There are two companies in particular that have offered such a “solution” but the true winners in the scenario, and ones investors should look to, are the phone companies that are capitalizing on this trend.
Facebook Inc (NASDAQ:FB) Home less than stellar
Facebook Inc (NASDAQ:FB) hyped it’s new “Home” skin for Android ad nauseam — which would have been great had the product delivered. The company released Home just over a month ago. An innovative shell for the Android mobile operating system, the app puts a stream of Facebook photos and status updates on the home and lock screen, pushing aside the traditional app grid.
According to trade magazine Computerworld, which conducted a quick poll after its release, tech managers aren’t impressed with the Home app layer. Roughly two-thirds said they don’t want Facebook Inc (NASDAQ:FB) “or anyone else” taking over the smartphone interface.
Everyday users followed suit. Its critics hardly gave it two weeks before commenting on “the Facebook Inc (NASDAQ:FB) Home disaster.” Business Insider labeled the product “a Huge flop” within days. The Atlanta Journal Constitution’s headline at day 30 read simply, “Facebook’s Home app not liked.” Its average rating in the main Android app store is 2.2 out of 5, with nearly 9,000 1-star reviews outweighing the 3,000 5-star reviews.
The stock took a predictable path. It rose steadily as the Home launch event played out. The stock rose initially and then the slow and steady decline came as people began using Home, indicating that the product failed to prep up the stock.
Windows phone
Before this was the Windows phone. After its launch, Microsoft Corporation (NASDAQ:MSFT) was putting up respectable growth in content availability. Most of the big tech companies like to wield app counts as selling points for their respective operating systems, coaxing users in with the promise of useful apps. That being said, the Windows phone also promised improved productivity for businesses and super interconnectivity for users.
Microsoft Corporation (NASDAQ:MSFT) was up to 50,000 apps prior to its phone, but in the months leading up to its launch, apps nearly doubled to over 100,000. Since launch, Microsoft Corporation (NASDAQ:MSFT) has inched higher to 145,000 total apps in its arsenal. Moreover, research firms have estimated that across the world, 19.1 billion mobile instant messages were sent daily in 2012, compared to 17.6 billion traditional SMS messages. This indicates that old SMS functions are losing their technological relevance as users with Internet data plans opt to send free messages, instead of signing up for restrictive SMS texting plans. Microsoft Corporation (NASDAQ:MSFT) has been putting effort into Skype and other messaging apps in order to address this need.
Microsoft Corporation (NASDAQ:MSFT) stock is up more than 30% so far this year. Its continued competitiveness with its apps and other products leading the charge into the cloud has kept the stock steady.
Phone companies for the win
However, as previously stated, the real leaders in these two attempts at a more ‘consumerized’ phone are the phone makers themselves and the providers of services. Let’s start with Nokia Corporation (ADR) (NYSE:NOK). Nokia Corporation (ADR) (NYSE:NOK) reported decent sales of its Lumia smartphones, which are powered by Microsoft Windows Phone 8. Right in line with estimates, Lumia sold about 5.6 million units last quarter.
It was also announced (by Microsoft) that the new Lumia 928 launches on Verizon Communications Inc. (NYSE:VZ) this week. The three-way partnership is a win for everyone involved. Microsoft and Nokia both get increased exposure to the largest mobile subscriber base in the U.S., while Verizon is not so secretly rooting for underdog platforms like Windows Phone in the hopes that competition will reduce subsidy expenses.
This week, Verizon Communications Inc. (NYSE:VZ) also told shareholders that its focus will be more on paying down debt and growing its cash pile for the upcoming spectrum auctions. Some analysts think these comments suggest that the company may still be planning to use the distributions as a bargaining chip to get Vodafone to sell its 45% stake in the company.
The phone on which Facebook Inc (NASDAQ:FB) Home comes pre-installed, the HTC First, has seen its price drop to $0.99 from $99 and is rumored to be on the verge of cancellation. This will undoubtedly call for a drastic change in strategy by HTC, but it also means a chance for it and partner AT&T Inc. (NYSE:T) to offer better alternatives.
AT&T Inc. (NYSE:T) expects much better results in its wireless business in the second quarter after a weak start to the year, based on a statement by Chief Executive Randall Stephenson. Last month, the number two U.S. mobile provider reported a net loss of 69,000 cellphone subscribers in the first quarter, sparking fears of a slowdown in the market. Stephenson didn’t come out and say it, but it was implied that it was from the Facebook Inc (NASDAQ:FB) Home debacle. In the last few weeks AT&T cut the price of the HTC phone running Home.
Conclusion
So, in essence, we have two companies profiting from all those around them with minimal growth for themselves. It is never intentional for companies to do this, however, with such a volatile and uncertain venue like predicting consumer trends in mobile phones, it can be a fortunate side effect for investors in the right place. I see continued profit for phone providers like AT&T and Verizon, as well as phone makers like Nokia.
The article Picking the Right Stocks to Benefit From Mobile Growth originally appeared on Fool.com and is written by Bill Edson.
Bill is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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