More on the trades for the coming tablet craze…
There is going to be an veritable barrage of new tablets hitting the markets this winter and into next year.
The incredible shrinking price of the recently released-dropped-then-brought-back-at-least-temporarily TouchPad from the geniuses running Hewlett-Packard HPQ +0.97% has opened a lot of eyes in the industry this summer.
See, Blackberry RIMM +0.23% , Samsung and others have been releasing tablets that lack much of what the iPad tablet from Apple AAPL +0.67% has had from the beginning (including simple usability and enjoyment) at prices that are close to or often much higher than the actual iPad — and those weren’t/aren’t selling. Which seems rather obvious when you think about it. Put yourself in the shoes of the buyer, both consumer and corporate. Do you want to take a chance spending five or six hundred bucks a pop on a tablet that might or might not be around tomorrow or would you rather just buy the iPad, with hundreds of thousands of apps from a dominant vendor?
It’s a no-brainer that you’re going to go with the iPad.
And while there have been some Android tablets from Asian vendors that you can pick up for less than the iPad, they have obviously had to sacrifice all kinds of features and accessories to get that cheap that quickly into the cycle.
But when the industry saw that Hewlett-Packard saw the exponential increase in demand that came with dropping the TouchPad to $99 a pop, they all sat back and wondered how to use the event to their advantage. Will they create tablets that they sell at a loss to get established?
Did you see the rumors/headlines that Amazon AMZN +0.32% itself is about to come out with a fully functional, newly developed Android tablet that will be priced at about half of what the iPad’s going for? Do you think they are the only company on the planet willing to sell this stuff at a loss to make it up elsewhere? At least for a few quarters?
And recall what I just mentioned up there about where we have been in the cycle, because this leads us to the second major factor that’s setting up to send this tablet industry into overdrive over the next couple quarters.
The cycle is moving past the early-adopter/high-priced/under-developed part of the cycle to the mass-adoption/quickly-dropping-prices/developed part of the cycle. All these first iterations are now out of the way and the second/third generation of these tablets built on Android and even Windows and yes, perhaps some WebOS will be much more fun and functional, have many more apps available — and the prices are going to drop, drop, drop.
Our stocks like Cypress CY +4.12% , Corning GLW +1.14% and Sandisk SNDK +4.05% are all great plays on this and I expect all will see analyst estimates go much higher for next year over the next three months. All three of these could really see some juice into year end as the tablet parade hits and as prices drop and as the masses start finding some of these tablets too cheap to pass up. Volumes will spike. iPad 3 is coming in a couple quarters too.
All three of these stocks are down big in the last month, along with the broader markets. I think these buys are as strong now as ever, and I’ll likely add a little bit to my Corning common stock position next, just to continue to build these positions up. Cypress and Sandisk are both bigger positions already, with Sandisk being one of my biggest.
Back in a bit.
