Whenever a new Apple (NASDAQ:AAPL) product is launched, people like iSuppli start looking for the components inside the device, and it's not unusual to see some key suppliers getting a positive or negative impact on their stock price due to the sales expectations generated by this leading customer alone.
Following Immersion Corporation (NASDAQ:IMMR) requires a similar approach: the company's success depends on the implementation of its haptic technology into more and more products, and is directly linked to their sales to consumers, as Immersion mostly collects a royalty per unit sold, like in the mobility segment.
Checking new products launched in the market by Immersion's partners is the best way to understand if and when additional royalties will be recorded by the company.
The exercise also requires a lot of patience, as some verticals like medical devices and automotive may require up to a few years before a product goes from being announced to actual sales in the marketplace (and Immersions receives royalties a quarter in arrear to actual shipments/sales).
Luckily, the mobile handset/tablet market is relatively fast from product development to market launch.
Tablets may represent an interesting new market for Immersion, that could positively impact this year's revenues.
Samsung (OTC:SSNLF) is already a confirmed partner of the company, and sales of its 7-inch Galaxy Tab recently reached more than 3 million units. Recently, the company officially announced the availability of two new sized devices, the 8.9 and 10.1-inch versions, which will complete its lineup of tablets. Samsung alone will represent a decent additional revenue stream for Immersion, given its sales performance so far.
LG (OTC:LGERF) is traditionally a strong partner for Immersion in the mobility sector, having incorporated the company's haptic effects into most of its smart-phone product line. We do expect haptics to be available in LG's new tablet, whose launch is expected soon.
Toshiba (OTCPK:TOSBF) represents a relatively new licensee for Immersion, that has just started incorporating the company’s haptic technology into one of its niche products, the Libretto, a dual screen ultra-mobile concept PC.
In the Q&A session of the last conference call, Immersion's CEO, Vic Viegas, hinted at the possibility of new devices coming from Toshiba:
We’ve had success with the Galaxy Tab from Samsung. Toshiba has had quite a bit of recognition and success with the Libretto line and I believe have announced a family of products around that type of technology.
To cut a long story short, we've found a couple of different sources, including Toshiba itself, that may support the speculation that Toshiba is incorporating haptics into its new tablet, which could represent an interesting additional revenue stream for Immersion and widen the popularity of haptics in the Android (NASDAQ:GOOG) community, a market that the company is also targeting with its new MOTIV Haptic Development Platform.
Here is the product description taken from androidcommunity.com (emphasis added):
Toshiba’s Adaptive Display technology ensures that you get the best visual experience, automatically adjusting the display’s brightness and color to the lighting environment–making it readable even on the sunniest parts of the patio. The tablet also features a built-in motion sensor that enables full screen rotation and includes a rotation-lock switch to set the display in position when the user chooses. In addition, the tablet includes an on-screen keyboard with Haptic feedback for more accurate typing.
Toshiba has a new web site dedicated to this new product alone. Going through its pages, haptics is conformed as a feature of the new tablet:
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While Immersion is not directly mentioned, we believe that the recent successful implementation of the company's technology into Toshiba's high end laptop range makes it very likely that the company has now decided to incorporate Immersion's haptics also into its new tablet range. This may represent a big win for Immersion. Toshiba's Libretto was a niche product, whose sales will likely bring very little in terms of royalties to Immersion. The new Toshiba's Tablet is certainly addressing a much bigger market, and may also contribute to establishing Immersion's haptics as a "must have" feature in the Android Tablet market.
Disclosure: I am long IMMR.