Don't Panic, Apple Fans

The latest tablet market share data out of industry tracker IDC isn't very encouraging.

Apple's (Nasdaq: AAPL  ) slice of the booming tablet pie is shrinking. The world's most valuable company accounted for just 50.4% of the industry shipments this past quarter according to IDC's research. It's still a big number, but it's a sharp drop from the 65.5% stronghold that it commanded during this year's second quarter or the 59.7% share it owned during last year's third quarter.

The good news is that Apple's tablet shipments continue to grow on a year-over-year basis. Apple went from moving 11.1 million iPads a year earlier to 14 million tablets this time around. That's a respectable 26% improvement over the past year. The rub is that its four closest competitors -- Samsung, Amazon.com (Nasdaq: AMZN  ) , Asus, and Lenovo -- saw their volumes more than double.

Before the panic attack kicks in, let's take a good look at the numbers.

Company 

Q3 Shipments

Q3 2012 Share

Q3 2011 Share

Apple

14.0 million

50.4%

59.7%

Samsung

5.1 million

18.4%

6.5%

Amazon

2.5 million

9.0%

N/A

Asus

2.4 million

8.6%

3.8%

Lenovo

0.4 million

1.4%

1.1%

Others

3.3 million

12.2%

28.9%

Source: IDC. N/A = not applicable; Amazon hadn't released its tablet yet.

The Android invasion
Now, it's easy to be frightened by the force of the competition, especially if the rivals are combined. Stacked up, Samsung, Amazon, Asus, and Lenovo have gone from 11.4% of the tablet realm a year ago to 37.4% today.

Apple is still bigger, of course. It continues to command more than half of the market. However, it just can't ignore the distant rivals closing the gap.

It isn't a surprise to see the gainers all championing Android. Samsung's calling out Apple in its ads, and it's apparently working as it moves Galaxy Tab and Note devices. Amazon wasn't even in the tablet market a year ago, and now it's benefiting from the second generation of the recently refreshed Kindle Fire entry-level gadgets. Asus is the company behind the Nexus 7 that Google (Nasdaq: GOOG  ) was even briefly promoting on its home page this summer.

At least Apple isn't lumped into the fading "Others" category. If it seems odd to see any tablet category in retreat, keep in mind that this catchall group includes the webOS and Research In Motion (Nasdaq: RIMM  ) tablets that were being cleared out at a loss a year ago. It's actually good for the market that those fire sales are over. Consumers don't need reminders of the crash-and-burn PlayBook.

Silver lining beyond the gold medal
Is Apple about to fall below 50%? The trend may suggest as such, and it will inevitably happen. The open-source allure of Android is too great for anyone not named Apple to get behind.

It's just not going to happen this quarter.

There's a reason why Apple is updating its iPad and cranking out iPad Mini devices. Just as refreshing its tablet paid off with a big boost earlier this year, Apple knows that early adopters love to get their iGadgetry while it's still hot. Heck, Apple sold more tablets this past weekend than anyone outside of Samsung sold all of last quarter.

The competition should also die down a bit. Android tabs will sell well, but it was a perfect storm this past quarter with the new Amazon, Nexus, and Samsung wares going on sale.

There will always be new tablets. Microsoft's (Nasdaq: MSFT  ) Surface is going to move a few units, obviously. However, this is still shaping up to be another Apple holiday season, despite the proliferation of cheaper tablets.

It's a pretty safe bet that Apple will dip below 50% of the market at some point next year. When it happens, it won't be the end of the world. There are far more Android smartphones sold than iPhones around the world, yet that hasn't gotten in the way of Apple's dominating market capitalization.

If things ever get to the point where Apple feels that it needs to slash prices -- sacrificing near-term margins for market share -- that would be the time to worry. A quarterly dip that will likely be remedied during the current quarter is not a cause for concern.

Mobile madness
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Read/Post Comments (5) | Recommend This Article (11)

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  • Report this Comment On November 07, 2012, at 11:20 AM, DonKing108 wrote:

    Another reason not to worry is that the figure you're giving is NOT the number of units Apple shipped. They're the number of units Apple actually sold. They're the number of units in the hands of users for which Apple received payment. Samsung's numbers, however, are of units shipped to dealers. They may be sitting on shelves or in storage rooms unsold. In fact, at the recent trial, Samsung had to release actual sales figures and they were dismal.

    And then there's Amazon. Not only do they use their own version of Android which is not compatible with most Android software (so the comparison with Apple's and other Android tablets is only in that they appear somewhat similar), but Amazon GIVES THEM AWAY, hoping to make money on them later, something their overall sales indicates is a questionable strategy.

  • Report this Comment On November 07, 2012, at 11:22 AM, EugeneNorman wrote:

    Your analysis is wrong on facts - as is everybody who is talking about IDC's figures. And it is wrong on forecasts, based on a "deluge" of Android devices which can't happen. Firstly Apple's share last Q is their exact sales to channel, as opposed to IDC's guesses about what everybody else was shipping. If Apple didn't release figures the guess would have been 17.5M, based on reports from sales and channel prior to the Apple results.. To do your job for you - as an analyst you should know this - the sales to channel, which Apple books as revenue, was reduced this year because they were playing down the iPad 3s in channel to upgrade to the iPad 4. In the absence of that upgrade, the sales to customers ( sell through) - full documented in the conference call, by the way - increased by 44%. Retrofitting the 44% into channel this year we would have had about 16M sales booked in the absence of the iPad 4 update ( note this has nothing to do with rumors, it has to do with how revenue is booked when channel is reduced). if you then assume a measly 10% held off for iPad mini rumors, you get 17.6M+ sales. Which is the same as the previous quarter in tablet percentages about 65%.

    Secondly to forecasts. The tablet market is not the phone market. My sister has an iPad she wanted, and an Android phone she got as she walked into an o2 shop, a phone she didn't know was even an android device. In mobile shops if you want an iPhone you get an iPhone, else you get what they give you.Nobody shops like that for tablets.

    But thats not the real reason the deluge is impossible. The deluge of Android devices can't happen because it didn't happen. What happened was iPad domination, and then a hail Mary pass by Amazon which feared iBooks taking the mobile market, and a hail mary pass by Google to offset Amazon by selling at a loss. Google doesn't want Andoid to be the "Android" device as it make OS updates useless, or uncertain. By selling at cost both of these devices have eliminated all profits from the Android market, only Samsung can trade on it's brand at the higher level. For now.( there is little profit outside Samsung and Apple in the phone market, and none outside Samsung in the Android phone market anyway where nobody sells at cost). Then there is the price elasticity of the iPad mini - selling 3M in a weekend seems to not have dented any forecasts on the iPad mini not increasing it's share beyond this year. Next year - and possibly earlier rather than later - APple will have a retina mini at the present price, and reduce the lower iPad to with $50 of the Nexus. At that stage $50 will get you 275,000 apps, and its a no brainer.

    MS might do something at the higher end. But thats speculative.

  • Report this Comment On November 07, 2012, at 2:02 PM, EquityBull wrote:

    One has to question the other tablets numbers or at least success. iPad commands 98% of all tablet traffic. Makes you wonder what these other 50% of people who own something other than the iPad tablet are doing with their devices. Maybe sitting on a shelf. Perhaps their next tablet would be something useable like an ipad or mini?

  • Report this Comment On November 07, 2012, at 7:14 PM, Melci wrote:

    Indeed, guesses from analysts are the last thing you want to rely on for accurate numbers.

    IDC were the ones who infamously reported that Samsung' sold 2.5 million Tablets in Q2 2012.

    They were then severely embarrassed when court documents revealed they had only sold all of 37,000 in Q2 2012 in the USA putting the lie to IDC's grossly inflated estimates for that quarter.

    And yet here they are again trumpeting that Samsung supposedly shipped 5.1 million tablets last quarter. Amazing.

  • Report this Comment On November 08, 2012, at 11:43 AM, 48ozhalfgallons wrote:

    Don't panic Apple fans, many bought at 700 when convinced its stock was headed straight to 1000. Hang on!

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