The Metaverse is the next big thing and everyone will be dying to own the coolest NFTs! Do you think the? Certainly not. At least not in the foreseeable future. As investors, however, we should rather focus on trends that are now gaining serious momentum than on distant castles in the air.
It rarely pays to be early with new hype
Already a good twenty years ago, it was clear that e-commerce would become a gigantic enterprise. But anyone who was already investing in this segment at the time probably had a few bankruptcies. And even those betting on the Amazon champion needed a lot of stamina. Because during the financial crisis of 2008, the price hit the ground again. Only then did the stock really take off.
Or how about the solar industry? The high long-term growth rates of installed capacity were already predicted at the time. And it got even better. However, none of this could prevent a mass extinction of module and cell manufacturers. It was only after the great solar crash of 2012 that there were good investment opportunities,
The mechanism is essentially similar. A subject is celebrated and a large number of companies jump on it. However, few of them have the quality to impose themselves and create value for investors. At some point, the framework conditions deteriorate and the competitive landscape is disrupted.
Only then do the strongest consolidate the market and increasingly generate economies of scale that can enrich investors.
The Metaverse crash is yet to come
One of the big hype topics today revolves around the term metaverse. Web3, NFT and other terms are also spread in the press. There are drums and market cries convincing us that the next big thing is about to happen. And it probably is.
But that doesn’t mean you should start investing here now. Because there is still complete disagreement over what exactly the Metaverse is, how it is organized, and what business models will prevail. For some it’s the next evolutionary stage of social media, others see it primarily as progressive game worlds and a third fantasy about virtual adventure travel or apps for the business world.
Yes, in 20 years this will definitely be a good thing. But today people sell a lot of garbage and talk nonsense. Billions of dollars are pouring into cyberworlds and NFT markets that no one will need in the end. Companies that create long-term value usually only emerge after a big bang.
Then we’ll see what really works. Until then, I would prefer to look elsewhere where the process is more advanced.
This is why Industry 4.0 is now becoming interesting for investors
The hype was followed by disillusion
Industry 4.0, also known as Industrial IoT, has long had its initial hype behind it. Just as everyone wants to understand today what Metaverse is, Industry 4.0 was in 2014 and 2015. At that time, the concept was still vague, but there were many visions with billions of things networked . Investors as well as companies jumped on it.
However, investors who ignored the trend hadn’t missed much so far. On the contrary, disillusion sometimes sets in. Manufacturing companies have been hesitant to introduce smart, networked and data-driven solutions to increase efficiency in factories.
The reasons were various:
- Suppliers struggled to clearly explain the benefits of a major investment in an Industry 4.0 solution.
- A wide variety of alternative standards and technologies also made it difficult to choose a sustainable solution.
- And in detail, difficulties have arisen in the implementation of data collection from thousands of networked objects in a heterogeneous machine park.
The sobering process is complete
Today, suppliers and users have a much clearer understanding of what Industry 4.0 can do. Rightly, the expert Prof. Matthias Schmidt from Leuphana University Lüneburg recently commented in an interview with the Handelsblatt that Industry 4.0 has long since left the stage of buzzwords.
At the same time, the building blocks of a comprehensive Industry 4.0 solution have made great strides. 5G mobile communications deploy global infrastructure. Hardware is securely networked “out-of-the-box” with the cloud. Intelligent software platforms simplify integration. Other technologies create completely new possibilities. For example, Bluetooth direction finding enables secure location in closed buildings.
Everything is therefore in place to implement what was promised to us many years ago. Reports of success from Industry 4.0 vendors are piling up. BMW and Deutsche Telekom have just invested heavily in automation specialist Kinexon.
After the IPO in December, Samsara shares were initially caught in the general whirlwind of selling. But operationally, things are progressing at high double-digit rates at the California-based industrial IoT specialist. Samsara has cracked the IoT code by removing complexity, according to an April 25 Forbes interview.
And the best thing is that many companies that are now spinning a bigger wheel in Industry 4.0 have a good chance of succeeding in the metaverse in the future.
Forget Metaverse stocks and NFTs: this trend is really taking off. This article first appeared on The Motley Fool Germany.
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Ralf Anders does not hold any of the shares mentioned. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a board member of The Motley Fool. The Motley Fool owns stock and recommends Amazon and recommends BMW.
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