It appears as though the Stock Market Gods have decided to
throw investor a curve ball this week, after large triple digit drops last
Friday and Monday the markets briefly rebounded on Tuesday and Wednesday before
selling off again on Thursday and Friday.
All
three major indexes are in the red this year, but according to the esteemed
analysts the bull market is not yet over. How much I would trust these opinions
though is a different story.
Out of
the three major indexes the one that clearly takes the prize as the biggest
loser is the Nasdaq which briefly fell below 4,000 in afternoon trading on
Friday. The index that is mostly composed of Tech stocks is currently down over
2.7% for the year as investors wisely begin to rotate out of high flying tech
stocks and instead begin to focus on undervalued companies with good fundamentals.
With
that said as investors begin to make my predictions of late last year come true,
large Tech companies like Google and Facebook continue to wage war over who
will control the future of the Tech industry. Now another Technology player
opens up another front in the 2nd Tech War, (the first one in my
opinion occurred during the late 90’s) Amazon has declared war on Apple, and Samsung
over who will control the smart console controlling your T.V and the
ultra-competitive smart phone market.
Facebook
and Google have headlines in recent months by making a number of high profile
acquisitions that according to the management of those companies will give the
two companies control over several important sub segments of the tech market,
such as virtual reality or the smart home. (if you are interested in these acquisitions
check out another one of my articles called Facebook
and Google are going Head to Head over the Future of Tech)
But now
Amazon has decided to enter the war, the online retailer has recently announced
the new Amazon Fire T.V, a streaming device similar to that of the Apple T.V
and the Roku 3. Yes Amazon the giant online retailer that already dominates
your online shopping experience plans on controlling your T.V experience as well.
When you think about it the Fire
T.V makes perfect sense for Amazon, the company already has a streaming service
similar to that of Netflix called Amazon Prime. And although I am not a great
fan of it myself it is still a perfect idea for Netflix to release a streaming
device. Amazon now will provide content through a streaming service and the way
to deliver it.
The tech war has just recently
shifted to the TV as the major players try to supplement cable as the predominant
form of delivering original entertainment. The race to replace the clunky cable
box has led to Netflix becoming a major power in the Tech world and has led to
tech companies creating small $100 streaming devices that connect to your TV and
hence forth connecting consumers to a number of streaming services including
Netflix, Hulu Plus, and HBO Go.
Every major tech company has built
a streaming device whether it’s Apples , Apple TV, Roku’s smart box, Microsoft’s
Xbox 1, or Samsung’s “Not So Smart TV” (I
have one and I always have constant problems with it but that’s a topic for
another time). Now Amazon joins the game, I personally have not got the chance
to see how well it works but what I have read about makes me interested,
perhaps Amazon might steal a significant share of the market from its rivals to
make a difference.
Apparently though it does not seem
that Amazon founder and C.E.O Jeff Bezos is content with being the online king
of retail, emperor of Electronic books and the up and coming Prince of TV, he
set his sights on the Samsung and Apple dominated field of smart phones.
Yes you read correctly Amazon is
coming out with a smart phone, which is due to come out sometime in the 2nd
half of the year. Amazon already has a line of tablets in its Kindle Fire,
which has found success in the market place against strong rivals like Apple.
This is probably because of Amazon targeting the lower end consumer, which has
seemed to work out considering Amazon’s Kindle fires have been a he success.
Maybe this strategy of targeting
the lower end consumer that has helped Amazon crack into the tablet market will
help it succeed in the smart phone market as well? This strategy actually might
work considering that aside from some 3rd rate competitors there is
no real smartphone for the lower end market, aside from maybe the iPhone 5c
which in my opinion is too expensive for the lower end market anyway.
If Amazon prices its new smart
phones correctly it might seize a large size of the smart phone market, it
might even cut into Samsung’s and Apples share of the market. From a business
standpoint Amazon will probably not try to make money from the sale of the
devices themselves but probably from the sale of content on them. This strategy
has worked out well with the Kindle and Amazon is probably gaming on the fact
that it will work out with Smart phones as well.
Unfortunately for Amazon the
smartphone field has been littered with failures as smaller competitors try to
take on the might of Apple and Samsung. For example Blackberry, once a strong
rival was nearly put into Bankruptcy late last year, and Motorola was sold off
to Google as sales plunged (Google has since sold Motorola for a substantial
loss). If Amazon does not play its cards right its venture into the smart phone
market may go the way of Blackberry and Motorola.
But regardless of the past history
of former smartphone makers, Amazon’s focus on the low end consumer might let
the company avoid the fate of these companies. In terms of whether or not to
buy Amazon stock, now that’s a different story.
Amazon stock by any means is not
cheap, the stock trades at a triple digit P/E ratio of 529x and although a fly
higher in 2013 if anything has been proven in the first 3 ½ months of this year
is that 2014 is not 2013.
Stocks of internet companies have
recently taken a beating as the Nasdaq goes through a bit of a correction
during the past few weeks. Amazon stock its self is down over 20% so far this
year. So if you plan on investing into Amazon you will have to beware of the
volatility and personally I feel that Amazon stock, similar to that of Netflix
is simply to expensive to invest into at this moment, especially with the
current volatility in the market.
With that said however even as tech stocks sell
off the large players of Silicon Valley will continue to wage war buying up
start-ups and competitors with Facebook, Google, Apple, and now Amazon all vying
to win and take control of the future of tech. IN THE NEXT FEW MONTHS I WILL BE MAKING A WEBSITE FOR INVESTMENT WEEKLY WHICH WILL INCLUDE WEEKLY STOCK TIPS AND POTENTIAL OPPURTUNITIES IN THE MARKET AS WELL AS WEEKLY ARTICLES ABOUT MARKET EVENTS AND ANALYSIS OF VARIOUS INDUSTRIES
IF YOU HAVE IDEAS FOR THE NEW WEBSITE PLEASE COMMENT
ALSO COMMENT ABOUT WHAT YOU THINK OF THE BLOG AND ANY IMPROVEMENTS YOU WOULD LIKE TO SEE
IF YOU HAVE FRIENDS INTRESTED IN THE MARKET PLEASE LET THEM KNOW ABOUT THE BLOG SINCE IM AM CURRENTLY ADVERTISING SOLELY THROUGH WORD OF MOUTH
THANK YOU
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