iPad Mini, Nexus 7 or Medical Tricorder?
Erick is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
As a physician, part of my uniform includes a handy dandy white lab coat. The pockets of the lab coat are roughly 7.5 by 8.5 inches and they are used to carry small reference books (accessory brains) and other tools of the trade. I recently saw a colleague with a Nexus 7 Android Google (NASDAQ: GOOG) tablet which was very slick, and we were discussing the various ways it could be used in clinical practice. I believe that these new 7" tablets represent a new opening of investment opportunities in the companies that make them and provide services for them.
Being an Apple (NASDAQ: AAPL) guy, the lightbulb went off in the noggin as I saw the chance to replace the clutter of my lab coat pocket with a spankin' new iPad mini. As I get up very early most days, I went online to the Apple store the day they came out using my now antiquated iPad 1 and ordered myself a Verizon LTE model. I wanted to have access to an internet connection most anywhere in my hospital which is notorious for having dead zones, especially when using my iPhone 4S which is served by good ol' AT&T (NYSE: T).
Verizon and AT&T are in fierce competition to control the cell phone provider market, but their networks are straining at the seams with all of these new mobile devices hungry for data. The data requirements in these devices will continue to fuel cash flow for years to come for these two companies and other cell data providers, and infrastructure in cell phone data companies. Most of the companies will move from unlimited plans to by the gigabyte plans and as such profits should increase. Their dividends remain juicy as well.
The iPad Mini arrived 2 weeks later and has been a real boon to my practice. I have transferred my old standby apps from my phone and added a whole bunch of reference book apps and patient education materials. In addition, I can now easily navigate the hospital computer system which uses a Citrix (NASDAQ: CTXS) system to access a virtual PC in order to access medical records and imaging studies.
Citrix systems is a good play into the cloud computing revolution as a bridge to legacy systems preferred by enterprise customers. Google, though, aims to supplant everything that Citrix does by providing all of these services via the web. Maybe one day Google will offer electronic medical records and imaging available anywhere securely (not there yet, sigh).
The screen in my phone was too small to easily pull the information I wanted and my old iPad 1 was too unwieldy to carry around all day, but I have found the iPad Mini to be perfect for the medical tasks at hand. These include everything from documenting wounds and physical exam findings, to researching antibiotic treatments, finding old medical records or pulling up a CT scan image while in the middle of a crowded restaurant in order to answer a query from an emergency room physician. It is light and speedy, and despite not having a retina display, the screen is not half bad. Being over 40 I can't really tell the difference without putting on cheater glasses.
I can see the future of medicine, just like Bones McCoy from Star Trek had his medical tricorder, I can now extend my capabilities with my iPad Mini in ways which were scarcely imaginable a decade ago.The advantage Apple has in this space should not be underestimated because of its rich ecosystem and its ability to magically open new markets. The price point for the iPad Mini did not deter me from getting one, and I think the main determinant as to which tablet you get is mostly which smartphone you own and how much investment you have in the apps already installed in your devices.
Apple and Google are both trying to figure out how to best monetize this space and so far each has been successful in its own way. Apple selling the devices and content, while Google sells the ad banners and search results. In my opinion both these companies will be great investments in the long term, and at their current valuations: Apple with a PE of 13 or so and Google with a PE of 21 or so they are very attractive at these levels for people holding for a long time horizon.
The high end of the market is being dominated by Apple, while the midrange is being targeted by Google and Amazon (NASDAQ: AMZN) with its Kindle Fire HD. As people get multiple devices for home and work, the real loyalty will be to the installed stable of apps and in that category Apple is still King. Amazon, though, is an outstanding retailer and I buy textbooks through them and some of their medical books are available through the Kindle app that's installed in my iDevices. Amazon is a great company, but as an investment it is very risky given its current valuation that remains in the stratosphere.
Black Friday ads have been featuring tablets of all flavors, and the deep discount deals are in 7 inch Android tablets selling below $100. As in the past, the clone makers will grab the low end of the market and subsist on razor thin margins, or in the case of Amazon on negative margins in order to sell content and ads through its own ecosystem.
In the end, Apple's margins will drift down as it moves its price points down with old models creeping down into the sub $250 range and new models with sharper screens, faster processors and new features staying in the $300 and above range. The continuing advantage for Apple will be the user interface and the installed universe of apps which makes switching to another platform painful. The competition will be fierce going ahead, but the players are ready to take on each other and my prediction is that the tablet market will ultimately surpass the smartphone market as new uses are found for tablets. As they say in Star Trek: "To boldy go where no one has gone before".
Fool blogger Erick M. Santos, M.D., Ph.D. (xerohype) owns shares of AAPL, GOOG and AMZN. The Motley Fool owns shares of Apple, Amazon.com, and Google. Motley Fool newsletter services recommend Apple, Amazon.com, Google, and AT&T.; 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!