Clash of the Titans—the Raging Tablet War
Sharmistha is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
The huge success of the Kindle Fire and the Nexus 7 has goaded Apple to launch the iPad Mini. Right from the moment Amazon.com, Inc. (NASDAQ: AMZN) had launched Kindle Fire there has been talk that Apple Inc. (NASDAQ: AAPL) is also planning to launch its iPad Mini. Bloggers expect Apple will hold a major event in mid-October to show it, and then begin selling it by Nov. 1.
When Google (NASDAQ: GOOG) launched the Nexus 7 earlier this summer, it was trumpeted for its best-in-class 7in 1280 x 800 IPS LCD display. It packed all the HD ingredients and sales took off accordingly. Now Amazon has updated its Kindle Fire 7in model with an HD display which is even more advanced, better priced, and reportedly selling at even a more aggressive pace. The interesting thing about seven inch tablets is they really don’t try to be productivity tools like the 10 inch class. These truly live where the iPad was initially targeted at content consumption. There are many other manufacturers making small tablets, but these are the only models seeing significant demand.
The Kindle Fire HD and Nexus 7 have pixel displays which exceed the resolution needed for viewing standard high definition video content, and are one of their principal marketing goals.
The first generation of 7-inch tablets that launched in 2011 established an important new category with mass consumer appeal. This second generation of 7-inch tablets has resulted in impressive improvements in display quality, now rivaling the top performing and most expensive large format tablets, including the new iPad.
As Amazon and Google slug it out with worthy small-screen tablets, the next anticipated move in the space comes from Apple. And how come Apple didn’t lead the way on this one? Not only did Apple miss the chance to set the bar here, it will be third to market with a very similar product. It is rumored that the iPad mini will ship in the same size and it will be interesting to watch the war in the market. Given that Apple generally does a good job with their displays, how is it likely to compare and compete with these existing 7-inch tablets?
Currently, Google is trading at a little more than 5 times sales. Earlier this year the stock price struggled a bit, but the market seems to have remembered that the pan-technology company offers strong growth prospects at a reasonable value.
On the other hand Apple under Cook has continued to rapidly increase its revenue, retain all the senior executives, maintain its product rollout schedule, and avoid huge blunders. Apple announced a dividend of $2.65 beginning from Q2, which makes them much more attractive than their competitors. It is assumed that in October when Apple is expected to roll out a smaller version of the iPad, the other cash cow in the company’s arsenal, the stock could heads towards $800. Apple's stock is more than the overall market and has surged 74% this year.
Google is making all attempts to keep itself at a high stock level, battling with Apple for the title of highest priced stock. The market cap shows Apple's superior performance in the last five years. The average price target for Apple is $763 and that of Google’s $755. Nevertheless Google continues to be well-positioned in the search engine industry, and its smartphone and tablet offerings are prospering. Although Google has not been offering dividends on its shares until now the average and overall recommendation for the company is a strong buy. What is important to remember is that the fundamental ratios of Google and Apple are quite different from one another and, a lot of this has to be attributed to the fact that Google and Apple are at two different stages in their product development.
On the same spectrum Amazon has a 4-star rating from Morningstar. The bottom line governing the company is its top line growth and therefore the stock has always been priced at a premium .While some diehard fans of Google and Apple feel that Amazon's 'growth prospects' certainly aren't very good and stands at 8.6%, Amazon does not seems to be losing. It is relevant to mention that Amazon made $7 million in the last quarter. I truly believe that Amazon has been growing at least twice as fast as the e-commerce sector in recent years. To keep up that pace, the company is spending heavily on growth and crushing profit margins for expansion into new categories and regions. In my opinion the future performance of the stock reflects a hot investment destination.
I’d personally be happy with the products and the companies mentioned above and truly believe that technology shapes our lives, in many ways and we cannot ignore the eternal truth that it dominates our lives in every sphere.With that in mind, it's always worthwhile to be updated about the general developments and innovation in the technology sector. My firm belief is that if you invest in the leading companies that are mentioned above you will observe that they are driving the trends. Superior returns will follow because I believe the technology waves they’re riding will reach much further than the market currently believes. They are long-term players and are included in distinguished business lists. Being on the radar of business strategists, they are considered as benchmarks for other companies to follow. They are also on the radar of momentum investors, and for a good reason propelling high growth towards their earnings and making stock prices higher.
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SharmisthaB has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple, Amazon.com, and Google. Motley Fool newsletter services recommend Amazon.com, Apple, and Google. 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.If you have questions about this post or the Fool’s blog network, click here for information.