IBM Is Still No. 1, But Google Is Flexing Its Muscle

While IBM is still on top in 2013, Google is now in the patent race.

Jan 14, 2014 at 7:00PM

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

Stocks recouped some of yesterday's losses, as the S&P 500 gained 1.1% on Monday, while the narrower Dow Jones Industrial Average (DJINDICES:^DJI) was up 0.7%.

IBM (NYSE:IBM) may be "old tech", but it remains the undisputed leader in one key area: patents. For the 21st consecutive year, IBM obtained more U.S. patents than any other company, with a whopping 6,809 in 2013. (You might be surprised to find out the number two most prolific patent author: South Korea's Samsung Electronics, with 4,675.)

As Bloomberg notes, since computer-related patents can take up to three years to be reviewed, the most recent "class" of patents indicate where technology companies have been placing their bets in terms of R&D. For IBM, those areas include analytics (so-called "big data"), artificial intelligence, and cloud computing.

IBM's Watson computer, which achieved popular recognition when it beat all-comers on the game show Jeopardy! in 2011, is part of that effort. Watson analyzes large amounts of data to answer difficult questions in plain English, and it estimates the degree of certainty associated with its answer.

Last week, IBM said it will invest $1 billion to create a separate business unit for Watson with approximately 2,000 employees. The Wall Street Journal reported that Watson's business plan calls for $1 billion in annual revenue by 2018, which would make it the fastest business ever to reach that milestone at IBM -- though, admittedly, the Journal article highlights some of the struggles the company is facing in turning Watson into a commercial application. (Sign-up required to view the article.)

One company that is shooting up the ranks in terms of patents and a bona fide "disrupter" is search giant Google (NASDAQ:GOOGL), which was awarded 1,920 patents last year -- close to twice the total it had obtained in all previous years combined. That number put it just outside the top 10, the tenth spot going to another South Korean company, LG Electronics, which obtained 1,947 patents. However, expect Google to crack the top 10 in the next few years -- over the past two years, the company has ramped up its annual patent filings to roughly 4,500.

For Google, the race for patents is a response to the "patent wars" in the smartphone space that have pitted Samsung against Apple, for example. It's also a result of Google's forays into new areas in technology, including wearable devices, with Google Glass. This week's news that Google is acquiring Nest Labs, which produces "smart" thermostats for the home, suggests that drive is only just heating up. "Big tech" is on notice -- Google may be your next competitor.

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4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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