Get Your Gadgets Here, but Invest Elsewhere:
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Comdex: Get Your Gadgets Here, but Invest Elsewhere
By Pat Dorsey
When I went to Las Vegas earlier this week for the Comdex trade show, there were a lot of things I fully expected to find. Testy cabbies were one (Comdex attendees are notoriously bad tippers), along with glassy-eyed salespeople, long lines, and enough company-logoed T- shirts to clothe all of Central America.
What I didn't expect to find was a religious revival, which is exactly what I got when I stopped by the Palm (Nasdaq: PALM - news) booth. A company representative asked the crowd, ``Do you love your Palm?'' and the scores of techies thronging the booth cried ``YESSS!'' I had the distinct feeling that any passerby spotted with a Microsoft (Nasdaq: MSFT - news) PocketPC would have been torn to shreds by Palmians eager to demonstrate their devotion. It was a truly weird scene.
Weird though it was, it pretty much summed up this year's Comdex. Companies with devices were cool; companies with wireless devices were worthy of worship. Although the handheld market is certainly a growth industry--otherwise, everybody and their mother wouldn't be falling over themselves to roll out some kind of ``post-PC'' gadget--I think it's going to be a while yet before a lot of the hard questions get answered. Moreover, I think it's highly unlikely that anyone is going to make any money betting on overpriced stocks like Palm, Handspring (Nasdaq: HAND - news), and Research in Motion (Nasdaq: RIMM - news) at this point.
Yes, I know that Palm has the early lead in both hardware and software for mobile devices, and that's the stock I would buy if you held a gun to my head and told me to choose a ``handheld play.'' (And believe me, with a price 233 times earnings estimates for fiscal 2002, you'd have to hold a gun to my head to get me to buy the stock.) However, the handheld industry is still very, very young, and even though the company's stock is priced as if world domination were assured, there's just no guarantee that Palm will emerge victorious.
More importantly, it's still an open question as to whether users will prefer a handheld that integrates phone functions or a phone that allows basic calendaring and contact management. The first approach gives you a bigger screen but a somewhat clunkier device (a Handspring with a VisorPhone won't exactly fit in your shirt pocket). But those oh-so-sleek mobile phones have oh-so-tiny screens that limit their usefulness. Even the super-clever R380 Smartphone from Ericsson (Nasdaq: ERICY - news), which combines personal digital assistant (PDA) functions into a largish mobile phone, was a little tough to use when I tried it out at Comdex. It's a good try, but far from a killer app.
It seems to me that the killer app in handhelds is unlikely to emerge until two things happen. First, wireless data-transfer standards like Bluetooth have to attain critical mass so that cordless connections are as simple as buying a third-party accessory and letting it communicate with your handheld or mobile phone. Second, voice recognition has to become a viable means of inputting data into handhelds, because thumb-keyboards and handwriting recognition seem like only interim solutions. Unfortunately, we need either faster processors for mobile devices or less processor-intensive speech- recognition programs before this happens.
My own gut feeling is that a few years hence, mobile users will have a small, Net-enabled phone for basic, transaction-specific functions, and a wireless PDA for just about everything else. What these devices will look like, who will make them, and what operating system they use, however, are questions that are still up in the air. Given the stratospheric valuations of the various handheld stocks, I think you're better off buying the gadgets than the companies right now. |
