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In his recent bearish article, Tim Plaehn summarizes channels of revenue for Corning (GLW) (underlines added):

Display Technologies: Produces screen glass for LCD applications, primarily flat screen televisions but also computer monitors and laptop computer screens. Accounted for 40 percent of 2011 revenue.

Telecommunications Segment: Produces fiber optic cable, cable connection hardware, fiber optic network interface devices and test equipment. Produced 26 percent of revenue.

Environmental Technologies: Produces ceramic filters used in vehicle catalytic converters and diesel particulate filters new required on new diesel truck engines. Segment brought in 12.5 percent of revenue.

Specialty Materials: The best known product is Gorilla Glass used on smart phones and tablet computers. Corning just launched Gorilla Glass 2. The division also produces advanced optical products such as laser optics and ophthalmic products. Produced 13.5 percent of revenue.

Life Sciences Division: Produces optical bio-sensors used in pharmaceutical research. Accounted for 7.5 percent of 2011 revenue.

Meanwhile, Google (GOOG) has announced that Project Glass may be nearing public availability. Corning business that will be affected in the marginally distant future:

  • Display Technologies: computer and TV screens
  • Specialty Materials: smart phones and tablets

Check out this futuristic video from Corning about glass which summarizes the bull case by Kevin Quon, who is long Corning. Then compare it to this video from Glass. Basically, a lot of the uses of Corning's buried-surface, touch-controlled screens are delivered more expediently by Google's portable-visual, voice-directed interface.

In both videos we see multimedia, interpersonal communication, and personal assistant functions cleverly woven into daily routines. The difference is Google does them through one interface that moves with you, whereas Corning does them through objects that are installed everywhere.

Certainly there can be room for both in the future. But Google's version appears far more cost-effective and immediate. And Project Glass will replace some uses of computers, televisions, smart phones, and tablets. So half of Corning's current revenue streams face some redirection of market share to Google Glass. Corning still can change the world, but for now it looks something like a value trap.

iRobot's (IRBT) Ava may début to similar redundancy. The highly-customizable, extremely agile, vaguely humanoid service robot features a central tablet screen. Much talk of immediate implementation involves medical robots and retail sales robots. In some cases, when the user is unable to operate Glass, or requires additional physical interaction, Ava will remain necessary. An example of this is administration of medication to a bed-rest patient. But for the example of a specialized sales representative appearing in a store aisle via streaming video chat, Glass appears to render Ava somewhat redundant.

In the big picture, Glass is bullish for Ava. The two are compliments more than substitutes. Like Apple (AAPL) and Google, iRobot and Google could become competitors in some categories, but overall profit alongside each other while creating value in a secular category. Corning could participate meaningfully too: but Corning should feature Glass, Apple's Siri (NUAN), and iRobot in its futuristic videos, and in its planning. iRobot is a "buy" at 17 P/E and an accelerative industry inflection point. Corning is a "watch with interest", at 7 P/E and persistent short-term pessimism.

Source: Google Glass Casts Grey Shades Across Corning And IRobot