In April, I wrote a blog “For Investors the Smartphone Battle is Over.” The gist of the article was that Apple had won the Smartphone device war – investors should make Apple a core holding and look for additional opportunities in other areas in the ecosystem. Now before you go all Apple fan boy on me, I realize that Android has a lot of momentum and is activating 200,000 new phones per day. However, that success has not been translated into stock appreciation for Google or its partners. Year to date, Google and Motorola are -15.2% and +10.3% respectively vs. 34.1% for Apple.
I suggested that better opportunities may exist beyond the device makers in companies like mobile infrastructure semiconductor provider NetLogic Microsystems (+19.5%) or cell tower companies Crown Castle International (+13.0%) and American Tower Corporation (+19.5%). More ideas can be found in the QFON Smartphone Index. I have created a spreadsheet with its components and their YTD returns.
As a trend trader, it is imperative that I continually think about the next thing. Maynard Um of UBS laid it out for us last week in his report “Who Will Win the Battle for the Global Digital Living Room?” He defined the Digital Living room as seamless access (eventually through the Internet or so-called “cloud”) to all types of content across all types of devices (anything with a screen) anywhere and at all times.
Smartphones are simply one screen in this paradigm. Other screens include TVs, PCs and Tablets. Here are the key pieces in the Global Digital Living Room Ecosystem:
The leaders in this race aren’t hard to guess. According to Um, Apple, Google and Microsoft are the early front runners. Amazon, Samsung and Sony are dark horses, while HP, Nokia and Research in Motion are challenged. The report also highlights some smaller niche technologies like voice (NUAN), content delivery (AKAM), IP (ROVI, IDCC) and mobile payments (PAY). I will be focusing my attention and dollars on the niche players.