Will Re-Adoption of the Stylus Be the Next Big Thing In Mobile?
Joseph is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Once upon a time, the Palm Pilot with its fancy stylus was all the rage. Then came the smartphone, where Apple (NASDAQ: AAPL) introduced its new iPhone, allowing users to glide across their screens with simply their fingers. The stylus, however, seems to be making a comeback. Will it re-emerge as a key component, or even the next trend in mobile?
The Stylus Comeback in Mobile:
The Samsung Galaxy II recently hit sales of 5 million, and an unique aspect of the tablet/smartphone hybrid is its stylus. Samsung has integrated the stylus into its line of Galaxy Note tablets and smartphones, using electromagnetic technology. Its unique "S Pen" allows users to handwrite and even sketch on their screens by utilizing the electromagnetic technology and shifting away from outdated acoustic stylus technology. The stylus in these Android devices seems to be a feature that differentiates them from Apple, which is also one thing that will more than likely be protected from bans resulting from the heated patent disputes between the iPhone maker and Android owner, Google (NASDAQ: GOOG). Other competitors, however, are hopping on the stylus bandwagon, as Sony (NYSE: SNE) recently filed for patents for a new stylus utilizing "friction-based haptic" technology which may replicate the feel of a ballpoint pen.
Implementation of the Stylus into the Market:
As the Stylus becomes more popular, apps will need to be developed around the technology to help with its integration and implementation into the mobile market. Another major factor for adoption will be compatibility. Qualcomm (NASDAQ: QCOM) is jumping into the technology with its new acquisition of technological assets. The technology that Qualcomm acquired will apparently bring more stylus and S Pen-like components for mobile devices to the forefront. The company, according to speculation, may also use the technology to create more touch free interfaces for devices as well. Integration of the technology into Snapdragon processors and Snapdragon powered devices could also lead to wider adoption of the stylus outside of the Android ecosystem.
Huge Potential Market in China:
The stylus is making a comeback, but with improved technology behind it. Microsoft (NASDAQ: MSFT) has also considered jumping on board. Another significant aspect of the technology is its potential popularity in China. According to sources, China may provide a new outlet for growth of the stylus, because according to Ivy Chen, chief product manager at recognition technologies (a Taiwan based company), handwriting directly on a screen is much easier than typing on a keyboard when it comes to Asian languages. She specifically cited the Chinese language for reference, explaining that because of the fact that the language in its written form relies heavily on characters (which contain different pronunciations depending on dialect), the ability to handwrite it using a stylus would be much easier than being forced to type. Especially since the Chinese language doesn't use alphabets, but instead relies on these characters. The stylus could have massive potential in China, especially if it provides its massive market with an obviously more intuitive way to communicate in written form.
Conclusion:
The stylus could be the next hot thing in tech. It fits the mold of digitalizing our world, and as the technology gets better, more people may begin writing and drawing on mobile devices with a stylus and relying less on physical paper and pen. "Going paperless" seems to be a new trend arising in and of itself, as the American Music Awards recently used the Samsung Galaxy II to announce winners instead of the traditional note cards and envelopes. The stylus fits right into this trend, and with assistance from Qualcomm's mobile Snapdragon processors, the stylus may claim more of a presence in the mobile market as well. Then there is China. If China adopts the stylus, it will gain even greater potential growth prospects.
The easiest way to play this upcoming trend is to invest in Qualcomm. According to Oded Turbahn, chief executive officer, EPOS (the company that Qualcomm acquired the "assets" from):
“Ultrasound technology provides device manufacturers a low-cost approach for integrating pen and stylus-based user interfaces into their products while gaining the benefit of a slew of new capabilities... Relative to other pen and stylus input solutions, the additional bill of material cost for the device is minimal as the technology does not require changes to the device’s screen and is independent of screen size. The EPOS team is excited about joining Qualcomm in working to further the potential of digital ultrasound.”
Qualcomm incorporating the ultrasound technology into their Snapdragon processors will give them an edge over competitors and bring stylus capabilities to many mobile developers and their devices.
As can be seen above, Qualcomm is relatively fairly valued at this time with a steady dividend that has room for increases in the future. The company has a nearly $13 billion cash hoard with a microscopic amount of debt, according to ycharts. The company also generates massive free cash flow at $1.2 billion. Qualcomm is already dominant in the mobile chip sector and would make a good investment at this time.
Jharry1 owns shares of Microsoft. The Motley Fool owns shares of Apple, Google, Microsoft, and Qualcomm and is short Sony (ADR) and has the following options: long JAN 2013 $22.00 calls on Sony (ADR). Motley Fool newsletter services recommend Apple, Google, and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!
