Apple (AAPL) has been the pioneer in communications technology in the last five years. The company impressed with its innovative take on cellphones when it unveiled the iPhone. Only a couple of years later, late Steve Jobs was back on center stage with the iPad. The iPad revolutionized computing in the last couple of years by bringing it to handheld devices. Google (GOOG), with its Android, was a late comer, but showed tremendous growth and is now the leader in handheld devices.
Microsoft (MSFT) is all set to launch its Windows 8-powered Surface tablet later this month. On the other hand, the Kindle upgrade by Amazon (AMZN) last month was a big development in the technology industry. Overall, the tablet industry is developing rapidly, making it hard for investors to catch up with the latest tablet technologies. We will review the available tablets in the market and analyze the competition that MSFT tablets (both Surface and hybrids by OEMS such as Dell (DELL) and HP (HPQ)) present to existing players.
Manufacturer | Flagship Product | Specification | Price | Availability |
Apple | New iPad | 9.5x7.3 inches Storage: 16-64 GB Dual Core A5X | Starting at $500 | Available |
HP | ElitePad | 9.2 inches x5.9 inches Dual Core 1.8 2GB Ram Storage: 64 GB extendable | N/A | January 2013 |
Microsoft | Surface Pro | 10.6 inches Core i5 Storage: 64-128 GB extendable | $700+ | 2013 |
Nexus 7 | 7 inch 16 GB Quad Core 1.2 GHZ | $249 | Available | |
Dell | Latitude 10 | 10.1 inch Intel Clover Trail Atom Storage: 128 GB | N/A | October 2012 |
Amazon | Kindle HD | 8.9 inch Dual Core 1.5 GHZ Storage: 64 GB | $599 | Available |
The table above compares the flagship tablets of different companies with each other. Nexus and Kindle are Android-based tablets, and already enjoy a huge applications base. The iPad enjoys customer loyalty of Apple fans, and also a large application base. The real surprise packages in this list are the upcoming Windows 8 tablets. When it comes to price, they are more comparable with the Nexus and Kindle, while giving users a Windows experience. The Windows 8 will be launched later this month and investors should expect more than a billion users to be interested in a Windows operating system designed specifically for the touch interface. According to a recent interview by a senior Microsoft executive, the company is expecting to sell 400 million Windows 8 units by July 2013. The figure seems optimistic right now, but if the Windows 8 tablets and phablets catch on with consumers, the sky is the limit.
Either way, companies such as HPQ, MSFT and DELL should see a good pre-launch run on expectations from Windows 8, which can be a good investment opportunity for investors looking to make short-term profits. Consumers were holding back from PC purchases in anticipation of Windows 8. The PC sales as well as the sales of Windows 8-based tablets will pick up after the launch. The forward P/Es of all three stocks are well below NASDAQ's average and we believe the market expects them to bounce back with Windows 8. This will be the primary reason for a pre-launch surge in valuations. MFST is trading at forward P/E of 8.8x, HPQ 4x and DELL at 5x.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
