Submitted by
Sizemore
Investment Letter
as part of our
contributors
program
Last week
, I suggested that
Microsoft ($ MSFT)
would be the ultimate winner in the long war for dominance of the
smartphone and tablet markets.
Though
Apple ($ AAPL)
dominates today, it has no real defensible "moats" that would
prevent an aggressive competitor from muscling in on its
turf. Consumers are notoriously fickle, and there is little
to lock them into the Apple ecosystem. You can access your
key services-such as
Facebook ($ FB),
Twitter, Skype and even Apple's iTunes-from just about any device,
after all. And if Microsoft is able to leverage its dominance
of the desktop market by familiarizing users with its Windows 8
operating system-which looks and feels more or less the same on
desktops, tablets and smartphones-Microsoft may well dig the
elusive moat that Apple has thus far been unable to dig.
Moreover, Apple's "idea man," the late Steve Jobs, is not
something that can be replicated, and going forward Apple will find
it increasingly harder to stay ahead of its competition.
As Apple discovered to its dismay during the PC era of the 1980s
through the mid-2000s, computers are ultimately commodity products
for which it is difficult to charge a premium (and yes, I lump
smartphones, tablets and PCs together as "computers"). The
iPhone's popularity has been bankrolled by generous subsidies by
service providers like
AT&T ($ T),
Verizon ($ VZ
) and
Sprint ($ S)
. But as these carriers start to push back against subsidies,
Apple will find it harder to maintain its margins without lowering
its prices-something the company will be reluctant to do. In
a very short period of time, Apple may again see itself fall from
the position of industry leader to that of a niche provider.
None of this suggests Apple's imminent demise, of course.
I'm talking about a long war of attrition.
But none of this matters in the short term. For the
remainder of 2012, I see investor risk appetites returning, and I
see Apple and its competitors Microsoft and
Google ($ GOOG)
leading a rally in technology shares.
I recommend investors pick up shares of the
Technology Select SPDR ($ XLK)
and plan on holding for the remainder of 2012.
With the bad earnings releases of the third quarter mostly
digested, I expect to see a broad-based market rally, and I expect
more cyclical sectors such as technology to lead.
Disclosure: Charles Sizemore is long XLK through his
Tactical ETF Model
. This article first appeared on TraderPlanet.
The post Microsoft the Better Long-Term Bet, But Apple and Big
Tech a Short-Term Buy appeared first on Sizemore Insights.
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