The Platform Thesis and the Mobile Market, Part 2

Oct. 01, 2010 6:07 AM ETBB, NOK, AAPL, GOOG, MSFT29 Comments
Tulip Farmer profile picture
Tulip Farmer
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In this posting I want to ruminate on trading the mobile handset market opportunity I talked about in part one. History gives us confidence that the platform pattern will repeat in the mobile handset market. Finding a trading strategy that will win however is a less certain endeavor.

Long Opportunities

If you believe the thesis that there's going to be one big winner, a few also-rans, and a bunch of fatalities it initially seems straightforward - buy the winner. But who will be the winner? If developer mindshare determines the winner, Android and iOS seem to be fairly close. Then there's the problem that Apple (AAPL) has many product lines, so taking a position in Apple means also betting on their future in notebooks, tablets, music, TV, etc. Android could hurt the iPhone longer term. With Android being an open source operating system, Google (GOOG) isn't going to make money directly on Android, even if they benefit indirectly from more advertising targets. The market for Android hardware has multiple players, and hardware is famous for its rapid commoditization and thinner margins. HTC is only traded on the Taiwanese exchange, and Motorola's (MOT) record in the handset market is spotty. The best I've been able to do is go long on all these companies, although I'm still searching for broker that will let me trade HTC on the Taiwanese exchange.

If you have ideas please post in the comments.

Short Opportunities

With Palm already acquired after a dramatic drop in its stock price the remaining players that are not already on Android are RIM (RIMM) and Nokia (NOK). I began shorting RIM about 6 months ago when the Palm collapse made it clear that Platform economics where well underway. RIM is an attractive short precisely because the company is still doing

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Tulip Farmer profile picture
16 Followers
I'm an individual investor with a day job working in R&D at a web based enterprise software vendor. My job involves interacting with customers in corporate IT and the web and mobile development community and translating their needs into product plans. Functionally I cover both product management and software development. Prior to my current position, I've held product management and software development positions at companies like Intel, Compaq, American Express and Intuit. I have a bachelors in Engineering from Stanford University and an MBA from Chicago.

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