One of the World's Greatest Trends Is Squeezing Dell and HP

Low-end devices are the future of technology, and it's not good news for many big-name companies.

Jan 22, 2014 at 9:00PM

One of the most striking aspects of the 2014 International CES was its breadth and scope, offering a look at the astounding scale of "white label" devices. It shows just how low the low-end tech industry is able to go in pursuit of a broader market.

What does it mean for large-cap computer and device makers? Motley Fool analysts Eric Bleeker and Rex Moore offer their insights from the floor of the world's largest consumer electronics show.

A full transcript follows the video.

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Rex Moore: Let's wrap it up with one last thing now as you've really looked across the floor, and you have a few thoughts about the future of technology.

Eric Bleeker: One of the areas... when you're reading about smartphones and tablets, you see these mind-blowing numbers. I believe smartphones could hit a billion units sold this year.

What you don't get a good feel for, especially if you're an investor in America, is where these billions are coming from, because you go out to Verizon and you buy your iPhone, but the people buying that billionth new phone aren't buying iPhones.

What you get to see is especially -- we call it "white label" -- just components that look almost essentially like iPads or iPad Minis, and they are extremely capable devices. I've seen tablets that I'm sure could perform admirably in most use situations selling for $30.

What I find fascinating about this is, when you looked at the PC in the '90s, you'd pay thousands of dollars -- a few thousand dollars -- for a top-line PC. The PC cost curve has really only gone down to maybe $500 before kind of plateauing.

The smartphone cost curve, and the tablet cost curve, is so incredible. It started at $600-$700, but it's moved all the way down, incrementally, to $30. We saw a fantastic stat the other day from Ericsson's (NASDAQ:ERIC) CEO that, for every $10 you can take off the price of a phone, you will reach 100 million new consumers.

At the end of the day, it's really showing that we focus on this top-end innovation, but this ability of companies to make things cheaper and smaller, and be able to reach these consumers, is really one of the greatest trends in the world. It might be painful to companies like a Dell (UNKNOWN:DELL.DL) or an HP (NYSE:HPQ) that are getting their margins crushed, but it's inescapable.

It's a fact of hardware life, and the pace and the scale; when you actually see it up close at an event like this, it's just truly awe-inspiring.

Moore: Yeah, I was blown away. Thanks, Eric. I appreciate it. Great insights for investors. 

Eric Bleeker, CFA has no position in any stocks mentioned. Rex Moore has no position in any stocks mentioned. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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.

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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