GONE are the days when the PC dominates the way the world conducts business. A new era has begun — one in which mobility and efficiency reign supreme. Moreover, the technology revolution is manifesting within other areas of the industry such as the Internet. This means that companies can no longer rely on price cuts to get their products off the shelves, and instead must recognise everchanging consumer tastes and exploit these opportunities. For investors, identifying the trendsetters in these markets will be key to unlocking profitable technology plays as the second quarter kicks into high gear.

One of the biggest success stories in the tech industry has been Apple Inc (NASDAQ: AAPL), whose stock price has skyrocketed almost 3,000 per cent over the last 10 years, boosted by the popularity of iconic products like the iPod, iPhone and most recently the iPad. Although AAPL continues to churn out record sales, the stock’s rally has slowed recently, declining by 3.17 per cent over the past three months to US$330.80 (close price on April 11, 2011) on concerns about the company’s Japanese supply chain, CEO Steve Jobs’ health and the timing of the upcoming iPhone 5 launch. Furthermore, most recently, NASDAQ OMX announced the rebalancing of AAPL’s weighting in the NASDAQ-100 Index to 12.33 per cent from 20.49 per cent to bring the company’s weighting closer to its market capitalisation. As portfolio managers lower their exposure in AAPL, savvy investors should take advantage of this excellent buying opportunity while it still exists.

Investors shouldn’t get too caught up on the flurry of negative news and events surrounding the company, but should focus on the fundamentals of AAPL’s business. Analysts expect the current pullback to be shortlived and see the stock reaching new, all-time highs this year. One such indicator is the company’s continued sales growth momentum — each quarter, sales trends continue to look more and more impressive. Notably, within the huge and growing tablet market, AAPL holds an unchallenged lead and the release of the second generation of the iPad — the iPad 2 has already received rave reviews. Of note, technology research Firm Gartner, Inc (NYSE: IT) forecasts that the iPad 2 will account for 69 per cent of the market this year and 64 per cent in 2012.

Not surprisingly, the tablet device has triggered a flurry of competition as hardware makers recognise the demand for devices that bridge the gap between a smartphone and a laptop computer. AAPL has sold more than 15 million iPads since its launch last April and is estimated to have sold 500,000 iPad 2’s since it went on sale last month. The only other tablet operating system forecast to come close is Google Inc’s (NASDAQ: GOOG) Android Operating System, which is used in Motorola Inc’s Xoom and Samsung Electronics Co’s Galaxy Tab. Android’s share of the market is expected to reach 24 per cent next year according to IT.

Essentially, the Apple iPad has been to the tablet PC market what the iPhone was to the smartphone market — a revolution. And yet again, rival Research In Motion Ltd (NASDAQ: RIMM) has been slow to enter the game. RIMM’s BlackBerry devices have been overshadowed not only by Apple’s iPhone but also by the vast array of smartphones running the Android Operating System. Its share of the global smartphone market continues to wane, declining to 16.0 per cent in 2010 from 19.9 per cent in 2009. On the other hand, GOOG’s share is 22.7 per cent up from 3.9 per cent a year earlier.

RIMM is planning to launch its version of the tablet computer – the PlayBook, which will run its new operating system. Experts, however, put RIMM close to last in the tablet game, expecting the PlayBook to account for a mere 5.6 per cent of the industry this year and 6.6. per cent in 2012. Sales are forecast to be 3.9 million devices in 2011, eclipsed by an anticipated 48 million in iPad units. Given RIMM’s inability to be a first mover in an everchanging competitive industry, it is not surprising that the stock has taken a beating over the past two years, declining to US$54.65 (close on April 11, 2011) from US$83.00.

Despite the frenzy surrounding the smartphone and tablet markets, there are gems to be found if one digs deeper into the industry. Oracle Corp (NASDAQ: ORCL), the world’s top supplier of integrated business software and hardware systems, continues to top analysts’ estimates for its third quarter end February 28, 2011 as companies increased spending on programmes to organise data and handle business tasks. As a result, sales surged by 37 per cent to US$8.76 billion during the period.

But what makes ORCL a buy in a fiercely competitive market? For starters — ORCL’s management team has taken the company from strength to strength with strategic moves such as its rewarding US$7.4 billion acquisition of Sun Microsystems Inc which was completed early last year. The company expects to surpass its goal of US$1.5 billion in operating profit in the first full fiscal year following this acquisition. Moreover, with ORCL’s leading business applications and database software solutions, it enjoys much stronger demand for its products and as such has been able to effectively compete with the likes of International Business Machines Corp (NYSE: IBM) and Hewlett-Packard Co (NYSE: HPQ).

Taking a look at the stock’s performance over the past year, ORCL has gained 27.14 per cent to US$33.78 (close price on April 11, 2011) as investors remain confident that CEO Larry Ellison and his team will not only sustain the company’s growth ratios but also increase profitability. The company also announced this month that it was increasing its quarterly dividend by 20 per cent to US$0.06 per share, up from US$0.05 per share.

The “new kid on the block”, Chinese Internet technology and software Company, Baidu Inc (NASDAQ:BIDU) which listed on the NASDAQ in 2005, has surged by more than 1,000 per cent since then. The company best known as the “Chinese Google” because of its search engine, has risen by about 47 per cent in 2011 alone to US$145.68 (close on April 11, 2011), boosted by international buzz surrounding the company as well as exceedingly strong fourth quarter earnings. Profit more than doubled as the company outpaced GOOG in boosting advertising sales in the world’s biggest Internet market. Net Income climbed to CHY1.16 billion (US$176 million) from CHY427.9 million a year earlier, exceeding analysts’ average CHY1.03 billion estimate on a 94 per cent surge in sales to CHY2.45 billion.

BIDU’s rally is impressive to say the least, which may lead some to wonder if a ceiling is approaching. However, BIDU isn’t finished growing and here’s why. Firstly, the company plans to develop more social networking services to widen its product line to win users and rival China’s biggest Internet Company, Tencent Holdings Ltd. Moreover, reports have surfaced that social networking giant Facebook may be close to striking a deal with BIDU to open a jointly-owned social network in China. Lastly, BIDU is stepping up its expansion into other Internet services with its recently acquired stake in local property listings website Anjuke, which is the market leader in listings of previously owned homes in China.

Overall, technology is ever changing with limitless opportunities for further innovation and growth. Undoubtedly, the market will reward those companies that continue to step up to the plate ably meeting the needs of the next generation of consumers. Investors can benefit from this burst of technology by paying keen attention to these companies and other first movers with established track records and strong growth potential.

Kimberly Thelwell is the Manager, Research & Analyst, Corporate Finance & Advisory Services at Stocks & Securities Ltd (SSL). You may contact her at kthelwell@sslinvest.com.