With 2013 now well underway, the tech sector hasn't disappointed. Technology's Super Bowl - the Consumer Electronics Show (CES) - recently wrapped up, and the next few years promise to be full of innovations as various new products showcased are rolled out to the public. Those new gadgets will power earnings at a number of firms. As expected, however, the consumer remains fickle - a lesson some tech giants learned the hard way this past week.
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Better-Than-Expected Lumia Sales
Once the kingpin of cool cell phones Finnish firm Nokia (NYSE:NOK) basically fell off a cliff as its products failed to excite consumers in the age of iPhones and Android devices. Taking a huge gamble on its new Lumia smartphone series, Nokia was considered by many analysts to be in do-or-die situation.
Well, it seems that the tech company is actually thriving. Last week, Nokia announced that it sold more phones than expected. That includes 4.4 million devices from its critical Lumia series running Microsoft's (Nasdaq:MSFT) Windows 8 software. All in all, the firm's phone unit sold roughly 80 million devices, with sales totaling $5.2 billion.
More importantly, those sales numbers could be enough for Nokia to finally realize a profit from the division. The company has seen losses in its device division for several quarters now. Shares of Nokia surged on the good news and gave investors hope that the firm could be headed for a turnaround. The Nokia bump also trickled down to BlackBerry maker Research In Motion (Nasdaq:RIMM). RIM is the middle of its own turnaround story as it unveils its new BlackBerry 10 OS.
Despite some hefty sales numbers from Nokia, Microsoft is having a tough go with its Windows 8 software suite. The software is designed to unify the look of Windows across PCs, tablets and smartphones and is optimized for touch-screen devices such as media PCs and phones. So far, the OS - which completely replaces the familiar desktop user interface with a mosaic of bright colored tiles - has failed to meet consumer expectations.
According to tech consulting group Gartner, shoppers shunned Windows 8 PCs during the holiday season. Worldwide PC shipments declined by 4.3% to hit 90.3 million units sold during the last three months of 2012. Some PC producers - such as Dell (Nasdaq:DELL) - saw double-digit declines in their shipments for the quarter. Overall, Gartner said the new operating system did not have a significant impact on PC shipments in the quarter. Combine this with Microsoft's poor sales of its Surface tablet, and Windows 8 is looking shaky indeed.
No Mini iPhone
There was plenty of Apple (Nasdaq:AAPL) speculation this week as reports began to surface that the tech giant would create a "cheaper" iPhone device. First reported by the Wall Street Journal, news of a mini iPhone device swirled around the Internet. The device would have been a stark contrast to the Cupertino, Calif. firm's mantra of delivering premium products to the marketplace.
In a revised version of an interview that was published in a Chinese newspaper, marketing chief Phil Schiller said that Apple would focus on making "the best products" for customers, adding that it would "never blindly pursue market share" - basically, putting the rumor to rest. Some analysts suspect, however, that Apple could still be working on a cheaper iPhone-like device to be sold under a different brand heading and run an iOS-like software suite.
Want to Talk to Zuckerberg? It'll Cost You
Finally, social media leader Facebook (Nasdaq:FB) unveiled a new program that will allow users to send messages to other users outside their network of friends and likes - if they pay. Normally, if a Facebook user messages someone outside his contact list, the email gets sent to the "Other" mailbox. The idea was to prevent spam.
Facebook originally didn't set a price for the feature. Now, however, if you want to talk to some top executives, it'll cost you a pretty penny.
Sending a message to Facebook founder Mark Zuckerberg carries a $100 price tag. While analysts say that fee will be less to send you or me a message, it'll still be at least $10. The new messaging fee is one of several new revenue streams Facebook is testing out - its latest experiments explore generating cash directly from its one billion members.
The Bottom Line
With 2013 only a few weeks old, some trends are beginning to show. The smartphone and mobile market will continue to be the driver for the tech sector. These devices will be the make-or-break industry for a variety of tech firms, and investors shouldn't take stumbles lightly.
At the time of writing, Aaron Levitt did not own any shares in any company mentioned in this article.