So Best Buy (BBY) says tablet sales are crashing. Not slowing… crashing. That means devices like the Apple iPad, Google Nexus and Samsung Galaxy. Actually this should not be a surprise. In fact this is exactly what we should have expected. It’s the nature of business. Everything rides a wave. Everything rises, then eventually crests and ultimately falls. What we should be asking is what’s the next wave?
We should not be surprised. Some waves last longer than others, but no growth wave lasts forever. Think about all the hot technology products and trends in your lifetime. Every growth wave like we have seen in tablets always follows a wave. It grows, crests then falls.
The smartphone growth wave lasted longer and was larger, but will ultimately follow the same growth wave pattern. That’s why companies must think a few years ahead of the marketplace. They must create their next growth wave before the one they are currently riding crashes.
In fact this smartphone crash already happened once. Until a few short years ago Blackberry (BBRY) and Nokia (NOK) were number one. Blackberry was number one in smartphones and Nokia was number one in handsets. Then the Apple iPhone and Google's (GOOG) Android entered the smartphone picture and suddenly changed the picture.
Soon after the Apple iPhone and Google Android were launched, they quickly rose to number one and two, forcing both Blackberry and Nokia to the back of the line, virtually overnight. That shocked many in these companies, and many investors as well.
The next smartphone transition could also occur at any time. And will.
This was not the first. We saw this same disaster with Motorola who was number one for decades, then collapsed in the late 1990’s after their ultra hot StarTac. They never had the next wave ready to go so they rapidly crested and fell as well.
Years later Motorola had another growth wave with the Razr. However that rose, crested and fell with nothing to replace it either. Then years after that Motorola next created the Droid. They are still around, but they have never recaptured past glory.
So did Motorola never understand this wave theory?
This is a key lesson for every competitor. Always have the next growth wave ready to go. In fact it’s a good idea to have several growth waves in the market at once. Think about what Apple (AAPL) did since the late 1990’s. First the iPod, next the iPhone, next the iPad, next the smaller iPad.
In fact Apple continued growing until they stopped creating the next wave. Riding current waves does not propel you forward. You must always create the next hot wave, then the next and so on.
Actually the same thing happened to many others over the last few decades. Want a few examples? Remember the Sony Walkman, the record industry with albums, followed by the cassette tape industry followed by the DVD industry. Did Apple win that battle with the iPod? What’s next?
Also, this transformation not only impacted the providers of music, but the equipment manufacturers as well. When was the last time you saw a turntable or tape player? Ever try and play your old family videos of your children? You no longer have that kind of player do you?
And that’s the point. Innovation in technology continually wipes the slate clean and rewrites new rules for the next big industry wave. This impacts not only the core industry, but also other industry segments, which work with them.
That’s what investors and workers and companies are always searching for. The good news is there is always a next wave coming. It’s important to understand your investments and where they ride on the growth wave.
It’s so important to understand if the companies you follow are on the growth side of the wave or on the falling side of the same wave.
Every wave has a life span. Some growth waves a long like smartphones while others are short like Netbooks.
Fortunately there is always the next wave starting. Remember the wireless industry, the Internet, smartphones and apps we have seen already. And also all the exciting new waves that are starting today.
So as tablet sales slow, what is coming next? Will we see a newer or better version of the tablet, or will growth come from another wave?
Ten years ago all we had was the computer, the laptop and the Blackberry smartphone. Today we have so much more with tablets, wireless notebooks, iPhones and Galaxy’s, smartwatches, glasses and so much more. And they all access the same information.
That means the cloud will play a larger role going forward. That’s one wave. There are plenty of areas where the next growth wave will come. In fact I see several growth areas getting ready to break.
I am sensing that we are just at the very beginning of the next big growth wave or waves. Keep your eyes open. The next wave is coming.
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