Was Steve Jobs Wrong About the Touchscreen Laptop?
Joseph is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
The legendary Steve Jobs wasn't too keen on the idea of touchscreen PCs or laptops, citing the problem known as "Gorilla Arm Syndrome" when he stated that:
"Touch surfaces don't want to be vertical... It gives great demo, but after a short period of time you start to fatigue, and after an extended period of time, your arm wants to fall off."
Tim Cook, current CEO of Apple (NASDAQ: AAPL), isn't a fan either. He opined that:
"You can converge a toaster and a refrigerator... but those things are probably not gonna be pleasing to the user."
Mr. Cook was referring to the hybrid Windows 8 devices. You know, those touchscreen laptops that seem to have plenty of critics. But are hybrids a product that consumers might actually want?
It's Windows? I automatically hate it!
I've noticed that there are many Microsoft (NASDAQ: MSFT) bears out there, and even more who are bearish on Windows 8. And why wouldn't they be? Microsoft has traded range-bound forever and the success of Windows 7 supposedly has many consumers clutching onto their previous version of Windows for dear life-- many buying into the "it's the next Vista" hype.
That's one version of the story. The other is that Windows 8 is selling on par with what Windows 7 sold. I don't want to get into a subjective debate over whether Windows 8 is good or not, but I do want to look at the hybrid laptops that are largely a creation of Windows 8-- which is Microsoft's first OS optimized for touch.
Let's face it; Microsoft actually did something innovative by merging the tablet and laptop into one device. OEMs are making some truly solid, innovative convertibles and hybrids, and Windows 8 as an operating system was the necessary glue to make this scenario stick.
Looking at Windows 8 from a more reasonable timeline
Qualcomm's (NASDAQ: QCOM) COO Steve Mollenkopf, while acknowledging that Windows 8 isn't exploding instantly in the near-term, has also said that he is "long-term bullish" on its prospects, stating that:
"We think there will be a break in the application environment, and the future of Windows will be something we can participate in fully," elaborating further on his near-term assessment by explaining that it will "be awhile before the consumer embraces such a new computing environment."
Windows 8 leading a significant surge in hybrids and convertible devices, and even other mobile devices such as Windows Phone, means more revenues for Qualcomm. It also means that if Microsoft is onto something with hybrids, others may take note and get in on the action of "such a new computing environment" as well. If more players begin adding even more hybrid devices and lineups that utilize the dominant Qualcomm's mobile processors, it means good things for Qualcomm.
And that may just be exactly what's happening
If hybrids are a bad idea, then Google (NASDAQ: GOOG) must be stupid. The company is apparently planning on producing its own touchscreen laptop that runs on its Chrome OS, according to the Wall Street Journal. If Google pulls this off, they will most likely do it cheaper than Microsoft, and will attract Linux fans into the hybrid device market. If this market expands, it might even mean good things for Mr. Softie, because if Google can make the hybrid a popular device and help develop the market for touchscreen laptops with their Chrome books-- people may start to consider more powerful Windows devices as well.
An Android touchscreen laptop would also be capable of taking away some of Microsoft's thunder, however. Either way, Google seems to side with Microsoft and disagree with Apple; realizing that there may just be a market for hybrids and convertibles.
The bottom line
It's still too early to tell whether or not touchscreen laptops and PCs will ever become widely adopted or even breathe life back into a PC industry that is supposedly dying. What investors can tell right now, however, is that (if successfull) the hybrid market will be another outlet of growth for parts manufacturers.
My company of choice to play this potential trend, and the one that may even benefit the most, is Gorilla Glass maker Corning (NYSE: GLW), who already provides the majority of the screens that you glide your fingers on when utilizing touch on your hybrid, tablet, smartphone, or any other form of mobile device. With hybrids and convertibles picking up steam and attracting other players like Google, we may be seeing more hybrids in the future, with Corning ironically contributing its "Gorilla Glass" to touchscreen devices that Steve Jobs thought would never work because of the "Gorilla Arm Syndrome". Who knows, even the almighty Apple may end up being fashionably late to the party.
In the end, it means more profits for undervalued Corning, who is currently trading at only 11 times earnings, about 10 times forward earnings, and at a price/book ratio of only 0.88. The company is also sitting on about $3 billion in cash (net of debt) and offers investors a solid dividend yield of 2.80%.
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Jharry1 owns shares of Corning and Microsoft. The Motley Fool recommends Apple, Corning, and Google. The Motley Fool owns shares of Apple, Corning, Google, Microsoft, and Qualcomm. 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!