And I also see many developing business and science uses of the iPad:
- Doctors are using it to access and manage patient data.
- iPads will now be used by American Airlines in the cockpit of their planes.
- Orangatangs and other apes in zoos can now videochat with each other. And they aren't the only ones - dolphins are using iPads too.
But then I see a report like the one released today claiming that 73% of small to medium sized businesses are planning on buying tablets in 2012. I can't help but wonder if companies are beginning to use iPads in their businesses because they think they are supposed to use them in order to stay up to date with the times. Especially in these times of rapid technological advances, companies must strive to stay on the cutting edge. But can it be over done?
The first two examples I listed strike me as brilliant. They save time, paperwork, effort, clutter, and generally make the lives of doctors, nurses, patients, and pilots much easier. I get a bit warier when it comes to animals in zoos video chatting or otherwise communicating - surely, given the size of a dolpin's beak, there are better ways to communicate than with a relatively small touch screen? And many of the creative examples for small businesses that you see on the internet are, it seems, primarily to cash in the novelty/gimmick factor.
So when I see that 73% of small/medium sized businesses I'm concerned. There are many good ideas and many more bad ideas. Have 73% of companies really found good the good ones?
Of course, in writing this I risk following in the footsteps of Ken Olsen who, in 1977, said that "[t]here is no reason for any individual to have a computer in his home." It's easy to look at the status quo and think that the new gizmos are a passing fad. It is also easy to see an exciting new development and run too far with it.
The real question, however, is how this affects us, as investors. For now, in the short term this is a boon for AAPL - companies using iPads will boost sales and continue to raise awareness, thus boosting sales even more, convincing more companies to use iPads, and the cycle continues. However, in the long run, it will create false expectations of growth that may boost share price and ultimately lead to speculative investments that do not pay off.
Knowing this, what can we do about it? Realistically consider the different uses for iPads - don't just blindly celebrate each one. Using them in the cockpits of American Airlines flights is a fundamental change, one that has taken months of wading through regulations and FAA testing to be approved, thus creating what will be a long lasting use for the iPad. Having iPads at each table for customers to order from instead of waiters? It's nice for the gimmick value, won't be around for long. So long as users risk overusing a device, we need to be careful of overly high growth expectations.
In closing, what's my final advice? If you are long, stay long. If you are short, stay short. But if there is a sudden change in growth expectations, it will happen fast and the warnings will be subtle. Regardless of your stance, be prepared.
Personally, I hold a long position, but am keeping my finger near the sell button.
Disclosure: I am long AAPL.