The Tablet Market is Growing Too Fast for Apple

Investors have been fretting lately over Apple's (NASDAQ: AAPL  ) declining tablet market share. The days of the iPad gobbling up 75% of the market are gone. That's not to say that the iPad is faring poorly overall as a business; it's just that the overall tablet market is just growing too fast for Apple to maintain such hegemony as rivals jump in.

Market researcher Strategy Analytics has now released its estimates on first quarter tablet shipments, as the company was likely waiting for Apple to disclose its official iPad figures. Total units in the first quarter surged an incredible 117%, to 40.6 million. Google (NASDAQ: GOOGL  ) Android and Microsoft (NASDAQ: MSFT  ) Windows are starting to make a dent, even though Apple's own iPad units jumped 65%, to 19.5 million in the first quarter.

Operating System

Q1 2012 Units

Q1 2012 Market Share

Q1 2013 Units

Q1 2013 Market Share

iOS

11.8 million

63.1%

19.5 million

48.2%

Android

6.4 million

34.2%

17.6 million

43.4%

Windows

0

0%

3 million

7.5%

Others

500,000

2.7%

400,000

1%

Total

18.7 million

100%

40.6 million

100%

Source: Strategy Analytics. Figures may not sum due to rounding.

Android, in particular, has risen dramatically, in large part due to low-cost models targeting lower market segments. This is the first full quarter that Apple has been shipping the iPad Mini, but that device is still priced at a premium relative to the competition in the small-sized segment. Two of the most prominent Android tablets, Amazon.com's Kindle Fire and Google's Nexus 7, are also sold at cost, so there's little profit opportunity within the Android army.

Windows is now showing up on the scene with 3 million tablets shipped during the quarter. Strategy Analytics believes that there are several key factors holding Microsoft back: very limited distribution, a lack of top tier apps, and consumer confusion. It's for these reasons that Strategy Analytics currently considers Windows tablets a "niche" market segment.

Just because Apple's tablet market share is slipping doesn't mean its profit share will drop. If investors look back on how the smartphone market has played out, Apple's profit share will be just fine.

Even with iPad units soaring, there's 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.

 


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  • Report this Comment On April 25, 2013, at 9:40 PM, ScottAtlanta wrote:

    Huh? What happened to that moat?

    lol...I have nothing against Apple...but just about every article cites "the moat"....but ...in the Matrix we learned "there is no spoon".....and now we see clearly..."there is no moat" and laugh like a fat buddha.

  • Report this Comment On April 30, 2013, at 1:01 AM, chrisflyz wrote:

    Market share is interesting, but to me it matters how you parse it. Apparently Apple is deciding not to compete in the entire tablet market. They have never done business in the basement. Even in their laptop and computer business you still can't get something cheap with an apple on it. In that regard shouldn't their market share be measured against their actual target market? What has always seemed the most Foolish to me has been an emphasis on profit and profit margin. In that case all hail Apple, Lord of the Profit Makers. Now as I say this, the devil's advocate in me says that that there are very good reasons to want to keep that dominant market share they earned previously, not the least of which is remaining the standard technology to draw appmakers, hardware, etc. So as a small-time Apple owner, am I worried? Not until the profits start to disappear or the market share heads well below Android.

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