Apple's Copycat Product Could Threaten Intel and Logitech

With Microsoft's help, Apple could be about to take a bite out of Intel's and Logitech's businesses.

Mar 30, 2014 at 11:00AM

Apple (NASDAQ:AAPL) is working on a keyboard cover for the iPad, according to AppleInsider. The publication cites a newly uncovered patent that could improve Apple's Smart Cover for the iPad by incorporating a multitouch keyboard -- similar to Microsoft's (NASDAQ:MSFT) keyboard cover for its Surface tablet.

Apple's iPad keyboard (should it choose to release it), combined with Microsoft's decision to bring Office to Apple's tablet, could pose a significant problem for rival tech firms. In particular, Logitech (NASDAQ:LOGI) and Intel (NASDAQ:INTC) could face substantial pressure.

Microsoft finally brings Office to the iPad
On Thursday, Microsoft finally unveiled Office for the iPad. Subscribers to Office 365 can now create and edit Word, Excel, and PowerPoint documents on Apple's popular tablet. With virtually every major corporation using the iPad in some capacity, Microsoft stands to gain substantial revenue from its new version of Office -- perhaps as much as $2.5 billion on an annual basis, according to analysts at Morgan Stanley.

But how useful is Microsoft's software suite without a keyboard? Microsoft has gone to great lengths to make Office for the iPad touch-friendly, but it's difficult to imagine doing much work in Word or Excel with just a touchscreen.

Why Logitech investors should be weary
Right now, owners of Apple's tablet can purchase a third-party bluetooth keyboard if they want -- indeed, many of them already do. So many, in fact, that Logitech's tablet accessories business has been booming -- up 95% last quarter.

To be clear, Logitech's tablet accessory business includes more than iPad keyboard covers, but a quick perusal of Logitech's website shows that the vast majority of its tablet accessories are keyboards for Apple's tablets.

Logitech also makes keyboards for two of Samsung's Galaxy tablets and a generic stand-alone bluetooth keyboard that it markets for "Windows and Android" tablets, but nothing aimed at the Surface. That's probably not a coincidence; Microsoft has that base covered, with a variety of its own keyboards that it advertises alongside the Surface.

Logitech's tablet accessories only account for about 13% of its revenue, but it is the company's single biggest growth area. If Apple releases its own keyboard cover, it's hard to imagine Logitech's tablet business remaining unscathed.

More PC cannibalization
Like Logitech, Intel could also feel some pain, though to what extent remains unclear. Traditional PC shipments declined 10% in 2013, and IDC expects the market to continue to contract in the years ahead. Tablets, particularly Apple's iPad, have weighed on the market for PCs and, by extension, Intel's processors.

But this cannibalizing effect has largely been limited to the consumer market. On its last earnings call, Microsoft admitted that for consumers Windows demand declined about 20% last quarter. Enterprise demand, meanwhile, has remained robust -- although businesses are employing Apple's tablets, they still need Microsoft's Windows and PCs powered by Intel's chips.

That might change if Apple releases a keyboard cover. With Microsoft's Office now on the iPad and a keyboard solution from Apple, some business users might be tempted to replace their Windows laptops with an iPad. Obviously, there's still a lot of unknowns, but if Apple does release a keyboard, investors should see it as a negative sign for Intel.

Are you ready for this $14.4 trillion revolution?
Let's face it, every investor wants to get in on revolutionary ideas before they hit it big. Like buying PC-maker Dell in the late 1980s, before the consumer computing boom. Or purchasing stock in e-commerce pioneer Amazon.com in the late 1990s, when it was nothing more than an upstart online bookstore. The problem is, most investors don't understand the key to investing in hyper-growth markets. The real trick is to find a small-cap "pure-play" and then watch as it grows in EXPLOSIVE lockstep with its industry. Our expert team of equity analysts has identified one stock that's poised to produce rocket-ship returns with the next $14.4 TRILLION industry. Click here to get the full story in this eye-opening report.

Sam Mattera has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Apple and Intel. It recommends Logitech International SA (USA) and owns shares of Microsoft. 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.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.


Compare Brokers