When Google began the hype about Google Glass and showed us how it works, all I could do was shake my head in disbelief. Clearly, Google's "wearable computing" vision is badly blurred. It reminds me of the Segway, the ultra-dorky upright platform on wheels that was supposed to transform the transportation market, and instead became the vehicle of choice for security guards at large upscale shopping centers. These days, whenever I see somebody riding a Segway, all I can think is, "Why doesn't that geek ride a bike?"
Google's leaders are no doubt impressive visionaries, and there's no question that their search algorithms are second to none. However, they missed the mark badly on Google Glass, because they forget that humans want to enjoy the human experience, not turn into automatons more appropriate for a Will Smith movie. Google Glass is a perfect example of rolling out technology for technology's sake. It certainly tracks with how the company's announcement of a driver-less car also fizzled. A large portion of the population actually enjoys driving. They're not looking to automate the entire process, but for a tool that enhances the driving experience, especially in traffic.
Ultimately, Google's search engine has become a massive revenue-generating machine that funds new technologies that nobody really wants, remember Google TV or Reader? This is not an effective redeployment of capital that enhances shareholder value.
Investors who are looking for upside in technology-enabled initiatives at companies need to bear in mind that the most successful use of technologies are ideas that do not replace the human experience, but enhance our quality of life as well as our enjoyment in indulging in the things we do. The best technology enabled companies increase their productivity and make our lives easier.
Put simply, the best technology bets for investors are companies that effectively use technology to place what the consumer wants and needs at the front and center of everything. Some of these are companies that are traditionally considered to be squarely within the technology sector, while others are non-tech enterprises that are nevertheless embracing technology to deliver a second-to-none consumer experience.
Here are five consumer-focused, tech-savvy companies that are using technology in innovative ways:
- Apple (NYSE:APPL) - It shouldn't be surprising to astute industry watchers why Apple continues to be on the top of this list. Apple always focuses on the human experience and nails it. If you ever go onto an Android system, you realize the beautiful simplicity of an iPhone or iPad. My infant son picks up our iPad and his tiny fingers intuitively know how to use it. Now, they are poised to eat Pandora and Spotify's market through a new streaming music / online-based radio application. My wish is that Apple would make a TV. I'm excited to have a TV that does what I want the way I want it to work and I know Apple is the company to make it happen.
- Verizon Communications (NYSE:VZ) - Television is the next frontier ripe for a mobile technology makeover. The television industry has been lagging in nearly every way in its un-willingness to adopt new technologies that enhance the consumer experience. For example, as a football fan in Los Angeles, my biggest gripe is that if I don't buy the sports package, I get the worst football games. Now Verizon has struck a deal with the NFL, enabling us, the American consumer, to watch any game we want for 3 bucks, all from our phone or IPad. It's often difficult to spend 4-5 hours straight watching a game at home, but this technology allows us to take the game with us, sneaking peaks wherever we are. Genius move for Verizon, and hopefully a sign of things to come for making the television experience mobile.
- The Walt Disney Company (NYSE:DIS) - Disney knows their consumer base inside and out, often anticipating our needs before we even know them. They are making really smart acquisitions that expanded their brands. They bought the Star Wars and Marvel franchises and completely refreshed them. They have a digital wristband that works on rides and to buy things throughout the park. Now they can track everywhere you go and everything you do! They use this information to build resorts, hotels, theme parks which reflect exactly what parents need and want. As an example, a Disney cruise is so filled with child-friendly activities; parents can actually relax and unwind, albeit with the sounds of Goofy and Mickey in the background. Technology is obviously an enormous enabler of their business, from the best tech-based filmmaking platforms in the movie industry today (think of the special effects wizardry of Pixar, for starters), to advanced customer service platforms that manage much of the back office operations of their theme parks as well as the development of multiple online and offline entertainment for all their properties.
- Starbuck's (NYSE:SBUX) - Okay, Starbucks makes coffee. And some food items which, frankly, could use some work. However, the way Starbucks has embraced technology is a sight to behold. From the first to give away free WIFI to the competent use of loyalty cards. They are the only company with digital coupons and gifting that you can give by email or Facebook. On Facebook, you can send a friend a digital Starbucks card for their birthday and use your phone to store a digital account. When you combine this willingness to expand customer markets and build new communities online with their ubiquitous presence on practically every street corner, you have a tech-enabled winner here.
- Whole Foods Market (NYSE:WFM) - Again, this is not the most obvious technology play at first glance. Sure, Whole Foods charges the most money for food, period. Still, their parking lots are full. They really have it nailed down. How? In large part, they use a sophisticated combination of technology systems to determine not only what their clients want, segmented out by region and demographic, but also have studied where placing products will have the best chance of a purchase. It's really an art and a science how Whole Foods has mastered the utilization of technology to better deliver what their customers want, that is why they have the highest sales per square foot of any market. They are also great with social media developing millions of friends and keeping them constantly engaged.
The companies I've named don't aim to produce or use technology for technology's sake. They use technology to enhance our experiences in ways that augment our lives, save us time and bring us pleasure. I'm a happy consumer of all of these brands, but you'll never catch me wearing Google glasses and riding in a driver-less car or a Segway. It's not my style, and chances are good that I'm not alone in that respect.
Ross Gerber is Chief Executive Officer and President of Gerber Kawasaki Inc. (http://www.gerberkawasaki.com/), an independent investment advisory firm based in Santa Monica, California, with approximately $175 million in assets under advisement. Gerber Kawasaki employees and clients own positions in various companies in the article. Any companies mentioned should not be construed as a recommendation. Investing involves risk and past performance does not guarantee future results.