2 Big Mobile Device Winners To Buy Now And Ride Higher
Maxwell is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Apple (NASDAQ: AAPL) has long been the standard for industry innovation. The company has been so in-step with market trends that some might wonder whether the iPad was the answer to consumer trends or the catalyst that steered the market toward tablets. In either case, it is poised to capitalize on this growth.
Even so, other companies also have a good track record of innovation and strategic implementation of products. One such company, Samsung, has recently been doing some great things in the mobile technology world. I predict we will continue to see positive performance from this company, along with those companies that supply and align with it, such as Qualcomm and Nvidia.
Samsung’s (NASDAQOTH: SSNLF) powerful smartphone sales from its Galaxy line have prevented even great companies like Nokia (NYSE: NOK) from being a dominant player. However, Nokia appears to be ahead of Apple in China, especially in terms of its relationship with China Mobile. The company's agreement to offer Nokia's Lumia 920T was good for both companies, and Apple is looking for a similar deal. China Mobile's decision to subsidize the Lumia 920T with a two-year contract was also good for both China Mobile and Nokia. Customers are now paying close to $0.16, compared to nearly $740 for a new unlocked Lumia 920T.
Apple and Samsung make up almost 50% of all smartphone units shipped. The interesting thing, however, is that Apple has reached this level with only one product: it’s iPhone – the most popular phone by units sold in the world. Samsung, on the other hand, has rolled out entire product lines which are just as trendy as the iPhone, and each tailored to a particular market niche. It made Samsung the world's largest tech company by revenue last year.
Samsung's Galaxy devices have become synonymous with Android, to the point that the manufacturer has more brand recognition than any other phone or tablet running Google's operating system. A lot of that has to do with Samsung's massive marketing budget and smart implementation of ads and roll outs.
Samsung is also following the tablet trend. For instance, the Galaxy Note, a smartphone-tablet hybrid with a giant screen, seems to combine what Apple does best with Samsung improvements and price point. Upon roll out, Samsung sold at least 10 million Galaxy Notes. That wasn’t enough for the company, as it came out with an updated version with an even larger screen called the Galaxy Note II a few months later and sold another 5 million.
This speaks to a fundamental difference between Samsung and Apple: Samsung seems to listen to consumers and give them what they want, even if it means a new device roll out. Samsung's product planning team takes user and reviewer feedback into account when preparing to deliver new software and device updates. What is more, they do not make users wait a year for new features like its competitor.
Apple is still the largest customer for Samsung's component divisions, which make display screens and chips. It is a strange competitor-cooperation relationship that doesn’t give Apple leverage over Samsung.
In comparison, Apple's stock has not been trending well for the past few months. This week, Apple stock took another small hit from reports of the Foxconn hiring freeze. Investors are looking on with expectation, and consumers with anticipation. The once market darling has only two options: roll out a new product, or improve the iPhone to be less expensive and a bit more like… well, Samsung’s Galaxy.
Offering an iPhone for less than its current price (around $300) could increase Apple’s addressable market by 40% or more, giving it easier access to emerging markets such as China and India. These are two emerging markets and two hot spots for mobile phone growth. However, there is a fine line between attracting more revenue and damaging its image. Part of Apple’s appeal is that is the higher end phone choice – the price point being a positive differentiation.
A further comparison
Samsung has built upon the foundation Apple laid. It is taking advantage of its mobile devices' processing power to layer premium features on top of Android, such as the ability to run two apps at once in a split screen or separate window. Samsung's best tablet, the Galaxy Note 10.1, can do all that plus take advantage of a stylus so you can draw and take notes on the screen.
Even more impressive is how nimble Samsung has become at improving its mobile devices through software updates. The Note 10.1 launched last fall, but it received a software update with a new version of Android and a slew of other features like the voice assistant Google Now.
Apple does not appear to be as versatile at adding new software features to its devices. Apple usually makes users wait a year or more for a new version of iOS, and even then some older devices can't access all the latest and greatest features.
Also key to Samsung’s growth is the interchangeability and adaptability of its products. Because it was open to multiple operating systems, it was able to wait and see which one would take hold and funnel more resources behind that. A smart move to pull ahead of Apple would be to capitalize on its differentiation. Continuing its already popular ad campaign, it could benefit from being the ‘Apple Alternative.’
The mobile phone industry has been characterized by fast-moving and quickly-changing product cycles. In other words, timing is everything. Companies must roll out updates, new products, etc, in order to maintain public interest, and missing an opportunity or staying ‘out’ too long can result in a slide. Both companies have the ability to do this – Samsung with its phone variations and Apple with its host of other products.
Samsung has strong financials and is currently up 3%. Apple is currently around $448, down about 2.4 percent. It has also has a 52 week range from $435-705. At this price, I see this as a good time to buy. I also predict continued growth for both companies as they continue to do what they do best – make outstanding smartphones.
StockCroc1 has no position in any stocks mentioned. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple. 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!