Why did Hewlett-Packard (NYS: HPQ) announce last week that it is exiting the personal computer business? Most people will tell you the answer is simple: No one can beat Apple. Hewlett-Packard is a subset of "no one," so ... Q.E.D. They saw the writing on the wall, and it read, "Get out now." So they got.
I like the argument. It's simple, logical, straightforward. According to the smart tech investors at Piper Jaffray, however, it misses the point. The real reason HP exited PCs isn't that it couldn't build better computers than Apple -- it's that PCs in general are now obsolete. The 21st century belongs to mobile devices.
In a wide-ranging report released yesterday, Piper Jaffray argues forcefully that there's a "fourth wave" of computing afoot today. To wit: "Mobile Internet devices are extending and, to a degree, replacing traditional computing devices. ... This shakeup ... will have wide-reaching effects throughout the technology sector." Within the new tech world, Piper sees multiple losers:
Best Buy (NYS: BBY) , which depends on laptop and desktop PCs to provide more than 25% of its annual revenues.
Dolby Labs (NYS: DLB) , which farther up the supply chain is even more dependent upon PC sales to provide it with licensing fees for its audio technology.
And Intel (NAS: INTC) , which Piper criticizes as too dependent upon old-guard PC makers to buy its chips.
On the other hand, Piper believes Google (NAS: GOOG) and Apple will both benefit from HP's exit, as HP essentially acknowledges their leading positions in the new mobile method of personal computing.
Piper's report is not exhaustive by any means. For example, it doesn't seem address the negative effect of HP's exit upon its hard disk drive suppliers like Seagate (NYS: STX) , nor conversely the benefits to be reaped by Apple's mobile comm-chip suppliers such as Skyworks (NAS: SWKS) . Still, for the tech names Piper does give an opinion on ... well, according to our CAPS supercomputer here at the Fool, Piper's one of the best tech analysts out there. Investors should give this analyst a listen.
You can read a summary of Piper's report, prepared by our friends at Barron's, here.
And you can check up on Piper's record of success in charting tech stock trajectories here.
Whatdoes this "fourth wave" future hold for investors in Seagate and Skyworks?Add both stocks to your Fool Watchlist, and find out.
At the time thisarticle was published Fool contributorRich Smithowns shares of Dolby Laboratories and Google, but he holds no other position in any company mentioned.Click hereto see his holdings and a short bio. The Motley Fool owns shares of Best Buy, Google, and Apple. The Fool owns shares of and has bought calls on Intel.Motley Fool newsletter serviceshave recommended buying shares of Intel, Apple, Dolby Laboratories, Best Buy, and Google.Motley Fool newsletter serviceshave recommended creating a diagonal call position in Intel.Motley Fool newsletter serviceshave recommended creating a bull call spread position in Apple.Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.
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