Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Apple's Undervalued Tablet Dominance

Apple's (NASDAQ: AAPL  ) worldwide market share of tablet shipments was down 14% in the second quarter, year over year, according to data from IDC. This spells doom for Apple's iPad segment, right? Nope.

Don't fret
Last year, Apple refreshed its iPads in March, giving Apple a fresh tablet to boost sales in the second quarter. In the second quarter of this year, however, Apple's iPad was almost five months old.. Talk about a tough comparison.

Apple shareholders shouldn't fret. The operating environment may be tough, but Apple's iPad segment still boasts significant market share -- 32.4% according to IDC, nearly double Samsung's 18% share. And, keep in mind, this data is based on quarterly shipments, not total installed base -- so it's going to fluctuate widely on a quarter-by-quarter basis.

Furthermore, consumers still love the iPad. In April, J.D. Power and Associates' 2013 U.S. Tablet Satisfaction Study ranked Apple's iPads No. 1.

The second half of the year will almost certainly be a very different story. With Apple's tablet refresh rumored to come this quarter, Apple's year-over-year market share comparisons should begin to look a bit nicer.

The overall trend
Zooming out to look at the overall trend, Apple's prospects look bright. Despite Apple's aging tablets, total tablets shipped was up an impressive 59.6% during the quarter, according to IDC.

Though Samsung is certainly doing an excellent job at competing with Apple in the tablet market, the market's obvious continued demand for tablets in general should help Apple when it refreshes its product line.

Even more, Samsung's ascent in the tablet market isn't indicative of the success other tablet makers are having. The rest of the competitors remain small players. Asus came in third on IDC's study, at just 4.5%.

Succeeding in tablets isn't easy. Just look at Microsoft, whose failed attempt in the tablet market left them unnamed on IDC's report. Even worse, the company took an embarrassing $900 million charge "related to Surface RT inventory adjustments," when it reported its fourth-quarter results.

Moving the needle
At 18% of revenue, a solid quarter from Apple's iPad segment could move the needle on the company's bottom line. Thanks to its cheap valuation, the needle doesn't need to move very far. And given a fast-growing tablet market that is basically ruled by just two companies, it's very likely that Apple's iPad segment will perform solidly when it introduces its new line-up in 2013.

Editor's note: An earlier version of this article contained an error comparing the size of Apple's market share with Samsung's.

If tablets alone can move the needle, just imagine if Apple does unexpectedly introduce a new revolutionary product. You can't deny Apple's history of cranking out revolutionary products... and then creatively destroying them with something better. Read about the future of Apple in The Motley Fool's free report, "Apple Will Destroy Its Greatest Product." Can Apple really disrupt its own iPhones and iPads? Find out by clicking here.

Read/Post Comments (3) | Recommend This Article (9)

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 August 06, 2013, at 10:28 PM, vv234 wrote:

    "32.4% according to IDC, more than double Samsung's 18% share. "

    I am not sure math were you using to come up with that statement?

  • Report this Comment On August 07, 2013, at 12:59 AM, SimchaStein wrote:

    A significant number of the other tablets are low-end, limited devices, that don't participate in the major App Stores. Slight exaggeration, but it's a bit like add golf carts to electric vehicle sales.

  • Report this Comment On August 07, 2013, at 8:10 AM, rrecine wrote:

    You spelled "overvalued junk" wrong. Why should people buy the most expensive tablet and in many ways inferior to tablets that cost half the price or less? Only fanbois and people that know nothing about technology and have money to waste buy Apple products. Advertised as a Mercedes, think you're getting one, but it's obsolete junk only useful to increase Apple's profit margins.

Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2581064, ~/Articles/ArticleHandler.aspx, 9/24/2016 8:49:58 PM

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...

Today's Market

updated 23 hours ago Sponsored by:
DOW 18,261.45 -131.01 -0.71%
S&P 500 2,164.69 -12.49 -0.57%
NASD 5,305.75 -33.78 -0.63%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/23/2016 4:00 PM
AAPL $112.71 Down -1.91 -1.67%
Apple CAPS Rating: ****
MSFT $57.43 Down -0.39 -0.67%
Microsoft CAPS Rating: ****