Sunday, June 10, 2012

The Purest Way To Play Mobile Commerce And NFC

 Do NOT miss this enormous investing wave.

This is the same type of story as Qualcomm.
 (a company with very disruptive technology opted to sell their hardware business and generated millions in revenue by just licensing the technology)

Gartner estimates the market to be $170B and many are calling it the next "gold rush" for ecommerce.The technology is called near field communications, or NFC.

A chip inside your phone will contain sensitive information (credit card, passport, airplane ticket etc) and when the phone is swiped near a point of sale terminal, the data will be transferred enabling a purchase, boarding or entry.

Say goodbye to your wallet. (the stock that has the patents for it here)

As everyone waits to see if Apple decides to include NFC  in their upcoming iPhone, the market is already adopting the technology.

While it may seem like Apple's iPhone is the dominant smartphone, it only represents 7% penetration.

There is NO DOUBT that NFC is where the market is headed. The ability to swipe your phone to make a payment, unlock a door and even cross the border is going to disrupt several industries.

From the June Issue of How To Find Big Stocks:
 (Big Stocks Newsletter)

Just like the advent of the credit and debit cards phasing out the need for cash, NFC technology is definitely capable of eliminating the wallet altogether. When doing a search for NFC and “mobile wallet”, you will see lots of stories from several years ago. Many have said this technology will never get adopted. If Google and Apple can indeed implement this technology in their infrastructure, it will completely disrupt the payments industry. All of these components represent a wave we call “virtual checkout”. The days of waiting in line for a cashier to ring up your goods are coming to an end.

This is the transformation:

The first way and easiest method of adoption will be converting a cellphone into your very own personal wallet. After the cashier scans all of your items, you simply tap your cellphone near the reader (instead of swiping your credit card).

Eventually, you walk into The Gap and scan a pair of jeans with your NFC enabled phone. The confirmation comes back to your mobile screen verifying payment. The store records the item as being paid, turns off the security sensor also embedded on that tag, and out the door you go.  See the potential disruption for the payments industry?

Your cellphone will soon act like a scanner and use the information on it to replace your wallet.

The key thing we look for in a big investing wave, (and we think $170B is a big one), is the company with the competitive advantage in it. They must have some kind of monopoly that allows them to be the dominant player in the space.

A Big Stock for Mobile Commerce

This company has a patent (along with approximately 100 other for NFC) that dates back to 1999 that has both the mobile phone manufacturers and wireless providers concerned. In a nutshell, in order for a mobile computing device and a wireless provider to implement NFC , you're going to have to pay them a licensing fee.

Their patent portfolio is starting to pay big dividends.

One major handset manufacturer just licensed this IP and we expect the others to follow suit. This company also just announced a lawsuit against one of the largest carriers.

Two individuals just filed 13-Ds. Management owns less than 10% of the stock. If there was ever a company poised for a buyout, this is it.

1. trading at less than sales
2. over 50% of their market cap is in cash

(more from the June Issue)

It is our opinion that handset manufacturers and wireless providers will need to license one or more of their patents. We haven’t seen this type of “monopoly” on a transformation for the mobile phone since Qualcomm!

A massive amount of wealth was generated by owning Qualcomm before the mobile phone boom.

There is another huge boom coming when the mobile phone replaces your wallet.

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