Tech stock investors only lag teenagers when it comes to chasing the latest, greatest trend. Remember the Y2K stocks? How about the linux stocks?
Unless you have been under a rock for the past week, you know that the Apple (AAPL) iPad is the hottest thing out there. Pundits have swooned over the device, and buyers queued up for hours last weekend at Apple stores to get their hands on the first release.
I have no idea whether it will be the transformative product so many claim, or the next Segway. Remember that one? It was supposed to change our lives too.
But since the iPad has captured the hearts and minds of so many, I thought I’d look into some iPad-related investments. In largecaps, Clearwire (Nasdaq:CLWR) is touting its 4G mobile hotspots as a better way to get the iPad onto the ‘net.
Glu Mobile (Nasdaq:GLUU)
Hat tip to Asif Suria on this one. His two-part series on Glu Mobile and the Apple App Store (part 2 here) shows why microcap mobile game developer Glu Mobile has a lot of upside. Glu has 38 games in the App Store, including 17 paid. Although it has stumbled in the execution department, Glu trades at a low enterprise value to sales ratio of 0.45. For now the iPad is only a small part of the story. However, the platform seems well suited for casual gaming. As it gains traction, casual gaming companies like Glu Mobile should benefit.
Artificial Life (OTCPK:ALIF)
Most people are well aware of the iPad’s potential as a media player, ebook reader, and gaming device. Artificial Life, like Glu Mobile, develops games for that market (as well as the iPhone and other mobiles). For example, Artificial Life is developing a game for the hit band Linkin’ Park.
I’m more interested in ALIF’s non-gaming business, which may be even more successful with the iPad. Just under half of Artificial Life’s revenues come from non-game mobile products, including Mobil Diab, a mobile healthcare application for business; MobileBooster, a productivity tool that has now become an integrated part of the newly released m-commerce platform, OPUS-M; and Mobile Property, a mobile application for the real estate industry.
Few commentators seem to appreciate iPad’s potential as a business platform for niche mobile applications, but remember Apple has done it once before. The Newton, which was a total flop with consumers, actually enjoyed a moderate level of success with doctors. The technology today is incomparably better. Look for high-priced applications to emerge in the medical, legal, sales [CRM], and related verticals. Artificial Life seems well-positioned to claim a slice of this market.
This play is a little different. TheStreet.com does not, as far as I know, even promote an iPad product. However, the iPad just might create a sea change in consumer willingness to pay for electronic content. The obvious beneficiaries would be floundering print media companies that would gain an online outlet. However, companies like TheStreet.com that already sell their content electronically, and have for years, could gain a whole new class of customers. The print media players will unwittingly help them along by mispricing their own products. Consumers may once have winced at the $99 subscription price for RealMoney, TheStreet.com’s flagship paid offering (I know that is not the published rate but I have a zillion spam emails from Jim Cramer showing that is the actual price these days). Yet when you compare that with paying $5 per week for the iPad edition of Time Magazine, RealMoney seems downright reasonable. So iPad edition or no iPad edition, TSCM benefits when consumers become accustomed to paying for online content.
DISCLOSURE: Long GLUU. No position in ALIF.OB or TSCM. Currently a paid subscriber to RealMoney, published by TSCM.