Microsoft Corporation (MSFT), Google Inc (GOOG) & Apple Inc. (AAPL): The Wearable Computing Boom

Page 1 of 2

Computers that you wear. It sounds far-fetched, but it’s coming — no matter what you feel about it. Some early wearables do seem far-fetched. But there are plenty of other options that are coming soon, most likely before the holiday season. What companies might be able to boost profits on the wearable computing trend? Let’s take a look.

Microsoft Corporation (MSFT)

“We Need a Hit”

Firmly entrenched as a staid enterprise business, seemingly no one thinks that Microsoft Corporation (NASDAQ:MSFT) has any potential in wearable technology. It seems to always flop with Windows on phones, and its Surface tablet appears to be just a way to sell Windows 8 — which is not doing well. Microsoft Corporation (NASDAQ:MSFT) knows that it needs a consumer hit outside of the Xbox. It has been steady with R&D, keeping spending at around 13% of annual revenue in the past three years. That’s around $10 billion every year for the company to try to develop new products and services.

Mobile market share. Source: ZDNet

Hopefully, some of that spending will result in some sort of consumer wearable technology. Microsoft Corporation (NASDAQ:MSFT)needs a hit, as its income has dropped 20% from 2011 to 2012. Tried and true, it’s betting on a new Xbox. But the same company that came out with the motion gaming Kinect device has to have some sort of wearable product up its sleeve. Will it come along with the release of the next Xbox?

Finding its way into hardware

Google Inc (NASDAQ:GOOG) needs to find a way to keep advertising revenue up and growing. So, it’s no wonder that it is trying to make a big deal out of Google Glass. The idea is that releasing this product to early adopters will translate into an ecosystem around this tech — and more advertising sales somehow. There has been a tepid response to Google Glass so far. Poor battery life, limited wireless capabilities, and privacy concerns have plagued it.

Yet, Google Inc (NASDAQ:GOOG) is on to something in selling hardware. In 2012, the company reported that 8.2% of revenue came from Motorola, which sells mobile devices and other miscellaneous electronics. This diversification is important, as the company has been criticized for being a one trick pony that could dry up in a drought of advertising. Indeed, the company now derives over $6 billion in revenue from sources outside of ads thanks to Motorola.

The biggest wearable company of all?

Gartner predicts that the wearable tech market will hit $10 billion by 2016. But they expect a majority of that money will come from athletic gear that is deemed “smart.” With that, the best bet is on Apple Inc. (NASDAQ:AAPL) making the most of this market. Why? Because the demographics in the United States suggests that Apple already has a major foothold in the trend towards mobile fitness technology.

Age 25-34 iOS device owners and app usage. Source: VentureBeat

According to Apple’s most recent quarterly filing, its Americas operating income went down to $5.1 billion from $5.6 billion a year earlier even though net sales went up 6.5%. It appears that this is a trend in most other regions as well. That might suggest that producing complex devices like iPhones will continue to take a bite out of revenue. With that in mind, selling simplistic add-ons like watches or fitness bands would be a great complementary product to smartphones, helping overall growth.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The 10 Countries with the Highest Suicide Rates

The 10 Most Technologically Advanced Countries in the World

The 10 Safest Countries in the World to Live in Peace

The 10 Top Selling Smartphones in the World 2014

The 12 Biggest Shopping Centers in the World

The 10 Friendliest Countries in the World

Qihoo 360 Technology Co Ltd (QIHU), Actavis plc (ACT), Yahoo! Inc. (YHOO) Among 20 Long Ideas from Sohn Canada

The 10 Laziest Countries in the World

The 10 Most Polluted Countries in the World

The 10 Most Dangerous Cities in America 2014

The Top 10 Gold Producing Countries in the World

The 10 Tallest Buildings in the World

The 10 Richest Stand Up Comedians in the World

The 10 Fattest Countries in the World

The 5 Best Summer Jobs for Teens

The 10 Most Religious Countries in the World Keeping the Faith

The 10 Most Educated Countries in the World

The 10 Most Popular Cell Phones in the World

The 10 Drunkest Countries in the World

The 10 Most Expensive Private Schools in the World

The 10 Smallest Countries in the World

Walking Dead Season 5 Spoilers You’ll Wish You Didn’t Know

The 10 Poorest Countries in the World

The 10 Greenest Countries in the World

The Top 10 Countries with the Highest Population in the World

The 10 Most Visited Countries in the World

The Top 10 Star Wars Characters in the Iconic Series

The 10 Most Expensive Android Phones in the World

5 Reasons Why The Illuminati Is Real and a Threat to Society

The 6 Scariest Halloween Costumes Ever Screamed At

The 4 Biggest Hedge Fund Managers in the World Today

The 15 Most Densely Populated Countries in the World

The 10 Biggest Tea Drinking Countries in the World

Top 6 Ways to Improve Your Checkout Process and Close Sales

The 5 Most Profitable Online Businesses You Can Start Today

The 20 Most Profitable Hospitals in the US

The 5 Most Profitable Home Businesses to Start

The 7 Teams that Will Win the Stanley Cup in 2015

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!