Apple Inc. (NASDAQ:AAPL) and Facebook Inc (NASDAQ:FB) are facing high expectations for their quarterly earnings reports due this week, and although the two companies have very different business models, they underscore the difference between IT firms that have Wall Street’s attention and those feeling a little unloved – mobile presence.
Desktop giants struggle to make the switch to mobile
Google Inc (NASDAQ:GOOG), Amazon.com, Inc. (NASDAQ:AMZN) and Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930) have already released earnings reports that beat expectations, reports Adam Satariano at Bloomberg, while International Business Machines Corp. (NYSE:IBM) and Yahoo! Inc. (NASDAQ:YHOO) (both companies that once dominated the IT sector) have generally been a disappointment. Microsoft has ventured into the mobile market with the Windows Phone and mobile versions of the Office productivity suite, but it’s really their corporate cloud computing services that have saved them from having a bad quarter as consumer sales slump.
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Security company Symantec and chip manufacturer Intel have similarly struggled because they haven’t been able to parlay their strong position in the desktop market to mobile. Even eBay, which seems like it should have been able to turn its bidding system into a popular app, has seen its earnings fall as online habits change.
Smartphones a cornerstone for key demographic
The fundamental issue is that people with disposable income are buying smartphones, and a computer that you can carry in your pocket is going to get used a lot more than the one you leave at home. Since this is exactly the demographic that advertisers and developers want to connect with, a mobile app presence is arguably as important as having an online presence, and it won’t be long before the two trade places. Even when you look at larger, global trends, market research firm IDC expects PC shipments to be down 10% worldwide for 2013 while smartphone shipments will be up 7.3%.
Twitter securely on right side of the divide
Seen this way, it’s clear why investors are getting so excited about the Twitter IPO – it may be the first major tech stock that exists on mobile platforms more naturally than it does on a PC. It’s the one stock where you don’t have to worry about whether people will want to use the product five years from now (though you still have to wonder when the company will start turning a profit).
Facebook or Apple disappoints in the mobile space
If either Facebook Inc (NASDAQ:FB) or Apple Inc. (NASDAQ:AAPL) disappoints in the mobile space, you can expect their share prices to fall sharply in response.