So tablet sales are slowing. And notebooks, they are still with us. Hmm. Even though I don’t understand my kids at all, it seems over the last few years I was right about this. I have been saying this growing tablet revolution might be short-term. Then the marketplace should settle down. Notebooks are not dead. Neither are tablets. All that’s happening is demand is changing.
It worries me how the entire marketplace can sway in one direction or another like this. All that has to happen is a new technology is introduced and everyone goes wild.
Sometimes new technologies are long lasting growth engines that do change the world, but for the most part they are not.
We have seen this happen so many times in the past. The entire marketplace seems to sway in one direction or another until it finally calms down. Some investors do well, but too many others get hurt.
You want a few examples? Remember Segway? They said it was going see such rapid growth that this personal transporter was going to change the world after it’s launch in 2001. Sure it’s cool and yes it works and is still in the market, but change the world? It has not disrupted anything has it?
Remember the Apple Newton from the 1990’s? Newton was like an early version of the iPhone and iPad. Timing is always an important piece of the puzzle and Newton was too early.
Remember the Netbook computer from a few short years ago? They were hot just before the tablet computers hit the streets. These were mini-laptops and are still for sale. Just stroll through any computer store and you’ll see one or two.
However these kind of devices have a short growth wave. And it’s all about the length of the growth wave.
Not All Tech Has Sustainable Growth
Some technology items have a long growth wave like the smartphone. Just look at the Apple (AAPL) iPhone, Google (GOOG) Android and Samsung (SSNLF) Galaxy, which are still growing as examples.
Others have a much shorter growth wave like the Apple iPod, Netbook computers and now the tablet computer.
It’s easy to lose your way. Over the last few years all we could talk about was how the tablet was going to replace the PC. However suddenly tablet growth is slowing while and PC growth is still occurring.
What’s happening? The marketplace is finding its level. That’s all.
What I said several years ago was the tablet revolution would take a few years and then start to slow. Once everyone who wanted a tablet had a tablet there would be no reason to buy another until it was time to refresh, like with PC’s.
The same thing could and should happen in the smartphone sector if nothing new and exciting is introduced. So far that has not happened yet.
We are always expecting great new surprises in the marketplace like the few that have had a long growth wave and changed the marketplace. Customers and investors look for them as the next, hot, new growth wave.
However it’s important to understand what each new technology is. Only a very few are important enough to be long-term growth engines.
The tablet is still brand new. They were introduced a few short years ago by the Apple iPad. Then Google with the Android and Samsung with the Galaxy. Today Apple iPad still has the majority of market share with tablets.
Growth in the newer tablet section is actually quite different from the smartphone sector. Smartphones are still growing. However growth in the younger tablet marketplace is slowing.
The Apple iPhone has a very strong market share in the USA, but globally the Google Android has a much larger share. That’s partly because Google Android is licensed with so many different smartphone makers and Apple is not.
The Next Growth Cycle in Tech Will Be…
So what’s next? The smartwatch, Google Glass, and all the other new innovations are coming. Will they be long-term or short-term success stories? They may stick around, or they may pass.
We must not assume every new innovation will be long-term and industry changing. More times than not they are not that important. Not that industry reshaping, and their growth curve is not that long either.
Now that tablet growth is slowing, and PC and notebook growth is still there, we can see what the marketplace will look like going forward. Maybe now the marketplace is ready to listen.
Every user will choose the devices they want to use. They will choose between desktop PC’s, notebooks, tablets, smartphones, smartwatch, glasses and whatever is coming next. In fact some will own several of each.
Then when users have more than one device, which share the same data, the cloud becomes more important. So I expect the cloud to grow in importance going forward.
I predict cloud services will be sold by device companies like Apple, Google and Samsung and networks like AT&T (T) , Verizon (VZ) , Sprint (S) and others like Microsoft (MSFT) , Amazon.com (AMZN) , HP (HPQ) and IBM (IBM) .
The cloud will be a big and growing space going forward. This will be a longer-term growth opportunity. Now we just have to decide which companies will see serious growth.
So while growth in tech will continue it is very important to realize not every sector will change the world. It’s important to stay focused on the long term growth engines like smartphones that just about everyone will have.
And it’s important to stay focused on services like the cloud, which we will be using more and more over time.
It’s also important to have a strong understanding of each new technology and whether it is a long-term or short-term growth opportunity. After all, there is a difference.
