US tech business thrives despite the economic gloom

Today, history looks like it is repeating itself as another technological transformation looks set to take off.

For the few billion people in the world yet to own a computer, their first taste of the Web will come from smartphones that combine the functions of a cellphone and a handheld computer.

Going by the way devices like the Apple iPhone have taken developed economies by storm, some forecasters predict that more than one billion people will own at least one smartphone each before the decade closes. These bullish forecasts are likely to make even the most staid of company bosses sit up and take notice of the immense possibilities as more people get hooked on their smartphones.

What is interesting is that, like the Internet boom a decade ago, this is taking place against a deluge of liquidity provided by the U.S. Fed to stabilize the global financial system following the sub-prime mortgage crisis. So it is not surprising that smart companies like Intel are planning far ahead by snapping up businesses whose technologies may be useful as they jostle for a slice of the emerging global smartphone market.

Even HP's audacious US$2.4 billion winning bid for 3Par, whose annual revenues amounted to only US$185 million last year, can be viewed in the same light.

3Par's forte is in making high-end storage systems that help companies cut energy costs related to storing information. This is vital for 'cloud computing', which involves delivering software, data storage and other services via the Internet, and a service that will become mainstream as smartphones become entrenched.

So what should investors be looking out for? Certainly, there is plenty of dismal news coming out about a possible double-dip recession in the U.S. and the sovereign debt crisis in Europe. But going by the muted manner Wall Street traders have responded to the lackluster data, much of the bad news is already reflected in battered share prices.

It may be worthwhile for brave-hearted investors to start laying bets on counters likely to profit handsomely from the emerging smartphone revolution. So, rather than be paralyzed into inaction by the talk of a double-dip recession, it may be time for investors to seize the day.

Of course, the boom may turn into a bust later, but it is early days yet for such a dour scenario.

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