Brian.oco 0 Posting Whiz

Tech stocks have been lagging along with the rest of the stock market so far in 2008, but its long-term prospects are much, much better.

So says Imran Khan, a JP Morgan senior analysts who specializes in the telecom and Internet markets. Khan is one of my favorite analysts and his argument that technology has a long way to go if it ever hits critical mass - if ever - is a compelling one.

His case is also a simple one - so simple most financial analysts miss it. Tech stocks will rise because capitalism - often brutally criticized in the mainstream press - has given the industry a big opening in places like China and Indiana - and other emerging, middle-class markets that have embraced capitalism.

Says Khan, in his 2008 Global Internet Snapshot, middle-class consumers in such regions are clamoring for the products that tech companies make. For example, in Indonesia, one person in a hundred owns a PC, and only one in a thousand has a broadband Internet connection. There are also 63 million cell phone subscribers there, but that only represents 27% of the country's population of 234 million. In additions, cell phone subscriptions in Indonesia are growing 36% annually. Cut to India, where the country has 166 million cell phone users, and where growth in 2007 was 84.5%.

Of course, the big omission is the U.S., which seems to be catching its breath after massive technology consumption during the past three decades. Khan says that while global PC penetration is about 13 of every 100 people, penetration in the US is about 80 in 100 people. What does that tell Dell, Apple, Microsoft, and every other Western computer and technologies provider? Go East, young man - Far East, to be specific.

Cell phones are skewed a bit differently. The U.S. at 77 cell phone users for every 100 people, actually fares well compared to cell phone use in Europe (especially Italy) that have far more cell phone users, percentage-of-population-wise. Overall, Khan says that the total market for global cell phone usage is only 46 out of every 100 people.

The global market for broadband Internet access penetration is even more wide open - 5.3%. "(These numbers) highlights that there is pretty significant opportunity worldwide for PC penetration growth and Internet penetration growth. That's why we put this chart out - the numbers speak for themselves."

Khan's numbers are a real eye-opener for tech investors. Clearly, there is plenty of room for growth in the sector across the globe, especially in the "BRIC" countries like Brazil, Russia, India and China, all of whom have booming middle-class consumers eagerly ordering their first cell phones or first personal computers.

So there is money to be made in tech stocks - you just have to expand your investment horizons to find it.

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