Tapping the Winners in Wireless Handsets
Our top pick has a strong signal, but could a competitor come calling?
While there have been some changes to the wireless handset industry landscape since our last overview, the basic tenets of our thesis remain unchanged: Handset makers that control both the hardware and the software portions of their platforms are best positioned to maintain long-term competitive advantages. In our view, Apple (AAPL) remains at the top of the heap, and although we're skeptical about Research in Motion's (RIMM) recent strategic moves, we think that RIM remains positioned to be a leader in the smartphone market.
Our three criteria for a winning smartphone company remain unchanged: control of both hardware and software, scale, and true smartphone functionality. In fact, we think that events over the course of 2010 confirm the importance of some of these criteria. Earlier in the year, we saw Palm give up on its efforts to remain independent, because while it certainly met the first and third criteria, it simply did not have the scale to survive. Additionally, we saw Nokia (NOK) take steps to regain complete control of its software platform by taking sole, direct control of the Symbian operating system from the consortium that was running it as an open-source platform.
Joseph Beaulieu does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.