Mortal Kombat: Apple, Amazon Finish Tablet Competition
AppleInsider is reporting via the DigiTimes that traditional hardware companies, like Dell (NASDAQ: DELL), Hewlett-Packard (NYSE: HPQ), Acer, Asus and others are leaving the tablet market next year, and letting Apple, Amazon, and to a lesser extent Barnes & Noble (NYSE: BKS) win the battle for the market.
According to a source that spoke to the DigiTimes, the major reason is the inability to provide content like the other three companies. As they say, content is king.
This could be a negative for Microsoft (NASDAQ: MSFT), whose Windows 8 operating system is going to run on tablets, as well as PCs. It also goes to show that the iPad, the Kindle Fire, and the Nook have gotten so much customer traction in recent years, as consumers took to the first adapter, (iPad), then did not take to anything from Dell, HP, and the others.
Barnes & Noble was able to stick with consumers because of the company's ability to sell books as well as the hardware, and Amazon has undercut everyone on price.
Apple has been able to successfully create the tablet market with its iPad, and has done so well, the iPad 3 is expected out early next year. The Wall Street Journal reported earlier this year that the Cupertino-based company was ramping up production for the iPad 3 in early next year. Boy Genius also has a report about the iPad 3 display shipping in heavy volumes.
The Kindle Fire launched earlier this week, and some thought it might end the dominance of the iPad. It has to some extent, as consumers look to a cheaper alternative for the iPad, but there are several trade offs that place the iPad squarely above the Kindle Fire in terms of performance and consumer happiness.
There has been some concern whether Apple has "lost its way" but it does not appear that way with the consumer, rather Wall Street.
Reports like this make it more and more likely that Apple has done the unthinkable and captured a market that did not really exist just a few years ago, and shut everyone out of it due to a superior product.
Just don't tell Jeff Bezos that.
Traders who believe that Amazon and Apple will win the tablet war might want to consider the following trades:
- Consider suppliers, such as NVidia (NASDAQ: NVDA), Qualcomm (NASDAQ: QCOM), Broadcom (NASDAQ: BRCM) and Corning (NYSE: GLW), which make parts for both companies products.
- Also consider Apple, Amazon and Barnes & Noble as well, as revenues during the holiday shopping season should continue to move higher over time.
Traders who believe that PC makers will not concede the market that easily may consider alternate positions:
- HP did really well with its tablet when the price was slashed to $99. If HP can make a tablet around this price and sell additional products and services to make up for being a loss leader, HP shares could benefit.
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