Shocking Chart Reveals the Next Two Technologies to Crumble
In every contest, there’s a winner and a loser.
It doesn’t matter whether we’re talking about a sporting event, the National Spelling Bee, or a bingo game at your local American Legion.
What in the world does any of this have to do with our mandate here to uncover the most investable technologies?
A lot, actually.
You see, we can’t forget that for every new game-changing innovation like Uni-Pixel’s (UNXL) touch sensors, there’s an ultimate loser; a technology or company destined for the trash heap.
Now, it might not happen overnight. But it is going to happen.
Doubt me? Then consider a brief historical record…
The automobile killed the horse and buggy.
Streaming video (Netflix) killed movie rental stores (Blockbuster).
Mobile phones killed the pay phone.
And, of course, video killed the radio star.
In all seriousness, this is a phenomenon that economists started observing way back in the 1950s. It happens frequently enough that they decided to give it a formal name – creative destruction.
To me, it’s simply a fact of life for technology companies. They must innovate or die. And that’s why I’m writing today…
One technology as we know it is about to be forgotten forever. And two more are about to enter a terminal decline.
At the very least, if you own any investments in the respective industries, you should get out while you still can. If you’re more ambitious, you might want to start looking for a few timely short investments.
Whatever your preference, here are all the gory details…
Go Ahead and Call it a Convergence
I’ll confess, it’s rare for a single innovation to render multiple technologies obsolete. But that’s precisely what’s happening with the exploding use of mobile phones.
We’re witnessing a historic technological convergence.
What used to be standalone functions (web browsing, messaging and even banking) or standalone devices (music players and cameras) are all being incorporated into mobile devices.
Or, as Jessica Leber of MIT Technology Review puts it, smartphones are becoming “the Swiss Army Knives of consumer electronics.”
And the record pace of adoption for smartphones all but guarantees that this rate of convergence is going to accelerate, too.
Of course, consumers (i.e., you and me) are the ultimate winners, as our mobile devices can do more and more, thereby increasing convenience and productivity. So who are the losers?
Say “hello” to the world’s top seller of GPS devices, Garmin (GRMN).
Headed in One Direction: South
Garmin used to be one of the market’s hottest growth stocks. From January 2006 to September 2007, shares vaulted a spectacular 242%.
Within a year of that meteoric rise, however, the stock lost more than 80% of its value. (Ouch!) And it’s been struggling to recover ever since.
What happened? The mobile phone.
In early 2007, companies like Nokia (NOK) started rolling out products with GPS baked-in.
Ironically, Garmin’s co-founder downplayed the threat of mobile phones in 2003, saying his company benefited from high technological barriers to entry. Specifically, pairing GPS signals with mapping software. Boy, was he wrong.
In any event, mobile phones with GPS capabilities officially put Garmin on death row. Now it’s just a waiting game. Even company insiders know it.
“It’s not a mystery that the personal navigation market is in a period of decline,” says Dawn Iddings, Garmin’s Vice President for Business Development.
A “period of decline”? I’m sorry, but all the data points to it being a terminal decline. Maybe she was just being euphemistic, though.
Long story short, avoid Garmin. And consider buying some long-dated put options, like the January 2015 $20 puts.
The Next Great Short Opportunities?
It’s high time we also start sleuthing out ways to bet against digital camera and portable music player companies. Much like personal GPS devices, they’re staring down obsolescence.
Case in point: Accenture’s latest study on which tech gadgets consumers report owning in the U.S., Japan, Germany, France, China and India.
As you can see, in just three short years, ownership of mobile devices (smartphones and tablets) exploded higher. In contrast, ownership of digital cameras and portable music players declined.
Coincidence? Not a chance. As we all know, we don’t need a standalone gadget when a mobile device comes with photo taking and music-playing capabilities.
Add it all up, and leading digital camera makers like Canon (CAJ) and Nikon are in trouble. While digital cameras don’t represent their entire business, they account for a significant enough amount to impact profitability and, in turn, stock prices.
The decline in portable music players doesn’t bode well for Apple (AAPL), either. It already relies heavily on iPhone and iPad sales to generate the bulk of its revenue. And it’s going to have to more and more.
Bottom line: Sometimes the most investable technologies are actually on the short side of the market. And right now, GPS devices, everyday digital cameras and portable music devices appear destined for extinction. So invest accordingly… or get ready to kiss your capital goodbye.
Ahead of the tape,