Perhaps one of the most touted and sought-after characteristics of modern electronics is speed. The power of new smartphones, tablets, and computer processors continues to be both a major selling point and the focal point of critical reviews. To that end, Samsung (OTC:SSNLF) announced last month that it has developed new Wi-Fi technology capable of delivering jaw-dropping data transfer speeds.
According to a post on the company's official global blog, Samsung has successfully achieved Wi-Fi "data transmission speeds of up to 4.6Gbps, or 575MB per second, a five-fold increase from 866Mbps, or 108MB per second, the maximum speed possible with existing consumer electronics devices." By utilizing the currently-unlicensed 60GHz spectrum and "the world's first micro beam-forming control technology," Samsung claims to be able to dramatically boost wireless speeds over the current 2.4GHz and 5GHz standards.
Who Might Actually Need Such Speeds?
While lab experiments and controlled-environment testing have proven successful, devices utilizing the 60GHz spectrum are only capable of sustaining these faster speeds over short distances, typically no more than 15 feet. Therefore, this technology is not intended to replace existing traditional wireless internet services, but rather to create an area within a network where data transfer rates are significantly improved. This limitation essentially reduces the capability of Samsung's new Wi-Fi advancement, but it is by no means without application potential.
Most likely, Samsung's WiGig technology will be aimed more at the enterprise market, not individual consumers. The possible advantages of a 575Mb-per-second data transfer rate are more easily applied to industrial settings and medical facilities. This means that the next iteration of the Samsung Galaxy smartphone might not possess WiGig capabilities, but we can expect to start seeing other electronic devices with the capability offered to the enterprise market at some point in 2015.
The company hinted at applications involving audio and video devices, medical equipment, and home automation systems, as well as a general reference to the Internet of Things. "[Worldwide] commercialization is expected as early as next year," and Samsung aims to secure its position as a pioneer in the advancement of wireless technology.
Reading Between the Lines
What Samsung's announcement did not mention, however, is that use of the 60GHz frequency is not its own original idea. In 2011, the Wi-Fi Alliance revealed that it had been working with "WiGig" data transfers using 60GHz, and described similar use cases and possible applications. So, Samsung did not invent a new kind of Wi-Fi, but rather devised a way to implement experimental new technology in a stable, usable manner.
What's the Relevance for Investors?
Samsung's announcement might not move the needle, but the release of an actual product with WiGig capability will definitely shake things up a bit. The future of digital technology is all about speed, and if Samsung releases a line of devices capable of transferring 1Gb of data in less than three seconds, people are going to be excited. There is no doubt about the fruition of WiGig technology, especially considering Samsung's impressive $14 billion R&D budget, and the company's need to stem deteriorating sales figures.
On the fundamental side, Samsung has a market capitalization of over $167 billion, price-to-sales ratio of 0.79, price-to-earnings ratio of 6.1, and profit margin of 12.89%. Paired with a few simple technical indicators like standard deviation of 2.03, mean deviation of 0.8, and variance of 4.11, Samsung is a strong buy across the board for long-term investors.
The company's year-over-year change in revenue and earnings is better than the average of its competitors. Additionally, ROI -- both current and over the past five years -- indicates that its relatively high operating returns are sustainable, despite the estimated 60% decline in operating income and 20% decline in sales for the third quarter, compared to the same quarter a year ago.
Share prices will not remain at the current lows for very long, as the Korean electronics developer has undoubtedly pulled out all stops with respect to R&D and WiGig innovation. That being said, consider Samsung's currently-depressed share price an ideal long-term buying opportunity.
Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.