On the long side I like finding long tail secular growth stories. As an added bonus generally the Fed is blowing bubbles of one form or another, so these secular growth stories not only have their inherent positive attributes, but easy money is sloshing throughout the globe to supersize the returns on investments. Until a brick wall is hit someday down the road. But as Chuck Prince told us, we have to keep dancing until we hit the iceberg. Back in 99 the secular growth story was Internet 1.0. Now we are in Internet 2.0 - Mobile. Ironically some of the same names I used to play back in 99 are back in vogue the past few years, but of course most from 1999 died (or were absorbed) once the bubble burst. I am sure some of the names now going up 10-15% a month will be dead by 2020, but in the long run we're all dead.
So as the the smartphone/social media/must stay connected every second of our life transition plays out, a very important milestone just occurred. In the last quarter of 2010, more smartphones were sold then PCs. While true that people upgrade their phones more often than their computers, it is still historic, especially as we move to a world where I envision most of our banking, shopping, and social experiences go mobile.
- For the first time ever, smart phones such as Apple Inc.'s iPhone are outselling personal computers, according to a report by research group IDC that was released Monday. Worldwide, consumer electronics makers shipped 100.9 million smart phones in the last three months of 2010, an 87 percent jump from a year earlier. PC shipments were weaker than expected, edging up just 3 percent to 92.1 million.
- The two trends aren't necessarily related, said IDC analyst Ramon Llamas. Smart phones and PCs serve different purposes, and consumers generally need both. PCs remain important for writing papers, editing photos and creating other kinds of content. PC sales are, however, have been hurt by competition from tablet computers -- namely Apple's iPad.
- Meanwhile, smart phones are getting a boost from falling prices. It's not uncommon to find brand-new models on sale for $100, a price Llamas says consumers are willing to pay. Some retailers, such as Amazon.com Inc., are willing to offer smart phones at steep discounts, sometimes for as little as a penny.
- Smart phone sales are also getting a push from growing interest in Google Inc.'s Android software, which powers dozens of phones made by HTC Corp., Samsung Electronics Co. Ltd., Motorola Mobility Holdings Inc. and others. Android continues to gain by leaps and bounds, helping to drive the smart phone market, Llamas said.
- People also tend to replace their phones much more often than they do their computers. Consumers might wait three to five years to replace computers, some of which are protected under warranties that last several years. Meanwhile, cell phone subscribers often have the option of upgrading to a newer phone well before their two-year service contracts are up.