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Let Samsung Illuminate Your Decision To Dump Apple

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Image by Getty Images Europe via @daylife

The key to consistently generating big profits in the markets is to be ahead of the crowd. Apple (AAPL) stock is no different.  Apple has a long open runway of opportunities ahead, but it also faces significant risks.

Astute investors should aggressively sell Apple at the first sight of any technological development that leads to significantly more power efficient generation of white light from OLED displays.

For background please see my article titled, Steve Jobs’ Failure To See Light In OLED Could Cost Apple.

Imagine Samsung introducing revolutionary new lines of mobile phones and tablet computers with twice the battery life of Apple devices!  Imagine colors more vivid than you have ever seen in any display before and half the thickness of Apple devices!

The foregoing is not just a hyperbole; Samsung is pouring billions into making this happen.

Samsung has been fighting legal battles with Apple; please see Apple Wins Another Round Against Samsung Galaxy In Germany, Samsung Finally Wins Patent Battle Against Apple, and Apple Wins Battle Against Samsung In Patent War.

Samsung has emerged as Apple’s main competitor across the globe.  Samsung knows that Steve Jobs made the mistake regarding OLEDs.  There is no reason to doubt that Samsung is gearing up to hit Apple hard at its soft spot.

In its fourth quarter conference call, Samsung management was clear that a very large portion of its $5.9 billion capital expenditure budget will be for OLEDs.

Traditional LCD and LED displays are relatively inefficient when it comes to power usage.  LCDs do not produce light but simply reflect light.  LEDs are often used for backlighting.

In comparison, OLEDs emit light and are very power efficient with the exception of situations where the screen is mostly white.  Examples of mostly white screens are emails and web pages.  On the other hand, a TV screen is seldom mostly white.

OLEDs are inherently black when no current is applied.  In other words, a black display using OLEDs consumes no power.  A white display using OLEDs consumes the most power because every pixel has to be lit up.

Samsung has rapidly moved up on the OLED experience curve.  A large number of Samsung devices use Super AMOLED displays.  Super AMOLEDs have overcome a number of deficiencies of traditional OLEDs described here.

A typical present day user interface using AMOLED ends up consuming about the same power as a typical Retina display in Apple devices.  The reason is wide spread use of white backgrounds.

Researchers throughout the world are working on a variety of techniques to make white screens using OLEDs more efficient.  Samsung has a history of innovations for reducing power consumption.  For example, larger than traditional red and blue sub-pixels need less power to emit the same level of brightness.  And now, use of larger red and blue sub-pixels has been commercialized.

It will probably take a combination of new techniques combined with an innovative user interface that uses less white screen to make OLED displays that consume half the power of traditional Apple displays.

Apple may be only one step away from losing its leadership and gigantic profits if such a development were to occur in the very near future.

Some will make an argument that Apple has the money, and it can simply buy OLED technology.  Such an argument, at least for the near future, arises from ignorance of the facts that Samsung controls 90% of the supply; there is a steep learning curve, manufacturing OLED displays is extremely complex, and Samsung may end up owning key patents.

Astute investors should be on the lookout for advanced warning of such a development coming to fruition, so that they can sell Apple stock at high prices to those less informed.  Further, experienced investors already know that such information is closely held and not readily available on the internet before it is too late.

About Me: I am an engineer and nuclear physicist by background, have founded two Inc. 500 companies, and have been involved in over 50 entrepreneurial ventures. I am the Chief Investment Officer at The Arora Report, which publishes four newsletters to help investors profit from change. Please feel free to write me at Nigam@TheAroraReport.com.

You can follow me here and get email notification when I publish a new article.

Full disclosure: I, my hedge fund, and Arora Report subscribers are long Apple.