Sensors: Concerns about environmental issues (be it in urban, natural, or industrial spaces) are causing relevant, increased concerns on a monthly basis, thus investing in companies that develop sensors serving the environmental issues such as sensors and sensing systems for monitoring air & water quality, pollution levels, humidity, and thermal fluctuations, and many more can be considered a conservative approach as it has already become an absolute necessity for municipal and larger authorities. Aeroqual, for example, provides sensor-based air quality monitoring systems – a company that is in our opinion a perfect match for this area of sensors.
• Automotive, Aviation, and Industrial Sensors: Sensors in these spheres are extremely important players, enabling the collection of valuable data to facilitate various essential functions – which often interact with human safety and operation-critical machinery. In automotive systems, sensors are employed extensively for safety, performance optimization, and driver assistance . They monitor parameters such as vehicle speed, engine temperature, tire pressure, and airbag deployment, ensuring efficient operation and enhancing passenger safety. In aviation, sensors are vital for aircraft control , navigation, and monitoring critical structural health parameters like altitude, airspeed, temperature, state of structure and engine performance. These sensors contribute to the safe and reliable operation of aircraft , enabling pilots to make informed decisions. In industrial settings, sensors are utilized for process control, equipment monitoring, and predictive maintenance . They provide real-time data on variables such as temperature, pressure, humidity, and flow rate, ensuring efficient production, reducing downtime, and enhancing product quality.
• Medical Sensors: the healthcare industry as such heavily relies on sensors for diagnostics processes, patient monitoring (both in vitro and in vivo), wearable devices, etc. Conservative investors can “help themselves” in this industry as improvements in sensing systems and sensors as such will be more than relevant for years to come! Medtronic is one of the leading medical device companies. The company offers a range of sensor-based products and solutions – making it the relevant player and an exemplary entity for this topic.

For over a year already, given the situation in Ukraine, the medical sector has become a priority spending and investment area for the military as well.

Embracing the Broader Picture of Investing in Sensors

Some prefer to start with supervisory control and data acquisition (SCADA) systems: It is one of the more promising starting points when considering future growth trajectories. It might look general, but the idea of SCADA systems are often referred to as the „brains of the plant“ – they are used as assemblies of sensors, data acquisition systems, and interfaces processing the final results – it can only be as good as the sensors it is based on this SCADA systems rely heavily on sensors to function effectively. The systems are utterly prevalent across water/wastewater, oil & gas, power utilities, and other industries. The significance of sensors extends beyond industrial settings:

The gas sensors market for example (valued at $1.1 billion in 2021), is projected to reach $2.1 billion by 2027 , according to a report by “MarketsandMar­kets”. The “smart city” tech spending on the other hand is expected to reach $70 billion by 2026, meaning the need for advanced sensor solutions will be there for the city-relevant applications of various sensors as well – especially ones that can access better data – cheaper and more effectively.

In the military sector, sensors have been indispensable since the start (not of the sector, but of the sensors themselves :)). If we consider the global military and defense sensors market ($8.3 billion in 2021, and is projected to reach $14.4 billion by 2031) we will see an increase in investments in this sector too. As known from the events of recent years, especially European countries pull investment budgets from a variety of industries to re-focus on military and defense . The adoption of Wireless Sensor Networks (WSN) is in fact a reality that also enables remote monitoring and enhances military operations. Luckily the WSN is not only useful for military applications, furthermore, the wireless sensors network market is positioned for impressive expansions ($203.94 billion by 2028) playing the utmost crucial role in healthcare as well.

** Of course, modern and upcoming smartphones and mobile systems owe their intelligence to sensors too.** The devices are most tightly and effectively equipped with hips of sensors, (proximity sensors , accelerometers, gyroscopes, touch and face ID capabilities). The industry demand is ever-growing – and even if a usual form of a smartphone is not expected to change much – the internal capabilities of phones, laptops, head-sets will improve exponentially – making it a perfect space for sensor investments.

In the automotive, specifically the EV industry, sensors seem to be first revolutionizing the concept of self-driving cars. Firms like Tesla, Waymo and a lot more in quantity but a lot less in trendy ones – are paving the way in autonomous vehicle development having sensors as inherently crucial aspects of the development. Sensor fusion is perhaps the more known way of SCADA-similar alternatives in the sector.

In this industry as well – importance of miniaturized and inexpensive sensor solutions cannot be overstated as these are the backbone of advanced robotics as such, the automation bases as well and safety-critical adjustments of gathered information.

As we enter a post-recession world driven by data, the demand for sensor-driven solutions will only grow. Investing in sensor technologies opens up a world of opportunities to be at the forefront of groundbreaking innovations. Whether it's exploring SCADA systems, gas sensors, wireless networks, or smartphone applications, the potential for impressive returns and meaningful contributions to the industries and applications of the future is undeniable.

CASE STUDIES

Case Study 1: Qualcomm Ventures and Sensity Systems

Qualcomm Ventures is the investment arm of Qualcomm Inc., known for strategic investments in Tech Startups. They made a strategic investment in Sensity Systems too making them one of the leaders in the market of intelligent lighting & sensor solutions. In this case, Sensity Systems developed a smart LED lighting platform, which integrated sensors for different applications, like parking management, environmental monitoring, etc.. Qualcomm Ventures recognized the potential of Sensity's solutions and ended up investing $36 million in the company in 2015. The investment proved to be successful as Sensity Systems started to work with Cisco and provide solutions for a variety of locations such as Bangalore (India), Adelaide (Australia), and many more. They experienced significant growth and in 2016 got acquired by Verizon , providing significant RoI to original investors.

Case Study 2: Andreessen Horowitz and Ringly

Led by Andreessen Horowitz – Ringly raised $5.1 million. Andreessen Horowitz is a known and respected venture capital firm, and Ringly is a smart jewelry company. In 2013 when wearables weren’t a thing yet, Ringly was launched raising 1 million by First Round Capital and Andreessen Horowitz. With the relevancy being undeniable, and the company growing – in 2015 the Series A funding came in from Andreessen Horowitz. In general, Andreessen Horowitz is known for similar investments, in variety of sensor-backed solutions: another interesting one to look out for is SAMSARA systems which managed to raise $100 million led by Andreessen Horwitz. This was another confirmation of investing body focusing on the smart solution as much as on the people bringing the solution forward, in this case, the people are the co-founders of SAMSARA – Sanjit Biswas and John Bicket

Case Study 3: Intel Capital and Movidius

Intel Capital, the investment division of Intel Corporation, invested in Movidius , an Irish company specializing in vision processing units (VPUs) and artificial intelligence (AI) technologies. Movidius developed low-power, high-performance VPUs that enabled devices to analyze and understand the visual world in real time. Intel Capital recognized the potential of Movidius' sensor-based AI technology and made an undisclosed investment in the company in 2014. The investment in Movidius proved to be highly lucrative for Intel Capital. Movidius' VPUs gained traction in various industries, including drones, virtual reality, robotics, and autonomous vehicles. In 2016, Intel acquired Movidius, integrating its advanced sensor technologies into Intel's product portfolio. The successful acquisition showcased the profitability of investing in sensor-driven AI technologies and solidified Intel's position in the emerging market segments.

Case Study 4: Microsoft and Immersion

Immersion, being an innovative, sensor-based company, has had important research and development efforts, which eventually brought them to touch feedback technology, also known as „haptic technology.“ Though now Facebook’s recent famous spendings with Meta of $10 billion for Haptic Feedback Tech, Microsoft and Immersion were on the trend much earlier. On 2003 Microsoft paid Immersion $20 million for a perpetual patent license and invest $6 million. Now, as of Q1 of 2023 Immersion has reported GAAP Net Income of $8.3 million .

Summary of Case Studies

These case studies we went through above, are merely to demonstrate the profitability, but more than that, the relevance of investing in sensor solutions and sensor technologies across different industries. By identifying innovative companies, and leveraging sensors to come up with a value missed in the markets – an investor of any size has a chance to profit, as long as they chose the smaller, smarter, most adaptable option for the market of their focus. However do not get it twisted, there are hips of irrelevant options that could be hard to mark as irrelevant at first. Overall, the industry comes with its own version of “death and taxes”.

Is there anyone on the lookout?

There are some concerns when it comes to investing in sensors as well – some related to the public perception and policy-makers adjusting to the fast pace of the innovation happening in the industry. AI and overall R&D might be ahead of human EQ – which poses large challenges.

Investments in sensors may have concerns regarding various issues that have arisen in industrial applications, driver safety, and public security and privacy. Malfunctions in sensor technologies have caused significant problems in industrial settings, leading to operational disruptions, equipment failures, and potential hazards for workers. In the automotive sector, sensor failures, such as malfunctioning LiDAR sensors in autonomous vehicles, have raised concerns about the reliability and safety of sensor technologies, impacting driver safety.

Additionally, the use of sensors for data collection and surveillance has sparked privacy and security concerns, exemplified by instances like the social credit score system in China. These examples highlight the potential risks and challenges associated with sensors, emphasizing the importance of robust testing, maintenance, privacy regulations, and cybersecurity measures. Investors should carefully consider these issues to ensure the successful implementation and responsible use of sensor technologies in various industries and applications.

• Autonomous Vehicle Accidents: Several incidents involving autonomous vehicles have been raising relevant concerns about the respective accuracy and reliability of sensor technologies such as radars, LiDARs, and cameras, as well as the proper software and data processing systems in place. These are responsible for detecting and sending reactive signals to deal with the surrounding objects and road conditions. Of course, one such incident is one too many! Self-driving Uber car kills Arizona woman crossing street (by Reuters, 2018)
• Industrial Sensor Failures: Malfunctions in industrial sensors are not at all trivial either. Such conditions have resulted in overall equipment failures, production delays, and more importantly safety hazards in sectors such as manufacturing, oil and gas, and power generation. This emphasizes the need for robust sensor solutions, and thus the predictive maintenance strategies for sensing systems as well. Equipment failures and their contribution to industrial incidents and accidents in the manufacturing industry
• Privacy Breaches in Smart Home Devices: The risks aren’t only directly physical or financial – Instances of unauthorized data collection and privacy breaches are an ongoing, growing trend governments seem to avoid, and in some cases even enhance. Smart home devices, mostly equipped with sensors for monitoring activities that are supposed to make the user’s life easier, might also be used to collect unauthorized information. In a variety of cases, this is due to awareness issues of the users, concentrating on Terms & Conditions of which they are not fully aware of – however, unauthorized data collection has raised concerns about the security of personal information and the potential for misuse even in cases where the user didn’t agree with data-sharing. Smart Home Technologies: Opportunities and Challenges (by International Journal of Computer Applications, 2021)
• False Alarms in Security Systems: Sensor systems are increasingly used in security systems – motion sensors, intrusion detectors, infrared security cameras, and so on. Continuous false alarms first lead to unnecessary panic and disruptions and eventually reduced trust in the effectiveness of these systems – so when the actual danger comes, the owner of the security system might not trust the sensors. Research: Nearly Half of Security System Owners Say They Deal With Too Many False Alarms
• Environmental Monitoring Inaccuracies: the topic continues with other types of sensors and instances as well, however, the general idea of false alarms stays on. Some instances of inaccuracies in environmental monitoring sensors came up as well where temperature/hu­midity sensors led to inaccurate data, impacting decision-making in agriculture and climate research sectors.
• Sensor Calibration Issues: Sensor Calibration is a crucial part of sensor operation integrity, thus an improper calibration of a sensor can lead to dangerously-inaccurate measurements, Online Monitoring of Sensor Calibration Status to Support Condition-Based Maintenance
• Global vulnerability to cyberattacks: The most fresh reminder of this is the cyberattack on Kenya servers, as the eGov (which by the way has been reviewed, and the risks assessed time and time again) has been attacked leaving businesses and citizens in distress. As a result, around 76% of Kenyans using e-money and 67% accessing the internet via mobile phones are compromised .

Conclusion

As a final note of the blog, we can conclude that miniaturized contactless sensors have emerged as a sort of transformative force within a variety of industries and sectors, helping and in many cases causing the change and future technological improvements, product intelligence as such and surely smarter / faster / better manufacturing.

The small size, non-intrusive nature, and versatility of applications are already expected as a baseline from some sensors, and from some other sensors (ones that are expected to have the highest performance possible), these size and cost-related features are an enormous bonus, which helps vouch for initial R&D investments with the “spared resources”.

The market demand for these sensors can only be expected to grow, as industries recognize the need and potential for automation, connectivity, and data-driven decision-making. The possibilities are not limitless, but the time to embrace the groundbreaking technologies is no later than now.

The above “lookout” examples, in their turn, highlighted the importance of addressing concerns related to sensor accuracy, reliability, privacy, and security.

There are surely more concerns such as the economic ones, concerns about Data acquisition, and AI crossing the line of physical space, and disregarding the quality of local, accurate data – thus only relying on simulations, however, we will return to these topics in upcoming blogs, so stay tuned.