Apple vs. Google Tablet Rivalry Will Boost HTC's Growth

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Includes: AAPL, GOOG, HTCCF
by: Investment U

By Ryan Cole

The iPad (NASDAQ:AAPL) has company. After ruling the roost for a year – with basically no competition – the iPad is now facing a whole new slew of tablets. And, much like in the mobile space, its only real threat comes from Google (NASDAQ:GOOG).

If there’s one complaint that gadget lovers have about the iPad, it’s that it’s essentially a scaled-up iPhone. Not that there’s anything wrong with the iPhone – it remains the best-selling smart phone in the world, by a fairly healthy margin – but a tablet is capable of a lot more. There’s a lot of screen real estate on the iPad that’s currently going to waste.

Enter Google’s Honeycomb Android system – designed specifically for tablets.

It’s not out yet, but it soon will be. And according to those who’ve played with it at electronics shows like CES, Honeycomb boasts a much more integrative experience on a tablet. Some have said it’s the first true tablet operating system (OS).

That’s not to say Apple won’t fire back, though, as seen with the recent iPad 2 announcement.

Talking Tablets

Still, the amazing thing isn’t so much that Apple has competition – but rather, that so little of it is real competition. Microsoft (NASDAQ:MSFT) again looks like it’s missed a cycle in the smart phone race, and the lack of a solid touch-screen base for its OS means it’s playing catch-up on tablets, too.

Palm, now owned by Hewlett-Packard (NYSE:HPQ), has a great OS for tablets, but much like with the Palm Pre smart phone, it’s taking too long to get to market. The edges of the market that Palm’s OS currently holds will almost certainly be gone in six months – when HP finally launches a tablet that can make full use of that nice OS.

In other words, Palm/HP are destined for a niche corner of the market again – no more, no less. A few true tech geeks who really appreciate the little things that Palm’s OS – called WebOS – does well will buy it, but it’s unlikely to cross over into consumer land.

If you want to catch the tablet fever, you want to be riding Apple and Google. And, by extension, you should grab the companies that make tablets for Google’s Android OS.

Motorola (NYSE:MMI) is the obvious choice – and, with the Atrix smart phone and the Xoom tablet stealing the CES show, Motorola should continue to do pretty well.

But there are some other strong contenders. Samsung (OTC:SSNLF) is continuing to expand in this space – and Galaxy might be a strong tablet contender, too.

But if you want a chance to make real cash …

Trek to Taiwan for Tablet Profits

Look to HTC (OTC:HTCCF). A small Taiwanese company, HTC doesn’t have nearly the same market cap that other companies, like Apple and Google, do. However, it keeps making hit after hit – both in the smart phone space, and now, likely, in tablets.

For instance, the HTC Nexus One was generally considered the best Android phone on the market when it came out – and its successor, the HTC Desire, holds the current crown. Its tablet, the HTC Flyer, is expected this month – and is already getting rave reviews.

Yet HTC remains the smallest of the major players in both the smart phone and tablet wars – which means it has plenty of room for growth.

Even if Apple continues to dominate the tablet market, HTC will get a big chunk of the Android corner – and that should be worth a nice gain for investors.

Disclosure: Investment U expressly forbids its writers from having a financial interest in any security they recommend to our subscribers. All employees and agents of Investment U (and affiliated companies) must wait 24 hours after an initial trade recommendation is published on online - or 72 hours after a direct mail publication is sent - before acting on that recommendation.

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