SAN FRANCISCO-- Investment bank Canaccord Genuity has unveiled its top tech picks for 2012, with Qualcomm Inc. and Apple Inc. topping the list, while investors were warned to be wary of buying Intel Corp. stock in the coming months.
The strongest trends being tracked into the New Year centered on mobile, said Canaccord, with smartphone growth, mobile advertising and advanced embedded functionality leading the way. Cloud-based services were also a strong financial bet, the firm said.
“While we anticipate global handset units will increase by 7% YoY in 2012 to 1.72B units, we anticipate much faster growth trends for the smartphone market. In fact, we are modeling 481M smartphone units in 2011 ramping to 650M units in 2012, or 35% YoY growth,” noted a Canaccord report.
The bank said it expected to see continued strong sales of Apple’s iPhone and iPad, despite the upcoming launch of a slew of competing tablets from competitors in 2012. “We believe Android tablets will continue to struggle given the limited number of apps designed specifically for tablet form factors,” said the firm’s analysts.
Windows 8 tablets, set to launch in the second half of 2012 could see success in “certain markets” according to Canaccord, noting that this was particularly likely within the enterprise sector which sports a large install base of Microsoft enterprise software, but even then, the iPad is expected to continue its tablet market domination.
In terms of mobile chips, Canaccord was most bullish about Qualcomm’s prospects, saying the firm was “well-positioned to grow faster than the handset market for the next several years.”
Qualcomm’s success, said the bank, was thanks mainly to ongoing Snapdragon momentum, especially its new 28nm products, as well as increased traction for the firm’s integrated strategy in mid-tier smartphones, improving 3G CDMA mix in China, and new market opportunities such as the tablet and Windows 8 markets.
Snapdragon is already powering over 300 mobile devices, with another 350 or so said to be in the design pipeline, and Qualcomm has a 100 percent share of Windows Phone 7 smartphones to boot.
While the mobile market continues to thrive, the PC market persists in its near-term softness, said Canaccord, owing to the lingering effects of recent inventory correction as well as the devastating consequences of the Thailand flooding and the resulting HDD shortage. While soft, however, Canaccord does believe that the very worst has now passed.
The investment bank said its recent checks of the PC assembly and test supply chain indicated only incremental weakness for semiconductor vendors.
“Specifically, substrate suppliers have received cuts for December from customers shipping commodity parts into smartphones, while packaging houses have seen reduced orders from power management semiconductors used in PCs,” said the Canaccord report, which also noted a softening demand for motherboards.
The bank said it expected Q1 PC shipments to be weaker than seasonal, despite the launch of Intel’s Ivy Bridge platform in late Q1/early Q2, and that this would be compounded by consumers delaying PC refreshes until the emergence of Windows 8.
“We see a potential air pocket for consumer demand in Q3 as Win8 likely won’t be available in PCs and tablets until Q4, prompting customers to limit back-to school purchases,” Canaccord said.
Intel’s new Ultrabook category might help to accelerate PC sales slightly, though that would depend on their pricing and competitiveness with Apple’s MacBook Air, said the firm, laying the impetus on Intel.
OEMs and the PC supply chain have been vigorously working to reduce pricing, said Canaccord, but with the CPU accounting for approximately 1/3 of the Bill of Materials (BOM), the most significant impact on pricing lies with the chipmaker. “Intel needs to reduce the processor platform price in order to stimulate demand,” said the bank in its report.
“Intel lowered guidance for Q4 on HDD supply disruption. While we acknowledge supply disruption to be severe and likely to worsen in Q1, we see additional negative issues with demand softening for motherboard makers and ODMs while component inventories build downstream,” said Canaccord’s Bobby Burleson.
If, however, Intel does manage to keep the costs of its processors down in order to stimulate demand for its new Ultrabook platform, Canaccord says it could end up having a positive knock on effect for many other component makers in the PC space, especially in the SSD market.
Not a single tablet/Smartphone uses Intel
Intel is doing good because of the server market - but thats not a lock since server software can run on other processors as well.
The key maybe when is ARM coming up with a 64-bit server processor design?
I don't see this as anything new or dramatic. You can certainly describe it as the fall of the PC and the rise of the smartphone/tablet. More correctly, though, all of those things are forms of personal computer. They simply have different form factors and different specializations.
What we are really seeing is the fragmentation and specialization of the PC market. Not everyone needs a big desk-top (or floor-top) box computer. For those that really do, not much else will suffice. Certainly a lot of people want or need portability, but not all need a full laptop. Many get their needs fully met with a tablet or a smartphone. A lot of those last set only used a laptop or desktop in the past because it was their only option.
When a tablet meets the vast majority of your needs, why would you use anything else? When you need so much power that only a big box will do, why would you use anything else? Well, if the price is right and you also want to access the Internet while away from home, then why not get both?
As in "duh, how could it be so shortsighted". A smartphone is mostly a dumb terminal. Estimates vary, but every new X smartphones require Y servers to support them, with X/Y something in the 10-100 range depending on who you believe. Intel's gross margin on server chips is probably north of 80% and explains why despite a precipitous drop in laptop and desktop prices over the last few years Intel's margin has been trending UP (significantly) and revenue growth has significantly outpaced unit shipments. There is very little money to be made in mobile chips, most of the profit is controlled by the integrator. Sure, buy APPL stock and see their lunch eaten by Android over the coming years (aka Mac v. Windows Part Deux). Or buy the boring plodding 800lb gorilla with a P/FCF less than 10 and a lock on one of the most profitable segments in the computing/communications market. This does not mean that Intel is safe 10 years from now. However, buying APPL or QCOM over INTC at this point is a fool's errand. Remember, cool-sounding technology does not equal a good stock, and I am yet to see ANYONE who has given up their laptop for an iPad? Sure, browsing and watching YouTube is great. Ever tried typing on the darn contraption?
I can hardly see Tablet is able to replace any computer in any enterprise. First of all, like PoseTech said, Tablet doesn't support business application well. Although it will likely change in 2012, there are still limitation in Tablet screen side and storage capacity. More importantly, a computer is generic enough to provide the flexibility that Tablet couldn't today. Enterprise can download various applications from small software house to improve their business. There might still be software that help them to run their business while there is no more support of the software anymore. Total transition to Tablet in the near future is just difficult.
On the other hands, I see the value of Tablet in some areas. For marketing presentation, instead of carrying a bulky laptop, sales person can carry a tablet to do presentation. For medical, instead of carrying a big binder of charts, MD can carry a tablet to retrieve patient information and medical history. Tablet provides tremendous opportunities.
With increased storage and computing capacity, a desktop/PC always holds promise. Pocket computing has its limitations in the connection speeds and battery issues. I don't see bandwidth improvements in the upcoming handheld markets at least for next 5 years. May be if PC enhancements (touch sensitive screens, larger displays, multimedia content etc) and business strategies are in the right direction, the market will continue to see growth.
Tablets that are Android or IOS based are mostly entenrtainment devices to most of the users. At best, these tablets are supplements to the Windows-based computers. At the end of the day these tablet users (in the business world) still need computers to generate the documents, reports, Powerpoint files,...etc for their peers or clients to consume. I think the demand for computers (desktops or laptops) in the business world will not change much in the coming years. However, on the consumers side, the demand for tablets will greatly increase in the next few years due to the convienence and entertaining factors. Can anyone name a profession where the current tablet-products have entirely replaced the desktop/laptop computers?
This has been coming for some time now. More and more every day we say mobile devices being used for things that we would have done on a PC only a year or two ago. I see this as only a natural progression/evolution for the industry, especially with the advent of voice control that actually works well.
This seems like one of those "duh" announcements.
The writing has been on the wall that computers and portable phones will eventually become one thing, particularly for consumer use. Motorola is leading the way with their webtop boot mode on their newer phones..
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