3. Tablet War
Apple is losing market share, and while it’s still the single largest manufacturer of tablets, its iOS platform is no longer dominant against a slew of Android and Windows competitors. According to IDC, the company’s share of the market declined to 39.6% in the first quarter. Apple has also had to react to Google and Amazon (NASDAQ:AMZN) by releasing the iPad Mini, a smaller form factor it was historically dead set against. While the iPad Mini has been successful, it’s priced significantly lower than other iPads.
The tablet segment remains red-hot, with plenty of room for growth — IDC says world tablet sales grew 142.4% year-over year in the first quarter — but the question is whether Apple will be able to maintain tablet revenue and profit against competition … and with cheaper tablets an increasingly larger part of its product mix.
Making things more interesting, Samsung — which has been a bit of a nonstarter in the tablet market — looks to be making a serious run at it in 2013 with the Galaxy Note 8.
PC manufacturers and Microsoft also mounted an offensive in 2012 with hybrid PC/tablets and enterprise-grade tablets like the Surface Pro. This move was an attack on the iPad as well as a defensive move against the growing trend of tablets cutting into computer sales. In 2012, PC sales declined for the first time since 2001 — despite the release of Windows 8. Last year the trend of tablets replacing PCs hit a broad swath of companies focused on the PC industry, with Microsoft, Hewlett-Packard (NYSE:HPQ), Dell (NASDAQ:DELL), Intel (NASDAQ:INTC) and others who failed to react to the tablet trend in time suffering as a result.
4. LED Lighting
Home, commercial and government budgets continue to be under pressure and “green” technologies continue to be boosted. Combined with general lack of enthusiasm (and disposal issues) with compact fluorescent bulbs and the lowering price point of LED bulbs (Cree (NASDAQ:CREE) recently announced $10 LED light bulbs being sold through Home Depot (NYSE:HD)), 2013 could be the watershed year where LED lighting takes off.
A report by RnR Market Research points to a world lighting market worth $78.3 billion by 2016. With the current price point, cost and maintenance savings offered by LED bulbs, I expect commercial and consumer buyers to begin switching to LED in earnest this year.
5. Social Media
Facebook held an embarrassing 2012 IPO that put social media companies and their business models in the spotlight: How do you monetize hundreds of millions of users who have signed up for free accounts? How do you remain relevant when customers are fickle and quick to move to next big thing? There are a number of social media heavyweights that could be at the IPO stage in 2013, including Twitter (valued at $8 billion), Dropbox, Foursquare and Pinterest.
While Facebook has been profitable and is showing progress toward dealing with the fact that its users are increasingly mobile, it’s still far from the goldmine that early investors envisioned, resulting in a 29% slide from its IPO price. The slowing growth in Facebook’s user base, competition from new services and ongoing difficulty in generating profits that justify its share price — issues all social media companies face — are going to be a big part of the investment story for this area in 2013.
6. Cloud computing
It’s the reason companies like Netflix (NASDAQ:NFLX) and Pinterest can get so big, so fast, without having to raise the capital needed to build, staff and operate their own data centers. It’s the reason software-as-a-service (SAAS) has been able to take off and is looked to by tech giants like H-P, IBM (NYSE:IBM) and Dell as the future in the face of declining PC sales. It’s increasingly embraced by consumers as a storage locker and the way to share their documents, photos and music.
The cloud is also a way to keep mobile devices affordable, since online storage means less physical storage is required on a device — Apple can offer a 16GB iPhone or iPad with no memory expansion capability because owners can store their big movie files and app libraries in the cloud.
Cloud computing is expected to continue to take off in 2013. The total cloud computing market is expected to grow to $210 billion by 2016 (it was $79.9 billion in 2010). Vendors like IBM (SmartCloud), Amazon (AWS) and Microsoft (Azure) that sell cloud services will obviously benefit from this rapid growth, but there’s also a real uptick for the Ciscos (NASDAQ:CSCO) and other companies that make the hardware and networking equipment needed to run the cloud.