Editors' Pick: Originally published Dec. 30.

The Internet of Things space is crowded and growing, but companies like Apple (AAPL) and Alphabet (GOOGL) could stand out in 2016, especially in the "connected home" market.

"It's a crowded marketplace," said Shahid Ahmed, emerging technology and IoT practice leader at PwC, based in Chicago. "Clearly, Apple and its HomeKit is an interesting development.'

HomeKit is a platform that helps a user control his or her home right from an iPhone. It was unveiled in 2014.

Aside from Apple, Ahmed points to Google parent company Alphabet as a possible formidable competitor. Google owns Nest, the maker of thermostats and smoke detectors that are connected to the Internet. Also, established IoT player Control4 (CTRL) is building vertically integrated solutions for luxury homes, Ahmed said.

"I think you'll have an ecosystem of companies coming together -- and we'll see a lot of partnerships and mergers and acquisitions," he added. "It's a very fragmented market and it needs to get consolidated."

(Shares of Apple and Alphabet are both held by Action Alerts PLUS, the charitable trust managed by TheStreet's Jim Cramer).

Ahmed said there are too many options for consumers. "As a homeowner myself, I've got four or five different apps for different things and I would like to get one app to do everything for me."

Aside from the well-known companies, he sees opportunities for IoT startups.

"Cloud companies who have physical hubs that are in the cloud, enabling customers to build their own use cases and their own apps -- I think that's going to be a very interesting space,'' Ahmed added.

While the connected home gets plenty of hype, the IoT market extends to health care and industrials, among other areas.

"Industrial Internet in manufacturing -- whether it's a nuclear plant, oil and gas company or utility -- I think that's where a lot of the innovation will happen with IoT," Ahmed predicted.

Research firm IDC expects the IoT market to grow to $1.7 trillion in 2020, compared to $655.8 billion in 2014.

 

More from Investing

Chart of the Day: The Cloud Kings Lost Their Crown in the Fourth Quarter

Chart of the Day: The Cloud Kings Lost Their Crown in the Fourth Quarter

It Was a Dismal Finish to a Dismal Week

It Was a Dismal Finish to a Dismal Week

Here Are My Top Guiding Investment Themes for 2019

Here Are My Top Guiding Investment Themes for 2019

China Halts Auto Tariffs, Tesla Lowers Prices of Model S, X

China Halts Auto Tariffs, Tesla Lowers Prices of Model S, X

AES Could Reach $27 Next Year; Cramer and the Charts Are Bullish

AES Could Reach $27 Next Year; Cramer and the Charts Are Bullish