It is clear that the mobile market is going to be the big growth story for the next ten years. Apple’s introduction of the iPhone basically created the smart phone market that we see today. Now, there is a lot of money going into mobile innovation.
There are some major players in this space that are positioned very prominently in the mobile market. Here are the stocks to buy that have significant interest in the mobile revolution.
Apple – iPhone and iPad
The obvious first one is the company that started it all: Apple. When they introduced the iPhone, it basically created the smart phone market out of thin air. The interesting thing is that it wasn’t the first iPhone.
The first smart phones were actually the Blackberry phones made by Research in Motion. But that was geared more toward business people that wanted to access their emails on their phones. Apple was the company that brought the smart phone to the average consumer.
The iPad did for the tablet market what the iPhone did for the smart phone market. Again, there were other companies like HP and IBM that had manufactured tablets in the past. But again, it was Apple that made it popular for the consumer. They have this ability to do that.
In addition to creating the market for the hardware, they also created a marketplace for software as well. There is an entire industry around iOS phone and tablet apps. This has also enabled Apple to heavily get into the publishing industry with books, music and now movies.
Google – Android Platform
The main software competitor to Apple is Google’s Android platform. It is pretty much used in most of the other smart phones and tablets now. The Samsung Galaxy, HTC and other hardware makers use the Android platform for their operating system.
Roughly 70% of mobile users are on Android. The interesting thing is that Apple still is the market leader in this space. Go figure?
The main advantage to the Android platform is that it is more open. It is easier for app developers to get their apps to market. Apple has higher restrictions on getting apps on their store.
In addition, Android is a lot more robust. Android is to iOS what Microsoft PC’s are the Apple’s Macs.
Microsoft – Windows Phone
The third wheel in this love triangle is Microsoft. They are really behind the mobile space. In an effort to get some market share, they have teamed up with Nokia as their hardware partner.
Recently Verizon announced that they will be helping to push the adoption of the Windows Phone platform. There is a simple reason. With only two main players in the game, the losers are the consumers and the service providers.
Verizon and AT&T are currently paying upwards of $600 for each iPhone. The reason you can get it for $199 is because you have to sign on with a contract that locks you in. They also make up the difference with their expensive data plans.
But if there can be a third player, say Windows Phone, then they could potentially angle for better margins with the other smart phone providers. This could be a game changer for the industry, especially for service providers like Verizon, AT&T and Sprint.
Verizon – Best Service Provider
Verizon has the best network out there, which allows them to offer the best service. They have just adopted the iPhone and it expanded their customer base by quite a bit.
The demand for wireless networks and service providers like Verizon is not going down. They will continue to have a strong business moving forward.
AT&T – Service Provider with Limitations
Having had its network taxed to its limits due to the adoption of smart phones, tablets and other mobile devices, they attempted to buy T-Mobile recently. It wasn’t for their business, their technology or even their customers. It was for their infrastructure.
The wireless service provider industry is facing a huge problem. They don’t have enough of what is called spectrum to offer their high speed data network services. There isn’t any new spectrum that is being auctioned off by the Federal government. So the only alternative that companies like AT&T has is to buy other company’s spectrum, via an acquisition like the one they tried to do with T-Mobile.
In any case, there is still great demand for wireless services and it will only grow with the growing use of mobile devices. That means there will always be a business for companies like AT&T and Verizon.
Stock Investment Strategy for the Mobile Industry
In the immediate future, I think what happens with Windows Phone adoption will have a huge impact on this industry. If Microsoft is able to get significant market share from Android and Apple, this will give more leverage to the service providers in negotiating pricing.
Right now, the service providers are held hostage by Apple and Android phone companies. In essence, Apple sets the price and they have the power to do so. But if the market became broad enough for a third player, it would significantly change the pricing power in the service providers’ favor. This would improve their margins considerably.
If Windows Phones do take off, and I’m hoping it will starting with the Nokia 900 Lumina that just came out, I think the best stocks to buy will be AT&T and Verizon. That is because I think they will get more leverage over companies like Apple and be able to get better margins.
The Mobile Revolution
There is no mistake about it. There is a mobile revolution going on. Everyone is going mobile. Smart phones are becoming as common as cells phones were just a few years back.
This also means that there will be huge demand for new software to be developed for mobile devices. Some estimate that a huge majority of the new spending by software companies will be for mobile compatible devices.
That means any software company that is developing useful applications for mobile devices will be thriving in the next decade.
Interestingly enough, the face of healthcare is changing due to this mobile revolution. The advancement in the use of mobile devices is moving faster in the healthcare industry than in any other. This will change how healthcare is done, not just in the western world, but especially in developing countries.
Large, diversified multinational corporations are investing in this. Companies like Siemens, GE, and others are investing heavily in this space.
Hot Tech Start Up Companies and Stocks
The next new wave of tech stocks will be in the mobile space, specifically around social media. Just recently, Facebook bought Instagram, a mobile social networking platform, for $1 billion. That was a huge price tag for a relatively simple app. You will hear stories like this more and more in the next few years.
Mobile technology companies are like what the dotcom companies were in the late 1990’s. Watch for the hottest stocks of this decade be ones in the mobile tech space.