Tech moves to the front of the market
New products and consumer demand have made technology companies major players.
For the past decade, we didn't have enough new products in tech, so we didn't have enough new product cycles.
We tended to look at tech as an economic play -- a weak economic play at that -- and when tech stocks moved up, we sold them, figuring that, like steel or aluminum, the moment that inventories rose was the moment that you sold.
The research reflected that, and you had constant downgrades and lids on stocks that seemed logical and necessary.
Occasionally you had something new, like the notebook, and it would catch fire, but then it would become outdated and the analysts would turn against the stocks once again.
That's what makes this moment so different. As we saw from the Consumer Electronics Show, there are so many product upgrades and so many new devices that the product cycle, not the economic imperative, is driving things.
The tablet is huge, but it's not just the tablet -- it's the components in the tablet, as well as the infrastructure needed to support it. At the same time, social networking and social-network gaming have their own sets of supports. So does everything involving video on the Web.
And the devices needed to move it, power it and control it. The whole darned thing is patchwork, and a pastiche of companies are behind it, not just Apple (AAPL). And you are seeing that now.
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Just take a couple of recent big moves. Qualcomm (QCOM) buys Atheros (ATHR), and Qualcomm rallies because it will enter the home with its 4G offerings. And why not? The signal is so powerful that you can go cordless.
Ciena (CIEN) is rallying hard because you need Ciena's technology to enable the broadband infrastructure to translate the signal into something that's fabulous for video devices. Same with Juniper (JNPR). Same with the towers.
You don't see these players, but they and F5 (FFIV) are the companies needed to allow Verizon (VZ) to compete with AT&T (T) for the iPhone or allow Comcast (CMCSA) to increase its share as the third-largest phone company in the United States or allow Sprint (S) or T-Mobile to offer enough features to compete with the big guys.
Think about all of the features these new devices need to be competitive with plain old TV or with your desktop. They need equal sound -- Cirrus Logic (CRUS) -- and equal picture -- Akamai (AKAM). The handheld devices can't drop the signal, so they need Skyworks Solutions (SWKS). Someone has to make the cool user interface, so Cypress Semi (CY) steps up. Of course, all of the data must be kept somewhere, so EMC (EMC) and NetApp (NTAP) get to play.
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