Apple, Google, and Microsoft Need to Hear This

The ascent of the tablet only continues. According to research firm IDC, Q4 of this year will mark the first time tablets outsell PCs. For the whole year, PCs will still rule, according to IDC, but by 2015 tablets will begin outselling PCs, and that's not likely to change in 2016 and beyond. Assuming the tablet trend pans out as IDC believes it will, there are two questions device manufacturers need to answer: How are tablet and smartphone owners using all those mobile devices, and do they have a product that fits their needs?

Noted research firm Gartner has answered the question of what users want in their devices, and Apple (NASDAQ: AAPL  ) , Google (NASDAQ: GOOGL  ) , and Microsoft (NASDAQ: MSFT  ) , would be wise to listen up.

Survey says
Gartner conducted a survey recently of 726 tablet owners in the U.S., Australia, and the U.K., and what it learned, first and foremost, is tablet users love their entertainment. According to the study, 50% of device screen time was spent playing games; watching live or streamed TV, videos and movies reading books; or listening to music.

Using tablets and other mobile devices like smartphones for communicating -- sending emails and visiting social media sites, for example -- averaged only 26% of users' time. Being productive, which Gartner describes as editing videos or writing, accounted for a mere 15% of users' activity. And finally, searching for information like the weather or conducting research occupied all of 9% of device screen time.

Perhaps most intriguing, and the biggest takeaway for device manufacturers, was the change in consumers' buying habits from Gartner's 2011 end user survey. Two years ago, the No. 1 "purchasing criterion" was brand, and Apple dominated. In 2011, Apple sold over 40 million iPads for a commanding 62% of the market; clearly brand-conscious consumers loved all things Apple.

Now, according to Gartner, brand ranks only third on the list of purchasing criterion, behind features and price, which coincides perfectly with the iPad's decline in market share. As recently as Q2 of last year, Apple held a 60.3% share of the tablet OS market, followed by Google's Android OS tablets with a mere 38% share. Microsoft hadn't started playing in the tablet sandbox yet, so it gets a pass.

As of the Q2 of 2013, Google's Android dominates with 62.6% of the tablet OS market, while Apple's share has dropped to 32.5%. As brand fell to third in importance for device-buying consumers, Apple's tablet share nosedived during the same period. Price continues to weigh on consumers' buying decisions over brand, which is Apple's bread and butter, so iPad sales will feel the pressure.

The takeaways
If tablet sales are about features and price, as Gartner's survey suggests, what do Apple, Google, and Microsoft need to consider as new devices roll off the production line? Both Microsoft and Apple, with price points considerably higher than the lean, mean Google Nexus machines, are behind the eight ball in those two key areas. For most users, an affordable device with a quality screen meets their needs.

Remember, 50% of device user's time is spent on entertainment, and if they can get what they want for $400 or less, which is about what Google's highly rated Nexus 10 sells for, instead of the $500 needed for an iPad or the $800 for a Surface Pro, you can bet they will.

What the iPad has going for it is a high-quality screen, an important feature for the movie-watchers and gamers of the tablet world. Microsoft? Whether it's a Nokia designed low-cost tablet with a quality screen, or one designed in-house, the folks in Redmond need an alternative to Surface Pro to match what users want. Apple already has a high-quality tablet, but until it offers something similar at a lower price point, its decline in tablet market share will continue.

Right now, the only low-cost, high-screen-quality tablet alternative belongs to Google's Android. The consumer has spoken, and right now Google is the only device manufacturer that's listening.

The titans of tech
The tech world has been thrown into chaos as titans like Microsoft and Apple invade one another's turf. At stake is the future of a trillion-dollar revolution: mobile. To find out which of these giants is set to rule the next decade, we've created a free report called "Who Will Win the War Between the 5 Biggest Tech Stocks?" Inside, you'll find out which companies are set to dominate, and we'll give in-the-know investors an edge. To grab a copy of this report, simply click here -- it's free!

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  • Report this Comment On September 18, 2013, at 7:45 PM, NeuroProf wrote:

    Hi Tim - Good points, but you forgot to mention the new Nvidia tegra tablet for $199. One of your fellow Fools thinks its pretty flash. It's also Android based, but sold by Nvidia...

  • Report this Comment On September 18, 2013, at 10:12 PM, groberys116 wrote:

    726 user survey! That's ridiculous. I could contact 726 tablet users and provide my own list of important features, thereof I suggest no one take IDC's survey seriously.

  • Report this Comment On September 19, 2013, at 7:37 AM, jdmeck wrote:

    Apple has name and features. Forget about price. Apple will never give it away like the others ( Amazon-Google) are doing. Most important to an investor is profit, NOT percent of market.

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