NEW YORK (TheStreet) -- Here is a test for investors. Where is most of the value added in a computer?
If you answered the hardware or assembly, you're wrong. Most of it comes in the software and the marketing. Controlling the platform is the key to long-term financial success.
The move from the PC era with a TV for output, a keyboard and mouse for input, and spinning disks for storage, to the tablet era with a TV for input and output, spinning disks replaced by memory chips and wireless networking, gave Asia a huge opportunity to grab the top of the stack. Asian companies made the parts and assembled the devices. All they needed to do was take control over what they had.
The big technology story of 2012 is how America's computer companies, at some risk to their margins, aren't letting them.The story is centered on Apple (AAPL), whose new CEO, Tim Cook, failed with his "new iPad" launch in March. It wasn't very different from what Samsung could do with Google (GOOG) software. It even used a lot of Samsung parts, chips and screens. Cook did two things to bring the value back: 1. He found a new source for the bright "Retina" screen, easily visible on a clear sunny day, through a combination of Japan's Sharp and Korea's LG, as 9to5google.com reported. 2. Apple engineers also perfected a new assembly technique, borrowed from aerospace, enabling flat screens to be crisply attached to a flat bank of chips, resulting in a device that's lighter and thinner than anything that came before. Cook took the hit on two quarters' earnings, investing more and selling less, to get ahead of Samsung's competition. Sure, Samsung made a fortune this last quarter, as Business Insider reports. Amazon (AMZN) also got 22% of the U.S. tablet market with its Kindle Fire, as PaidContent reported, a device tied even closer than the iPad was to a proprietary app store. Both of these moves, by the way, were good for Google, whose Android operating system drives both companies' devices.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV