Soon after Hewlett-Packard and Dell pushed into both the enterprise and consumer markets, keeping control through the rise of e-mail and the Web. Microsoft and its Internet Explorer ruled the browser market. But Google came along and took that power, and then the smartphone revolution happened. Research in Motion trumped Nokia and its “dumb phones,” and yet another sea change in technology was on.
Well, Apple upped the ante with its iPhone, and now the iPad, making Steve Jobs’ company the king of tech. Unlike previous transitions, though, where lots of companies benefited, only Apple and its suppliers are thriving now. Everything else has either lost value – see: Nokia – or watched its price-to-earnings multiple shrink, as investors are less and less willing to pay up for those profits.
The iPad especially poses a threat to these non-Apple-related companies. Just last week during its earnings call, Apple said that more than half of the Fortune 100 are testing the tablet for enterprise use. If that happens and the iPad crosses over, Cramer said, this product will be the Trojan horse that lets the entire Apple lineup into the workplace.
“All of these changes are so visible that people have given up on Microsoft and Intel and those that use the chips and the software,” Cramer said, “no matter what these two great companies say or do.”
“What you are seeing,” he continued, “is that people have pronounced all of tech dead, except for Apple and a couple derivative plays,” like Cirrus Logic and Skyworks Solutions . “There’s just too much non-Apple in hardware, software, the semis, the Web and networking. And Apple has not only stolen mindshare, it’s killing market share.”
So Apple is “the key to the funk of tech,” Cramer said. The other stocks? They are viewed as being in secular decline, and the market never buys anything in secular decline. Cramer may think the judgment is premature, but at least now you know why tech is being left behind. And he doubts they will make any significant move until they “can prove that Apple isn’t destroying their franchises like all of the other disruptive technologies in the past.”
When this story published, Cramer’s charitable trust owned Apple and Intel.
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