Winners and Losers in the Tablet Race

From hence, ye beauties, undeceived,
Know, one false step is ne'er retrieved,
And be with caution bold.
Not all that tempts your wandering eyes
And heedless hearts, is lawful prize;
Nor all that glisters, gold.
-- "Ode on the Death of a Favorite Cat, Drowned in a Tub of Goldfishes" by Thomas Gray, 1748

Today's tribute to National Poetry Month hinges on that very last line. Like a cat chasing golden shadows in dangerous waters, mobile-device makers must tread carefully when choosing what markets to pursue. And right now, tablets look like a juicy morsel skimming right at the surface.

That's one possible takeaway from a new study on tablet sales by analytics powerhouse Gartner. Total market sales are expected to double in 2012 to $118 billion and then move on to become a $369 billion pie in 2016. That's a blistering pace of 48% annualized growth. But not all players in this game get an equal share of the gains.

Apple (Nasdaq: AAPL  ) is the king today, with a 66% market share, and it will still rule the roost way down the road with a 46% presence in 2016. Cupertino fans will interpret this as a big win, since the dollar values involved are so much bigger, while critics can point and laugh at lost market share. There's something in here for everyone to enjoy.

Gartner sees the release of Microsoft's (Nasdaq: MSFT  ) Windows 8 changing the game later this year. The platform will be compatible with oodles of existing Windows-based software, which might not work too well on a tiny smartphone screen but should translate very nicely onto larger tablets. So even with a late start, Windows should grab a 4% share of the market in 2012. In 2016, that share will balloon to nearly 12% of a much bigger pie

Other winners in Gartner's scenario include Android, which should grow from a 29% share in 2011 to 37% in four years. Even Research In Motion (Nasdaq: RIMM  ) is seen as a winner, quadrupling its market share to 4% by 2016. But then you have to assume that RIM and its PlayBook tablets will be around in four years, and that cat could very well drown along the way.

Again, you have to accept Gartner's assumptions to arrive at these numbers, including the idea that Android's app developers will continue to simply scale up their smartphone apps to tablet-sized layouts rather than rewriting from scratch with bigger screens in mind. Otherwise, the Android insurgence could become even larger at the expense of the incumbent, Apple.

Whether or not Gartner's detailed forecasts pan out, one thing is for sure: Tablets are here to stay. The iPad unleashed a whole new market, first for consumers and now in enterprise environments. What started as a few employees bringing their own devices to work will end up a wholesale tablet invasion of the workplace, with several platforms carving out their own niches. Find out more about the smartphone and tablet revolution in this free report, including detailed discussions of three hidden winners. Grab your copy today -- this bucket of steroids for your portfolio won't be free forever!

Fool contributor Anders Bylund holds no position in any of the companies mentioned. Check out Anders' holdings and bio, or follow him on Twitter and Google+. The Motley Fool owns shares of Microsoft and Apple. Motley Fool newsletter services have recommended buying shares of Microsoft and Apple and creating bull call spread positions in Microsoft and Apple. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinion, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


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  • Report this Comment On April 11, 2012, at 9:40 PM, rfaramir wrote:

    "Gartner sees the release of Microsoft's Windows 8 changing the game"

    Gartner has been a MS sycophant for decades, if you haven't noticed.

    I'm interested in opposing opinions to my investment theses (e.g., I am long AAPL), but Gartner has been nothing but useless pandering for a long, long time.

  • Report this Comment On April 12, 2012, at 12:02 PM, lucasmonger wrote:

    I don't think anyone can predict the tablet market four years from now. Think 4 years ago when the iPad wasn't even out in the wild... Gartner was concentrating on PC and mobile phone sales with no tablet predictions in sight. Who is to say someone doesn't invent/reinvent another must-have device like an internet streaming TV or new form-factor computing device that once again changes the playing field?

    My we dream is a 24-36" touch computer that sits flat on my desk where I can use huge spreadsheets, but touch things like an iPad. Unlike the iPad, multi window is essential as you often need to look at one thing while editing another. I guess I could do that today with two iPads in one specially made case.

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