Waiting for Apple: The Tech Industry’s Second-Half Outlook

Wall Street, consumers anxious for the next iPhone

   

The technology industry’s first half of 2013 has been markedly different than the same period a year ago.

QuarterlyReviewOutlook185 Waiting for Apple: The Tech Industry’s Second Half OutlookApple (AAPL), last year’s star performer, has fallen into the dumps, down around 30% in that time. Meanwhile, BlackBerry (BBRY), the Canadian smartphone pioneer all but left for dead, relaunched in January and has sustained an unexpected comeback story. And the PC industry’s hopes for recovery — which rested on Microsoft’s (MSFT) Windows 8 and Intel’s (INTC) new Haswell CPUs — has not only failed to materialize, but PC sales actually have declined at an accelerated pace.

But that was January through June. The second half of 2013 will see a flurry of new products hit the market. This coming holiday season in particular, all bets are off. We’re likely looking at a new iPhone (or iPhones), new iPads, a video game console battle, the arrival of wearable tech and a push to get consumers to upgrade those HDTVs in their living rooms to 4K Ultra HD sets.

Here are the key companies and products I’m watching for the second half of 2013:

Apple

Let’s get the big one out of the way first.

After a miserable first half, capped by news of unsold iPhone 5s piling up on retailer shelves, Apple’s stock slipped below $400 — 30% lower than it was a year ago. Competition is tougher than ever in the premium smartphone market, with Samsung (SSNLF) pumping out Galaxy S4 variants and Chinese manufacturers planning an assault on the U.S. Apple needs the next iPhone to be a home run. It also needs a lower-priced model to attract budget-conscious consumers to gain market share in China.

There’s also iOS7 — Apple’s high-profile attempt to reinvent its aging mobile operating system — and the likelihood of new iPads. Then there’s the smartwatch (or iWatch) we’re pretty sure AAPL is working on, and the hint Apple is up to something in the living room — either that long-rumored Apple-branded television set or perhaps a game apps-enabled AppleTV. If the iPhone turns out to be a home run, investor confidence might finally be restored in AAPL. But a disappointing iPhone launch or a new-product misfire could send Apple further into the basement amid renewed concern that its days of innovation and domination are fading.

BlackBerry

Against all odds, BlackBerry has done well this year. BBRY stock is up 65% compared to this time last year. Its new BB10 smartphones are selling well (despite delays in getting them to U.S. customers). And it’s diversifying by offering BlackBerry services to iOS and Android users.

However, Blackberry’s sales so far largely reflect pent-up demand from existing customers. And Microsoft’s Windows 8 Mobile is gaining steam. If sales of BlackBerry devices slow significantly in the second half — allowing Windows Mobile to take third place in the platform wars — BlackBerry likely will pay a price in carrier support, developer support and public perception. BBRY also desperately needs a tablet solution for its enterprise customers.

Google

Google’s (GOOG) Project Glass wearable technology might get legislated into oblivion before it can hit the mass market, but Google doesn’t need the glasses to succeed. The company’s Android OS is dominating mobile, and its online search business continues to fire on all cylinders. Plus, other hardware forays such as Nexus tablets, smartphones and Chromebooks are all doing well — including Google’s Motorola division, which is reportedly prepping a super “X” phone for the fall.

Google stock is up 55% since last June. There’s no reason to believe it will slow in 2013′s second half.

Microsoft

The PC business isn’t so hot right now, and RT tablets are struggling, but there are bright spots for Microsoft with its Surface Pro tablets and Windows 8 Mobile. What I’m mostly looking for from Microsoft in the next six months is some tangible results following efforts to fix its mistakes. Will Windows 8 sales gain momentum with a new version that brings back the missing “Start” button that alienated so many users? Will backtracking on Xbox One restrictions be enough to win over complainers and lead to a big holiday sales season for the new game console? And will deep Surface RT discounts for educational customers and an attempt to drop the price through 7-inch models be enough to spur sales of its consumer tablet?

Sony

It isn’t out of the woods yet, but Sony (SNE) appears to be entering an upswing. Its consumer electronics are becoming compelling again — particularly its mobile devices like the Xperia Z smartphone and Xperia Tablet Z. SNE finally is making progress in righting its TV business. And with Microsoft’s missteps and a $100 price advantage, the PS4 video game console could spark a very merry holiday season.

Samsung

Barring any major surprises, the second half of 2013 is going mean a lot of defense for the South Korean consumer electronics giant. The company has finished its flagship smartphone release for the year (the Galaxy S4) and has been busy spinning off different versions of it since then. It also has released new tablets, including a hybrid Android/Windows 8 device, and is hoping consumers will fork over $40,000 for one of its new 4K Ultra HDTV sets.

But barring any major new product releases — and with Apple’s new iPhone coming (along with fierce competition within the Android market) — I expect Samsung stock will face continued downward pressure in the second half of 2013.

Other technology stocks to watch include:

  • Will Yahoo’s (YHOO) buying spree, including Tumblr, pay off with increased ad revenue?
  • Intel could see a bump if a revised Windows 8 spurs PC sales, while its coup of getting a processor in one of Samsung’s tablets could be the start of bigger things in mobile.
  • Nokia (NOK) is bringing new smartphones that are essentially spec-bumped and thinner versions of last year’s models into a tough smartphone market. If its position as the primary Windows 8 Mobile manufacturer doesn’t protect it, Nokia could take a hit.
  • Facebook (FB) needs a winner, and quick. Facebook Home didn’t do much, and the first Facebook Phone (HTC’s One) was an embarrassing flop that quickly became a 99-cent special.
  • Amazon (AMZN) hasn’t released a new tablet or e-reader in a while, and Google has been making moves into its online shopping turf. With Rakuten’s Kobo now offering the best e-reader on the market and Barnes & Noble (BKS) dropping its Nook tablets, look for Amazon to come out swinging in the e-reader and tablet market this fall. In the meantime, its Fresh online grocery business is making waves and has potential to get much bigger. The pieces are in place for AMZN to keep heading north.

As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, http://investorplace.com/2013/06/waiting-for-apple-the-tech-industrys-second-half-outlook/.

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