Winners And Losers In The Death Of The PC

by: Shareholders Unite

Here is a thought. Soon (within weeks), you will be able to buy a product that has:

  • Instant On
  • Can function roughly 16 hours on a single battery charge
  • Is light and portable
  • Has a magnificent full HD (1920x1080) super IPS screen
  • Build in 3G and 4G
  • Functions as a entertainment tablet as well as PC substitute
  • Costs a mere $500-600

Yes, this rather insane proposition actually has a name, the Asus Transformer Infinity. Earlier versions (without the full HD screen) were already a roving success. For those of you not familiar with this product line, it's an Android tablet computer which clicks into a keyboard with a second battery (and more connections). And of course, Apple has something similar, of which an improved version is coming out any time soon now.

The specifications of iPads and Transformers seem terrific. Take that full HD super IPS screen from the Transformer. Previously, in the laptop space, the only company coming anywhere near to this was the Sony (NYSE:SNE) Z series, with a 13 inch screen with full HD as an option (Sony also had a little netbook with an 8 inch screen figuring 1600x900 pictures, wonderful stuff).

Apple is likely to top even that, with the iPad3 rumored to have a 2080x1540 resolution 10 inch screen. That's quite something else from your average netbook 1024x600 grainy dim TN panels (and terribly slow processors to boot).

Apart from the clear advantages in terms of the screen, the low cost, long battery life, instant on and dual purpose, are there any limitations? Is there anything that one can do on a PC that one cannot do on a tablet? We fear that for your average consumer, this isn't likely the case. And even for business, the advantage in terms of software able to run on PC is rapidly diminishing.

The main limitation is perhaps their size, but one could plug in a better keyboard and bigger monitor, no doubt. This means that tablet sales could soon be seriously alter the computer landscape, insofar as they're not already doing that (who in his right mind would buy a netbook now?)

Who are the likely winners of these developments?

Well, those chipmakers that power the tablets. Most of them are based on designs from British ARM Holdings (NASDAQ:ARMH). The design of which has been licensed to a host of companies, who also develop chips, like Nvidia with their Tegra chip, Qualcomm (NASDAQ:QCOM) with their Snapdragon Chip, Texas Instruments (NYSE:TI) with their OMAP product line, Samsung (OTC:SSNLF) with their Hummingbird, and Apple (NASDAQ:AAPL) with their A4 and A5 chips (and perhaps a sequel in the iPad3, who knows..).

While all the rave is now about Nvidia's (NASDAQ:NVDA) quad-core Tegra3 chip (the one powering the Asus Transformer), but keep an eye on Qualcomms upcoming Snapdragon4 chip (which promises to be "insanely fast"), and, more surprising, Chinese company Huawei might have come up with a terrific chip:

Huawei hasn't used Nvidia's Tegra 3 processor like the rest but has instead developed its own chip that apparently outclasses all others when it comes to graphics. Where Tegra 3 has quad-core graphics, the 1.5GHz K3V2 has 16 cores.

The losers?

Well, in the first place, Intel (NASDAQ:INTC), although they're trying to make a come-back with the Atom chips. Whether these will be able to match the top of the ARM based chips remains very much to be seen though, and the main point is that this shift away from PC's (where they dominate) to tablets (where they don't count, at least not yet) can't be good for Intel.

Microsoft (NASDAQ:MSFT) is also likely to lose out to Android and Apple, although not everybody is convinced of that. They could make something of a comeback with the upcoming Windows 8 operating system, optimized for tablets and a version of which runs on the ARM architecture. Some argue it's too little, too late though.

For almost three decades, the Wintel duopoly ruled supreme. That's no longer guaranteed.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.