Microsoft Corporation (MSFT), Google Inc (GOOG) & Apple Inc. (AAPL): The Wearable Computing Boom

The best investment for wearables

It was recently reported that Microsoft Corporation (NASDAQ:MSFT) was granted a patent that allows data to transfer via the human body. This suggests that the company’s research division has been working on wearable innovations. But, Microsoft Corporation (NASDAQ:MSFT)’s soiled history of failed consumer products makes its foray into wearable computers suspect at best. One exception: a product associated with its Xbox brand. The company’s R&D in its Entertainment and Devices Division topped $140 million, or a 44% increase in Q1 2013, related to what the company calls an increase in work on interactive entertainment.

Many have criticized Google Inc (NASDAQ:GOOG) for being too singular, focused on ad revenue. But the company’s purchase of Motorola shows that it knows hardware is the new frontier for them. In Q1 2013, the company posted $1 billion in revenue from hardware alone, making up 7% of revenue for the period. That is a major year over year improvement from nothing in Q1 2012. Google Glass also proves that the company will take on the criticisms of wearable tech with what could be considered the most ostentatious example of it seen so far.

But, it is Apple Inc. (NASDAQ:AAPL) and its iOS ecosystem that will likely be the biggest benefactor of wearables. Year over year sales of iPods have decreased 20%. Sales of iPhones are up a scant 3%. iPads are doing well with a YoY 40% sales increase. But that’s not sustainable. Apple Inc. (NASDAQ:AAPL) needs to release a product to combat slowing iPhone and tepid iPod sales. If it doesn’t release something, its competitors will. Reduction in costs is an important factor as well, one of the key reasons it wants to break off its semiconductor relationship with Samsung.

Another reason for the split? Samsung is probably going to get into the wearables business too.

The article The Wearable Computing Boom originally appeared on Fool.com and is written by Daniel Cawrey.

Daniel Cawrey has no position in any stocks mentioned. The Motley Fool recommends Apple Inc. (NASDAQ:AAPL) and Google Inc (NASDAQ:GOOG). The Motley Fool owns shares of Apple, Google Inc (NASDAQ:GOOG), and Microsoft Corporation (NASDAQ:MSFT). Daniel 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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