It's Official: Apple Is Losing Its Tablet Dominance

Tablets remained a red-hot growth area in the fourth quarter of 2012. According to IDC, 52.5 million tablets were shipped worldwide during the fourth quarter of 2012, an increase of more than 75% since last year. Sequentially, the holiday season was a blockbuster hit for tablet sales, having risen over 74% since the third quarter of 2012. A decline in average selling prices, a wide array of product offerings, and increased holiday spending all contributed to pushing the tablet market to record levels.

As a result, Apple (NASDAQ: AAPL  ) lost ground to Google Android in the tablet space. By the end of the quarter, Apple controlled 43.6% of the tablet market, an 8.1% loss since last year. Samsung continues to encroach on Apple's turf, increasing its market share by 7.8% year over year and ending the year with 15.1% of the market.

Slower than the industry
We've seen this story once before in smartphones, where Apple has begun growing slower than the industry. Although Apple's tablet unit sales increased by 48% year over year, it's still far below the tablet industry average of 75%. Considering the iPad's average selling price was $466.93 last quarter, presumably well above the average selling of the entire industry, it's not surprising. However, it's important to recognize that we're getting continued indication that the premium device market is closer to saturation, which over the long term could put Apple at increased risk of stagnating sales.

Watch out for Mr. Softy
Microsoft (NASDAQ: MSFT  ) Windows 8 is the newest entrant to the tablet market. During the quarter, IDC believes that about 900,000 Surfaces were shipped during the quarter, which wasn't enough for Microsoft to be part of the top five tablet vendors. However, Microsoft's opportunity is longer term, with the potential to slowly dismantle Apple's iOS position. It comes down to how successfully Microsoft and its partners can influence consumers that buying a tablet with a full-blown (or more powerful) operating system is worth the premium.

Apple exhaustion?
Have we reached a tipping point where Android continues to chip away at Apple's share from the low end, and Microsoft begins chipping away from the high end? Could Apple's tablet position become seriously threatened in the years to come? Although Apple remains the premium device manufacturer of today, its market valuation could be indicating that there's trouble ahead for Apple investors. Given Apple's current P/E of 10, is the market anticipating the iKingdom to come crashing down? Or is the market totally underestimating Apple's track record of innovation?

There is a debate raging as to whether Apple remains a buy. The Motley Fool's senior technology analyst and managing bureau chief, Eric Bleeker, is prepared to fill you in on both reasons to buy and reasons to sell Apple, and what opportunities are left for the company (and your portfolio) going forward. To get instant access to his latest thinking on Apple, simply click here now.


Read/Post Comments (18) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 04, 2013, at 7:23 PM, alboy5 wrote:

    Aapl costs way too much. It is below standard tech at too high a price.

  • Report this Comment On February 04, 2013, at 8:27 PM, dogmatica wrote:

    Howdy!

    Steve, you're the worst kind of smart. You take numbers--real numbers, even accurate numbers--and present them in the most dishonest fashion. Just a brief example:

    "Although Apple's tablet units sales increased 48% yoy, it's still far below the industry average of 75%."

    This is factually accurate, but it hardly tells the real story. Apple basically created this segment in 2010 and thus had both a running-start and no competition; Apple sold 14.6 million iPads in 2010, and everyone else combined sold 3 million!

    So these other guys could grow at percentages in the hundreds and still be millions and millions of units shy of iPad's numbers; in fact, this has already happened: In 2012's Q3, Samsung's tablet sales increased 325% over 2011's Q3 for a total of 5.1 million units shipped. And Apple only grew at a 26.1% clip in 2012. Sounds bad, huh? However, Apple sold 14 million iPads and Sammy only sold 5.1 million!!!!!, even with these glaringly different growth figures!

    Market share stats for iPhones and iPads can be deceiving because Apple created and dominated these 2 segments so thoroughly and without competition that they had only one way to go, especially since they were/are loathe to go after the low-end, no-margin market. The most important aspect for Apple is customer loyalty/repeat sales, and in this Apple simply demolishes all of its competitors!

    For a truer and more accurate article always include profits and profit margins, along with your growth data, when comparing Apple with others. But I'm sure you won't because these stats will run counter to your thesis, huh?

    Lastly, I love the fact that you directed us to one of your own articles for support. How unbiased!

    BuhBye!

  • Report this Comment On February 04, 2013, at 8:43 PM, ryanlucas wrote:

    Dogmatica,

    Thanks for articulately presenting your thesis for what a tool the writer of this article is. A biased tool...

  • Report this Comment On February 04, 2013, at 8:57 PM, pwready wrote:

    Try this one on for size. Research firm Strategy Analytics has come out with a report showing that Apple has overtaken Samsung as the top phone maker in the all-important U.S. market. The Cupertino, Calif.-based firm sold 17.7 million smartphones during the fourth quarter, taking 34 percent of the market. Samsung sold 16.8 million units, capturing 32.3 percent of the market.

    The Apple haters just love to twist and turn the spin. All the while Apple is beating the competition like a ugly stepchild!

  • Report this Comment On February 04, 2013, at 9:01 PM, samkass wrote:

    It's not "official" until Samsung and Amazon announce their sales numbers. Until then it's "rumor". (Thus, the title should read, "It's A Rumor: ...".) That IDC is putting out the rumors isn't very material since they've gotten every other Christmas tablet sales figure in the history of the tablet industry significantly wrong. To wit, they almost always count Apple "sales" against competitor "shipments". They don't include Apple's channel inventory to its own stores but do include channel inventory of competitors to external retail stores. And finally, they actually have no idea how many are really getting sold because no one reports it. All actual evidence (ie. internet usage, app sales, media sales, book sales) points to Apple dominating the industry. Heck, Apple is far and away the leader in internet streaming movies, and I don't think that's just due to AppleTV.

  • Report this Comment On February 04, 2013, at 9:27 PM, PieroG35 wrote:

    I have a few comments:

    1. This is article is either written by someone that is extremely biased or really dumb.

    2. IDC data is not accurate. If Apple is the only company releasing sales data then how is this source credible. Recent data based on web traffic that Apple is continuing to gain market share.

    3. MSFT's surface will be discontinued within 18 months.

    4. Samsung is excellent at copying so I do believe they will grow sales. They don't innovate and are not expected too. Apple is the only company expected to innovate.

    5. Apple created the tablet market and will always dominate. Samsung is in the game because making money on hardware is not the objective. The same shall be said about google and amazon.

    6. Like it or not Apple is the most powerful company in the world. This is where investors are missing the point. They are in a business that can profit more than any other. long term investors will be rewarded.

  • Report this Comment On February 04, 2013, at 9:39 PM, RaulR2 wrote:

    So, according to the "official" who wrote this set of words, Apple having almost 44% market share vs Samsung 15% and the headline is that "Apple is losing its tablet dominance" Don't forget: it is official

    Really it seems the "official" thinks that readers are a bunch of stupids.. Looks like a cheap propaganda from Samsung!

  • Report this Comment On February 04, 2013, at 10:00 PM, blueofblue wrote:

    useless article. wasting time for me to read it

  • Report this Comment On February 04, 2013, at 10:15 PM, tompanderson1 wrote:

    I really need to stop my membership. More crap about Apple.

  • Report this Comment On February 04, 2013, at 10:32 PM, secularinvestor wrote:

    Its "Official" .....Only in the minds of the naive, the ignorant or the disingenuous..........LOL

    IDC numbers are just guesswork, based on fantasy "shipments which are meaningless marketing hype and cannot be compared with the real "sales" numbers of Apple which are published in SEC filings.

    tech.fortune.cnn.com/2013/01/31/apple-ipad-tablet-market-sha...

    Neither Samsung, Amazon or Google dare to publish their real sales numbers, because they are so miserable compared to the real sales numbers of iPads.

    IDC's numbers are easily proved totally unreliable by looking at tablet browsing numbers on the internet which measures actual usage. According to Chikita the iPad has nearly 90% share.

    SO WHERE ARE ALL THOSE MISSING MILLIONS of Kindles, Samsungs and Google Nexus? Are IDC seriously suggesting that people buy them but don't use them?

    chitika.com/insights/2012/december-tablet-update

    Samsung have been proven again and again to exaggerate their sales claims, as was proven in Court last summer when their own evidence showed that they had only actually sold ONE TENTH of what they had actually claimed and IDC had said they had shipped.

    http://forums.appleinsider.com/t/151854/quite-smooth-samsung...

    Samsung have repeatedly claimed that the Galaxy is the world's "best selling" smartphone, but Raymond James added up all their claimed sales and found that in the same period Apple had SOLD 70% MORE iPHONES than ALL the Galaxies PLUS Note phablets COMBINED that Samsung had claimed to have sold.

    blogs.barrons.com/techtraderdaily/2013/01/17/aapl-iphone-out...

  • Report this Comment On February 04, 2013, at 10:43 PM, applefan1 wrote:

    Well, let's look at this situation. The iPad Mini gets announced and it becomes an instant fast seller creating a bigger demand than supply. They didn't start selling the iPad mini w/o cellular in Asia until December, so they only had 1 month of sales in Asia vs. 3. They also didn't get the iPad mini w/cellular to start shipping in Asia until THIS quarter and they are selling them as fast as they can make them.

    I see Apple bringing HUGE numbers for the March quarter. Again, another misleading article not explaining what was going on with regards to Apple's involvement with the tablet market.

  • Report this Comment On February 04, 2013, at 10:46 PM, secularinvestor wrote:

    pwready wrote:

    "Try this one on for size. Research firm Strategy Analytics has come out with a report showing that Apple has overtaken Samsung as the top phone maker in the all-important U.S. market. The Cupertino, Calif.-based firm sold 17.7 million smartphones during the fourth quarter, taking 34 percent of the market. Samsung sold 16.8 million units, capturing 32.3 percent of the market."

    @pwready, Good stuff!

    Apple did even better with smartphones in the all important US market.

    According to Kantar, in the 12 weeks to 23 Dec. the iPhone took 51.2% of all US Smartphones sold!

    Android took only 44.2% US share and Samsung only took a part of that Android share!

    So it looks like the iPhone outsold the Samsung 3:1 or more in the US, and that was despite the heavy discounts being given for the Galaxy S III as soon as the iPhones 5 was launched.

  • Report this Comment On February 05, 2013, at 1:57 AM, deasystems wrote:

    "Official," my behind!

    Numbers-for-hire firm IDC has *no data* for any tablet manufacturer other than Apple itself. Apple is the only manufacturer that releases unit sales data. In addition, there is no corroborating evidence to support IDC’s claims. In fact, all such independent evidence points to Apple’s continued overwhelming dominance of the tablet market.

    Why repeat IDC’s etc. nonsense here?

  • Report this Comment On February 05, 2013, at 6:06 AM, pk22901 wrote:

    Have you ever wondered where IDC gets its non-Apple numbers? I have.

    I wouldn't be surprised if hushed calls between IDC analysts and corporate officials (speaking to the truth of your headline).

    Seems surprising that actual web stats report Apple traffic numbers as 80 to 90% of ALL tablets.

    Have you no curiosity Steve? An article on this divergence would be informative and useful.

  • Report this Comment On February 05, 2013, at 6:10 AM, pk22901 wrote:

    Corrected:

    Have you ever wondered where IDC gets its non-Apple numbers? I have.

    I wouldn't be surprised if hushed inquiries between IDC analysts and corporate "officials" are the source.

    Seems surprising that actual web stats report Apple traffic numbers as close to 90% of ALL tablets.

    Have you no curiosity Steve? A post on this curious divergence would be informative and useful.

  • Report this Comment On February 05, 2013, at 11:39 AM, limbo64 wrote:

    I do not understand all these people talking about how bad APPLE Business is.

    Fact is: Apple has ONE Mobile Phone. the IPHONE

    Fact is: Apple has one Tablet. the IPAD

    I must laugh when I read that Google's CEO says that Android is selling more than IOS.

    And I must also laugh when I read that Samsung is selling more than Apple do.

    Only in Germany, Samsung sells more than 400 different Mobile Phones, in every Price level.....APPLE ONLY ONE !!!

    I do not know how many devices there are , running Android, APPLE has only TWO devices running IOS

    How can you compare it !!

    Apple is and remain invincible !

  • Report this Comment On February 05, 2013, at 3:52 PM, JJ111985 wrote:

    I prefer the Kindle Fire HD. The interface is great and it's very easy to use. Check out its Amazon page(http://amzn.to/11SRHbE) if you want to compare what they bring to the table.

  • Report this Comment On February 09, 2013, at 11:54 AM, snommis69 wrote:

    The Apple fanboys descend upon the article like locusts! LOL! The spin from both sides always makes me laugh, but understand this - Apple lost the PC war by closing it's ecosystem, and "Wintel" won for doing exactly the opposite. Arguably, this is much like Beta losing to VHS, but regardless, it's true. Apple may be king for the moment, but their closed system is losing ground. The Apple zealots will always be Apple zealots and, admittedly, if one buys into the Kool-Aid it is an impressive ecosystem that works seamlessly together. Still, one flavor of Kool-Aid has never slaked the thirst of the masses, no matter how tasty the flavor.

Add your comment.

DocumentId: 2233988, ~/Articles/ArticleHandler.aspx, 7/13/2014 2:30:41 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement