Big Tech Companies Are Still Innovating Like Crazy

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By Adam J. Crawford, Research Analyst

One theory that has been circulating through cyberspace of late is that the world’s largest technology companies are “out of ideas.” For example, I recently stumbled across these provocative headlines: Has Microsoft Lost Its Mojo? and Are Apple and Google Out of Ideas? Some are even suggesting that a lack of corporate imagination might eventually lead to The App-ocalyspe for Apple.

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Don’t believe it for a minute. As someone who spends a considerable amount of time tracking the activities of the tech titans, I can assure you that such pundits are dead wrong. Big tech is hardly bereft of the kinds of ideas that will move it into a bright future.

Take, for instance, Google’s plans to juice up its physical network with the rollout of its new high-speed fiber service (called Google Fiber), which is said to provide connectivity that is 100 times faster than what most Americans currently have. The main purpose of Google Fiber is to give people faster Internet access, so that they will spend more time online, where they are more likely to use a Google product or click on a Google-sold ad. But Fiber may do more than that; it could unlock a whole new business as an ISP and TV provider.

Google’s whip-smart engineers are working on other groundbreaking projects, as well… like Google Glass, a wearable computing platform that runs on voice command and is said to be essentially the same as a smartphone, but far more convenient. It also features some pretty dorky-looking glasses, which is a problem Google must address if it expects this product to be a hit. But if Google can bring to market a stylish, wearable computer – and do so at a reasonable price – then the potential profit generated by this innovative gadget could be enormous. Apple obviously sees that potential too, as it is reportedly working on a similar product.

Google is also aggressively pursuing its autonomous car project, which aims to cut worldwide vehicle-related deaths in half. This significant undertaking, which is often dismissed as being “stupid,” is proving to be anything but. The collective odometer of Google’s self-driving fleet of cars recently passed the 300,000-mile mark without a single accident. Sure, there are some significant regulatory roadblocks to clear before an autonomous vehicle could be sold to the masses. There is also the consumer trust factor to consider. But if Google can clear these hurdles, then it is not a stretch to say that the market for a computer-driven car – touted as twice as safe as a car driven by a human – could be significant.

Then there’s Apple, which has plenty of good ideas in its own right. For example, rumors persist that the company might soon release a high-definition television set with iOS features, including Siri voice commands, FaceTime video chat, and access to the App Store. It is estimated that this product will cost as much as two to three times more than competing LCD TVs. Despite the lofty price tag, many analysts predict that an Apple TV could make significant inroads into the $100-billion television market, if the company decides aggressively to enter the space.

Apple is also generating quite a buzz among the automakers with its new initiative named “Eyes Free.” This project aims to bring the iPhone’s personal assistant, Siri, into the automobile by placing a “Home” button on a vehicle’s steering wheel, so users can interact with Siri in the same way they already can with their iPhone or iPad. Eyes Free will begin rolling out in new cars early next year.

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As always, Apple is also busy at work padding its patent portfolio. A couple of the more notable patents recently revealed relate to features on its future smart devices. For example, Apple holds a patent for a miniature fuel-cell power supply that could power an iPhone or iPad for days or even weeks without recharging. And it has patented a new technology that can detect and then alert iPhone owners or the police to unauthorized use. It should be noted that just because Apple holds these patents doesn’t necessarily mean that these ideas will ever see the light of day. The company is known for stockpiling patents as a means to head off competing firms from using various technologies. But the larger point is that Cupertino has not lost its creative touch.

Microsoft clearly isn’t the innovation powerhouse that Apple is. But at the same time, the engineers in Redmond aren’t exactly mailing it in either. I recently had the opportunity to toy around with Windows 8 and RT, and I can say that these new interfaces are nothing if not innovative. In fact, they are so innovative that Windows 8 is a huge gamble for the company. But it’s a good thing Microsoft is taking some risks. That could reignite the company, as well as encourage the competition to release more innovative products.

It appears that Microsoft is preparing to shake things up in the television market, as well. A recent job posting reveals that the company is recruiting engineers to work on a new Cloud TV platform. Rumors of a Cloud-based television service from Microsoft have been circulating for quite some time, but it now appears the company is finally ready to take the plunge. Microsoft is also diving into the traditional gaming industry. A recent report revealed that the company will release a 7-inch Surface device supposedly designed to serve as a mini Xbox. The rise of mobile gaming clearly justifies Microsoft’s foray into this market.

These are far from the only cutting-edge ideas about to emerge in the world of big tech. A whole new generation of products is on the way – not just from Google, Microsoft, and Apple, but from the likes of Intel, Cisco, Hewlett-Packard, Oracle, Qualcomm, EMC, Amazon, Intuit, Adobe, and even Dell. There are also scores of promising ideas percolating at some of the lesser-known major technology firms. My purpose isn’t to provide an all-inclusive look at the ideas coming soon from the world of technology; that would be exhausting. Rather, it is to illustrate the simple fact that many of the big tech firms are, contrary to what you may hear, as innovative as they have ever been.

Which leads us to the investment implications.

>From the investor’s standpoint, many of these big tech stocks are as cheap as they have ever been. Just take a look at the laughably low forward P/E ratios, and you’ll see what I mean. But that is not to say that you should gobble up shares of any major technology company just because you’re enticed by a tasty P/E ratio. Quite the contrary. You’ll find that stocks always carry a low forward P/E for some reason. As an investor poised to lay down your hard-earned cash, it is your job to figure out what that reason is, and then decide whether or not it is justified… which takes a lot of work.

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That is to say: Sniffing out the genuinely cheap stocks is not something that can be accomplished on your lunch break. And that’s where we come in. The Casey Research Tech Team spends countless hours listening to conference calls, as well as thumbing through mind-numbingly boring SEC filings, in an effort to determine the very best investment opportunities in the technology sphere. We then release our findings to our subscribers in a monthly publication called Big Tech. You can try it now for only $99 per year; and if you find yourself dissatisfied, then simply cancel within 90 days to receive a prompt, courteous, and complete refund of your entire subscription price. No questions asked.


Bits & Bytes

Google Throws Open Doors to Its Top-Secret Data Center (Wired)

Google is far more than just a search engine company. This excellent article proves as much, as it takes the reader on a tour of one of Google’s highly sophisticated information palaces.

Foxconn Allegedly Replacing Human Workers with Robots (TechCrunch)

Looks like Foxconn is forging ahead with plans to replace it workforce with robots. This is a trend that is gaining traction in China, as more and more workers are demanding higher wages.

Android Crushes the Competition in China as It Passes 90% Smartphone Market Share (The Next Web)

This is an absolutely amazing accomplishment for Google, which now has clearly established a foothold in the lucrative Chinese market.

Cisco to Acquire Cloud Software Firm Cloupia for $125 Million (All Things D)

Cisco is continuing its efforts to elbow its way into the Cloud via the acquisition route. It’s a safe bet that such acquisition activity will pick up in the technology industry, considering that the big tech firms are very flush with cash.

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avatarDoug Casey - Casey's Daily Dispatch posted Thursday, November 15th, 2012.

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