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new devices and InvenSense +2

08:22 05-Oct-16


Long-time readers know that I've been tracking the progress of Amazon's Echo device family because of the innovative use of an array of microphones for better voice recognition.  Unfortunately, the sales volume was never enough to move the needle for InvenSense, though it has been increasing.  3.5M Echo devices have been sold to date, but Amazon is making a push and plans for the total to hit 3M this year and 10M next year.  Presumably it aims to achieve this goal by cutting the price of the cheaper Dot version almost in half, but those numbers still aren't really enough to be of any importance.

The reason I'm writing this morning is because of the introduction of Google Home at yesterday's event.  I expect Alphabet to eventually dominate this space because of its back-end technologies.  If such devices become ubiquitous that could be a substantial boon for InvenSense, though it may still face margin pressures.  It's also worth noting that both of the new phones sport AMOLED displays and will initially be available only through Verizon.  That's not a good sign for Project Fi, though I continue to think that such services will eventually change the industry.

I still can't get very excited about either INVN or GOOG right now.  Alphabet has great technology, but competition in advertising from Facebook remains a threat, as do regulatory pressures.  I can easily see the stock being vulnerable to a major market pullback.

Without a major Coursa breakthrough, "every little bit helps" is going to be the InvenSense motto going forward.  That will make financial results tough to project and anticipation of its developer conference in about 3 weeks may be buoying the stock.  Press related to the latter notes 45K developers and partners, up from over 30K last year.  That's good, but not earth-shattering.  Short of a buyout, I think good but not earth shattering is also the best that can be hoped for in terms of stock price, and the downside risk remains significant.