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Stock Strategist Industry Reports

For Investing in Smartphones, Stick with the Obvious Choices.

Motorola and Palm can't beat Apple and RIM; little money in Android.

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Americans love rooting for the underdog, and the press and other technology mavens love upstart companies. But investors would be well served to face up to reality: in the handset industry, scale, features, and reputation are everything. For that reason, we think investors looking to invest in the growth of the smartphone market should narrow their focus to  Apple  (AAPL) and  Research in Motion  (RIMM).

Three Features of a Winning Smartphone Company
We've settled on these firms because they (and their platforms) meet what we view as three key criteria for long-term success in the smartphone market. The first criterion is that the company controls both the hardware and the operating system. We think firms that control both aspects are able to provide a more controlled, consistent user experience and allow them to drive customer loyalty.

Joseph Beaulieu does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.