The tech world had no shortage of storylines this weekend, and tech stocks soared along with the broader market. The information technology sector leapt 3% during the week, good enough to make it the third best-performing sector behind the leading financials industry. Tech stocks have rallied across the first few months of the year, but the overriding storyline has been Apple
This week, that storyline didn't change: The world was fixated on the launch of Apple's newest iPad. However, there were some other storylines that tech investors shouldn't ignore.
Tech storyline No. 1: The new iPad
On Friday, the newest iPad hit store shelves, and the mania that's accompanied recent Apple product releases followed. Analyst estimates of a million iPad sales on the launch day could prove light. My checks with an Apple store in suburban Washington, D.C., show that the store received up to 15,000 iPads for the opening weekend. That points to a larger opening than even the most bullish analysts expect.
There's little doubt that the iPad will further continue Apple's dominance of the tablet space over closest rival Amazon.com
On top of that, the newest iPad offers LTE service within select regions of the United States, Canada, and Germany. That could spur more adoption of iPads that connect to 3G and 4G data networks, which once again sell at a higher price point and drive iPad margins.
In the end, Apple is most concerned about driving adoption of the iPad and pushing its market share closer to what the iPod enjoyed in MP3 players rather than the iPhone's share of the fragmented smartphone market. Since the iPad is aggressively priced relative to the iPhone, higher selling prices on the new iPad could continue the trend of Apple's swelling margins and counterbalance decreased selling prices for the now-$399-priced iPad 2. iPad margin expansion is definitely a storyline for Apple investors to watch in coming months.
Related Fool article: Should You Buy Apple Before the iPad Goes on Sale?
Tech storyline No. 2: Another dumb Cisco buy?
I find the deal to be a mistake. Cisco has a lot of cash burning a hole in its pocket that can't be returned to the United States without a huge tax hit. So the draw of making foreign acquisitions without that corresponding tax hit is a large temptation for Cisco CEO John Chambers.
However, Cisco's gotten in trouble before trying to move its focus beyond its core networking technologies. Beyond that, I see the "software layer" of next-generation video delivery moving away from service providers and toward large tech giants. That would be bad news for Cisco, since it's placing a huge bet on its own collaboration with service providers, e.g., companies such as Comcast and AT&T.
My money is -- literally -- on Apple to eventually strike the right deals and create its own interface for next-generation television, but Microsoft
Related Fool article: Another Dumb Cisco Buy
Tech storyline No. 3: Seriously, Samsung's not buying RIM!
Research In Motion
Here's the problem as I see it: It's conceivable that Samsung would develop some small number of phones with the BlackBerry OS if RIM opened up the operating system. It's well known that Samsung is insecure over Google's purchase of Motorola Mobility and fears that the acquisition could cause Google to favor phones from its own captive mobile unit. Throw in the fact that Samsung has begun controlling a majority of the Android market, and Google likewise could be leery of having one handset vendor with such a dominant position in its OS.
However, instead of abandoning Android in favor of an unproven OS like BB10, if Samsung was looking to decrease its reliance on Google, its path to self-determination of an operating system is best served by Amazon's actions. Amazon heavily "forked" Android on its Kindle Fire, which means it no longer has access to key features like Maps and Google's native email client, but it also means that Amazon now controls the operating system on its tablets and isn't reliant on Google. To me, that could prove to be the more effective path if Samsung decides a divorce from Google is necessary.
Related Fool article: Can Apple, Samsung, and Amazon Make Google Irrelevant in Mobile?
That's it for this week's tech stories. If you're looking for a way to get in on the mobile revolution that plays a central part in all these storylines, The Motley Fool has a just released free report on mobile named "The Next Trillion-Dollar Revolution" that details a "hidden" component play inside mobile phones that also is a market leader in the exploding Chinese PC market. The company recently declined on some short-term concerns, but we believe it has vast potential that's unappreciated on Wall Street and that will make it a strong outperformer in the coming years. Hundreds of thousands have requested access to previous reports, but you can be among the first to access this just-released report -- and it's free.
Eric Bleeker owns shares of Cisco. The Motley Fool owns shares of Apple, Microsoft, Cisco Systems, Intel, and Amazon.com. Motley Fool newsletter services have recommended buying shares of Microsoft, Amazon.com, Apple, and Intel and creating bull call spread positions in Microsoft and Apple. 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.
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