3 Ways to Profit From the Mobile Computing Wave
byNov 16th 2011 12:20PM
It's official. Step aside old-fangled computers -- mobile computing has taken over.
The switch was officially flipped in the fourth quarter of 2010. That's when smartphone and tablet computer shipments surpassed those of desktops and laptops. One hundred and one million mobile devices lit the airwaves -- an astounding 87% more than the previous quarter -- versus 92 million personal computers shipped.
The shift was inevitable: Computer shipments had been growing much more slowly. However, the surprise was that mobile became the king of the hill two years ahead of Morgan Stanley's prediction.
Pushing Aside the Desktop
It doesn't look like mobile computing will be giving up the high ground any time soon. Smartphones and tablets have become our go-to devices.
Luke Wroblewski, digital product designer and author of Mobile First, recently spoke at Motley Fool headquarters about how computer usage patterns are changing. More people are grabbing their mobile devices more often for information, even when their laptop or desktop is sitting nearby.
Although this shift has been taking root for a while, it's not too late for investors to get a stake in the mobile computing trend. Here are three ways to do just that.
1. Follow the Leader
The world is becoming more connected, not less. Smartphones and tablets are the easiest ways for people to stay in constant contact with anything they want: friends, family, their favorite sports team, the next deal on a great pair of shoes, etc.
Apple (AAPL) -- with its simple, elegant mobile devices -- is in the perfect position to be a sales leader going forward. People can't get enough of the iPhone and iPad. According to Apple's year-end results, the company sold 72.3 million iPhones and 32.2 million iPads in fiscal year 2011.
Demand for Apple's and others' devices will remain strong over the next decade, too. Sure, there's plenty of competition for smartphones, but the iPhone does what people want, and it does it well. And the iPad shows all the same signs of becoming the market's monster to beat.
2. Go Upstreaming
Today, global mobile traffic is pretty evenly split between Web browsing and watching videos. Cisco (CSCO) predicts that's going to change drastically by 2015 as video traffic explodes over the next five years. Cisco expects video to be 66% of global mobile traffic to be video, versus 22% for browsing.
Today, Netflix (NFLX) is typically the first company that comes to mind when someone says the word "streaming." Originally a video reseller, Netflix figured out a way to make little red envelopes flow efficiently through the postal service, bringing DVDs to homes everywhere. The company wants to do the same thing with streaming, pushing movies bits through the Internet tubes -- and people will use their phones and tablets to watch.
The battle won't be easy. Streaming video has lower barriers to entry than shipping DVDs. And there's always a risk that the fees for mobile data usage that carriers charge could go through the roof if demand for video clogs their networks. But Netflix is best-positioned to take advantage of the gotta-have-my-video trend.
3. Shop the Future
When a consumer purchases a $300,000 diamond engagement ring using Blue Nile's (NILE) mobile app (yup, this seriously did happen), you know that people have become comfortable trading their real-world wobbly shopping carts for a swifter and smoother virtual one. That's what Amazon.com (AMZN) is banking on as it introduces the Kindle Fire, the company's tablet computer, to the masses.
We know digital books will continue to fly off the virtual shelves. The Kindle has proven that. But Amazon.com customers are getting more comfortable placing other orders on their mobile devices, too -- more than $1 billion worth of orders. That's a lot of purchases and no time wasted in the checkout line.
The number of desktops and laptops being used today still exceeds the number of mobile devices in use, but that's going to change at some point, too. The mobile wave continues to build. Investors can get on board with device sellers like Apple, content producers like Netflix, or retailers like Amazon.com. In his presentation at The Motley Fool, Luke said, "There's a growth curve, and someone will ride it." Let's make sure we're one of those riders.
David Meier is an associate advisor for Motley Fool's Million Dollar Portfolio. He owns shares of Apple and you can follow him on Twitter here. The Motley Fool owns shares of Cisco Systems and Apple. The Fool owns shares of and has created a bull call spread position on Cisco Systems. Motley Fool newsletter services have recommended buying shares of Blue Nile, Amazon.com, Netflix, Cisco Systems, and Apple. Motley Fool newsletter services have recommended creating a bull call spread position in Apple.