With Leap Motion Technology Approaching, Will Apple's Image be Challenged?

Tyler is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

The most advanced gesture-control system to ever be released is coming this February to places near you. Though ASUS isn't traded on the NYSE or NASDAQ, it will likely affect personal computing devices in a major way. Recently Apple (NASDAQ: AAPL) has been proclaimed as the innovative genius in the technology industry, but that might change in February (the expected release date of Leap Motion).

Apple's revenue increased 27% in 2012, but has recently taken steps backward with its share price. Apple's stock ended 2012 with a 26% increase, despite losing nearly 14% over the previous three months. The company posted underwhelming results with unreasonable expectations from the media. With the numerous products Apple has released recently, it has pressured companies such as Dell (NASDAQ: DELL) and Hewlett-Packard (NYSE: HPQ) to become more innovative.

Since Apple's initial release of the iPhone, its stock has soared 430%, while Dell has spiraled downward by 57%. This isn't due to just the iPhone, but it has had some relevance. iPhones were the first smart phones of their kind, contributing to more media coverage than any other technology company in business. Apple has become a power house in technology, largely in part to the media coverage that began with the iPod's and iPhones. Generally speaking, investors flocked to Apple and continue to do so. Apple has become arguably the most popular technology company in the world. This seems to have led to more business for Apple and less business with other companies. Dell's revenue has decreased almost 9% over 2012, and 7% over the past five years.  

Hewlett-Packard has faired similarly to Dell since the iPhone's release. HP's stock has fallen 65% over this period of time, but has not changed over the past year. While HP's revenues have only fallen 2% over the past five years, it has fallen over 8% in the past twelve months.

Here is the most interesting trend among these companies. HP, Dell, and Apple generate hardware revenues by selling its products. PC's, workstations, and other end user computer devices generate approximately 30% of HP's revenue, 65% of Dell's revenue, and all but approximately 5% of Apple's revenue. The strategy obviously works, and will be followed by ASUS. 

Leap Motion is expected to release in February and will set a new standard for innovation in the technology industry. Leap Motion will be selling for around $70/unit and works similar to X-Box's Kinect system, though much improved. X-Box is owned by Microsoft (NASDAQ: MSFT) which, despite its stock falling in 2012, has faired slightly better than Dell and Hewlett Packard. 

Microsoft fell just over 3% last year, but has fallen 23% over the last five years. Microsoft has not seen any serious affect from the Kinect games, however, Kinect's faults/glitches/lag make Apple's Maps look successful. Leap Motion seems to have perfected the idea that Microsoft previously released. Though Microsoft is primarily a software company, they still derive about 14% of their revenue from hardware devices.

The chart below shows how these companies have performed over the past five years. 

<img src="http://media.ycharts.com/charts/993f658835d09ef58361a681b9bf7e5a.png" />

AAPL data by YCharts

Apple has set the standard for innovativeness, but ASUS is showing they are willing to step up to the plate. Leap Motion will be compatible with both Apple and ASUS products. ASUS's bundling of Leap Motion underscores an understanding that they need to portray an image of innovation to the consumer. The statement has been made: ASUS will push forward with new innovative ideas, whereas other companies seem to have given up.

The Bottom Line...

With the technology advances that ASUS will soon be marketing, it seems as though Apple's image may be challenged. How Apple, Dell, Microsoft, and Hewlett-Packard respond may well determine their success in the future. ASUS's partnering with Leap Motion has made a statement which will separate them from the industry - at least for now. If other companies don't make changes and become more innovative, they will not have a durable competitive advantage. If Leap Motion is released in February, it will be an interesting few months within the technology industry. 

tlwofford has no position in any stocks mentioned. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple 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!

blog comments powered by Disqus