This Apple Inc. Rumor Just Won't Go Away

Is Apple about to copy Microsoft? If so, Logitech could be the biggest loser.

Feb 15, 2014 at 7:30AM

While Apple (NASDAQ:AAPL) is notoriously secretive, its management is still willing to drops hints about forthcoming products from time to time. Apple's CEO Tim Cook has, for example, never said no to a bigger iPhone and often speaks positively about the opportunities in TV, wearable devices, and mobile payments.

But one thing Cook and other Apple executives have consistently ruled out is a hybrid operating system -- a convergence of OS X and iOS that would unite Apple's product lines in a similar way to Microsoft's (NASDAQ:MSFT) Windows 8.

But analysts won't stop talking about it. Last week, JPMorgan Chase revived the rumor in a note predicting a forthcoming "iAnywhere" -- an operating system that would merge Apple's iPad line with its Mac PCs. Based on comments from Apple's leaders, I strongly doubt such a product will ever appear. But if it does, it should have an immense on the entire industry, and accessory suppliers such as Logitech (NASDAQ:LOGI).

JPMorgan calls for "iAnywhere"
JPMorgan analysts believe Apple is working on a converged platform, a new operating system that would combine iOS's mobile, touch-based capability with OS X's desktop, productivity capability.

In a hypothetical example, you take your iPhone and plug it into a special dock that connects to an Apple-made display, keyboard, and mouse. The iPhone then switches to OS X mode, allowing you to do the sort of work you would've done on an iMac.

Apple wouldn't be the first company to experiment with such an idea. Motorola tried something similar with the Atrix phone years ago, and the failed Kickstarter Ubuntu Phone project promised a Linux-based phone that could transform into a desktop computer. Asus' Padfone is in a similar vein.

Apple's management has consistently downplayed hybrids
The obvious problem with such a notion is that Apple, as a company, is based entirely around selling physical stuff. Yes, iTunes has grown significantly in recent years, but it remains a tiny fraction of Apple's overall revenue. JPMorgan claims there would be an opportunity in selling docks and accessories, but ultimately, Apple would probably prefer its customers bought an iPhone, iPad, and iMac, rather than just an iPhone and a couple of docks.

More concretely, Apple's management has explicitly ruled out a hybrid operating system on numerous occasions. As far back as 2012, Cook openly mocked Microsoft's Windows 8 as an attempt to converge a toaster with a refrigerator, and then late last year, characterized Apple's competitors (read: Microsoft) as "confused."

Craig Federighi, Apple's SVP of software rngineering, told Macworld last month that operating-system convergence was a "nongoal," and that Apple had no intention of turning iOS into OS X, or OS X into iOS.

I suppose that Apple could get around this by running two completely separate operating systems on the same device, shifting back and forth between them based on how the device is being used, similar to the growing number of tablet hybrids that run both Microsoft's Windows and Google's Android. Still, it just doesn't seem likely, given how much Apple's executives have explicitly criticized the very notion of a hybrid product.

Microsoft would seem like the more obvious choice
If the concept does have any merit, then it's more likely to benefit Microsoft -- a company that's explicitly moving in that direction.

More than just a hybrid operating system, the overarching philosophy behind Windows 8, repeated in every Microsoft commercial, is "one experience for everything in your life." Microsoft already sells a docking station for its Surface Pro, allowing the laptop/tablet hybrid to easily transform into a desktop PC.

And it will likely push this philosophy further with the next version of Windows, codenamed Threshold. Microsoft blogger Paul Thurrott has said that the next version of Windows will put Microsoft on "the threshold ... of a truly consolidated OS."

Logitech will either be a big winner or a total loser
From an investing perspective, the stock that could be most affected by Apple's push into a converged operating system is Logitech. The PC component supplier has been a great small cap to own, rallying more than 120% in the last six months.

Much of that gain has come from a string of solid earnings reports fueled by Logitech's success in tablet accessories. While sales of Logitech's PC keyboards have been stagnant, it has seen tremendous growth in tablet keyboards.

Logitech sells keyboards for several different tablet vendors, but most of its products are aimed at Apple's iPads. In the event that Apple were to commit to making its own accessories, it could eliminate much of  the demand for Logitech's products. On the flipside, however, there's clearly a market for these products, and if Apple doesn't take advantage of it, Logitech will.

iAnywhere the next Apple catalyst?
Based on the philosophy Apple's management has consistently articulated, I strongly doubt that the company would move to offer a converged platform. It certainly could, but it seems highly unlikely. However, Microsoft is very explicitly moving in that direction, and if that's the way the computing market is headed, Microsoft is the company that would benefit the most.

A better stock than Apple? Get our top pick for 2014
There's a huge difference between a good stock and a stock that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it's one of those stocks that could make you rich. You can find out which stock it is in the special free report "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.

Sam Mattera has no position in any stocks mentioned. The Motley Fool recommends Apple, Google, and Logitech International and owns shares of Apple, Google, JPMorgan Chase, and Microsoft. Try any of our Foolish newsletter services free for 30 days. 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.

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.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information