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April 10, 2015

Machine to machine, screen to screen ... and all things mobile

Is 2015 going to be the year of wearable technology? Apple certainly hopes so, but it is not the only hot trend in technology right now.

The trend is definitely towards all things mobile, however, and the recent Mobile World Congress in Barcelona provided a good snapshot of what’s coming down the turnpike.

Apple wasn’t at the Mobile World Congress, of course, because it likes to stage manage its own events, but most of its competitors and some of its suppliers were.

This article will have a quick look at those trends and the companies that are placed to benefit from them.

Living by numbers

I think we can safely say that the hunger for increased bandwidth will continue unabated.

3G – the third generation of wireless technologies – is still going strong, offering “good enough” bandwidth for rapid data transfer, audio and video streaming and video-conferencing.

4G networks, as one might expect, are faster than 3G networks and can carry more data – and then some.

You can probably guess what's coming next: 5G, where the buzz-phrase is about “intelligent network technology”, which appears to be more about traffic management and prioritising packets of data.

With more machines now connecting to the network, the onus will switch more to quality of transmission, presumably because while a human is tolerant of a jerky video of a kitten appearing to play a banjo along to Khachaturian's “Sabre Dance”, quality of transmission is a lot more important for a driverless car trying to avoid a collision.

The advent of 5G promises to speed up the development of the machine-to-machine (M2M) communications market, which is good news for Telit Communications (LON:TCM), one of the world leaders in this field.

“Telit is exposed to rising connectivity, sensing and automation through its modules and services in the automotive, healthcare, telematics, smart metering and other sectors,” said broker Canaccord Genuity, in a note following Telit's results last month.

Any expansion of the wireless market is likely to be good news for Anite (LON:AIE), the supplier of test and measurement solutions to the international wireless industry.

Hanging on the telephone

Even Apple, a company not known for its humility, has recognised that the trend is towards bigger smartphones.

Not only does this recognise that these devices have evolved beyond being phones into “pocket computers” but also that a bigger phone allows for a bigger battery, which is important because all of those handy smartphone features (the alerts, the wireless connectivity, the geolocation and so on) take up power.

Apple fan-boys were crowing that the company's latest iPhone had finally cracked China, where a big screen is essential because of the Chinese language uses logograms rather than letters, and that Apple was giving perennial rival Samsung a kicking in its home territories.

Samsung has certainly taken a hit; its first quarter profits are expected to be down 30% on last year, but that was not as bad a showing as feared, and the company is certainly not running scared of Apple anymore than Apple is running scare of the taxman.

Samsung recently unveiled the Galaxy S6 and S6 Edge models in Barcelona.

The screen is a laaaaarge 5.1” (diagonally), and the processor is apparently 35% faster than the one used in the Galaxy note.

According to Samsung, the phone charges in half the time it takes Apple's iPhone to become fully charged, and there were a load of other judiciously chosen metrics highlighted in Barcelona to give the impression that only a brainwashed Apple fanatic would persist in using an iPhone.

Unfortunately for Samsung, there are literally millions of those in the world …

What is becoming evident is that it is becoming increasingly more difficult for handset makers to differentiate their products, and the market is in danger of becoming commoditised.

That won't bother the likes of chip designers ARM Holdings (LON:ARM) and Imagination Technologies (LON:IMG), or retailers such as Dixons Carphone (LON:DC.).

As for tablets, these tend not to get used so much, left down the pub, dropped down the loo or dropped on the railway tracks, so the replacement/upgrade market is not so buoyant.

A company such as Motive Television (LON:MTV), with its TabletTV product, which has rehabilitated the humble aerial as a technological gizmo, will not care much about the tablet upgrade market, just so long as everyone ends up owning one.

In some respects, the industry has moved on from pushing tablets, and is now enthusing over wearable technology, such as smart-watches.

Nearly all of these gizmos need to be tethered to mobile phones in some way, so that's more good news for chip designers ARM and Imagination, while on the software side Fitbug Holdings (LON:FITB) has undoubtedly been gaining traction, as the marketing folks like to say, with its digital coaching app Kiqplan.

I can see for miles

Virtual reality has been “the next big thing” for a decade or more, and is still not quite there yet, possibly because people look daft wearing virtual reality headsets.

That being said, the humble gamer alone in his or her bedroom or, come to that, in a televised tournament held in a closed-down cinema, is not going to worry too much about appearances, and the field offers up promising possibilities for computer game developers such as Frontier Developments (LON:FDEV) and solutions provider Seeing Machines (LON:SEE) with its incredibly impressive eye-tracking software.

Seeing Machines is growing ever closer to consumer electronics giant Samsung, with whom it has a memorandum of understanding to facilitate joint development of face and eye tracking technology for the consumer electronics industry.

Mobile killed the video star

The days of kids being slumped in front of the telly seem to be over, but before you celebrate too quickly, that's because they now seem to spend all day hunched over a screen getting all their entertainment needs from the Internet.Ever since the advent of commercial television, advertisers have complained about the difficulty of attracting the eyeballs of the teenager market, but that seems to be a thing of the past, which is great news for digital rights companies such as 7digital (LON:7DIG) and Rightster (LON:RSTR), not to mention mobile marketing companies such as InternetQ (LON:INTQ) and Globo (LON:GBO).

Everybody has to pay and pay

Bill Gates, the co-founder of Microsoft, was predicting tablets were the future of computing back in 2002 but as we know, a technology is not deemed to be established until it has been around for at least five years before Apple enters the market and people start believing it invented it.

So it is with mobile payments, where the likes of Proxama (LON:PROX), Bango (LON:BGO), Monitise (LON:MONI), eServGlobal (LON:ESG) and Planet Payment have been evangelists for quite some time.

People did not really sit up and take notice, though, until Apple Pay, which, like Proxama's platform, uses near field communications (NFC) tech, and now Samsung has moved in with its size 14 clod-hoppers, with Samsung Pay.

“Samsung Pay goes beyond Apple, combining NFC and MST [magnetic secure transaction], which allows smartphones to emulate an old-fashioned magnetic stripe card and doesn’t require retailers to upgrade their hardware (less than 10% of US retailers have NFC),” notes broker finnCap.

“On the downside, it looks slightly more complex to operate than Apple Pay’s tap and finger-scan (even if the phone is locked). Paying with a smartphone shouldn't take longer than paying with a credit card. Of course, Europe has switched over to chip and PIN so Samsung Pay’s MST won’t work here; Samsung and Apple will be on the same footing, hoping retailers roll out NFC,” the broker notes.

”We think it will be a (much needed) shake up for mobile payments,” the broker opined.

“It is an extremely fluid environment at present and all we can really say is that with the arrival of the giants, it’s about to go mainstream,” the broker concluded. @MasterMetals MasterMetals Blog

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