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Apple’s Tablet Market Share Will Fall Into the Single Digits

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Apple's (NASDAQ: AAPL  ) share of the tablet market continued to fall in the third quarter, according to IDC, dropping below 30%. Tablets powered by Google's (NASDAQ: GOOGL  ) Android, particularly those made by Samsung (NASDAQOTH: SSNLF  ) , are growing ever more popular.

Apple's eroding market share is altogether not surprising. In the coming years, Apple's tablet market share should fall further still, eventually dropping into the single digits.

Apple maintains its premium pricing
Apple's share of the traditional PC market has long remained below 10% -- Apple's iPad business seems destined to follow. This is largely due to Apple's premium pricing, wherein most buyers simply cannot afford Apple's devices, even if the devices the company offers are superior. 

The average PC sells for around $500-700, while the cheapest PC Apple offers starts at $999. A similar phenomenon will likely take hold in the tablet market, as cheap, capable tablets appear to drive down the cost. IDC estimated that the average selling price of a tablet would fall to $381 this year.

Google and Samsung are turning their attention toward tablets
But $381 will look expensive in the years ahead. Companies are introducing cheaper tablets than ever before, and some of them are quite capable. Most of them run Google's mobile operating system.

Google's own Nexus 7 is a little bit slower and a little bit smaller than Apple's iPad Mini with retina display, but at just $229, it's $170 less than Apple's competing tablet. Samsung's Galaxy Tab 3 10.1-inch is slower and a bit heavier than Apple's iPad Air, but it's also $140 cheaper.

As with its phones, Samsung offers a wide variety of different tablets. Its Galaxy Note 10.1 is actually $50 more expensive than Apple's iPad Air, but comes with more features, including Samsung's S-Pen, its smart stylus, and ability to interface with Samsung's Galaxy Gear smartwatch.

Samsung has been pushing developers to design their apps around its hardware. Twitter's Android tablet app, for example, remains a Samsung exclusive for the time being, and includes unique, S-Pen-dependent functionality. For these efforts, Samsung has seen its share of the tablet market soar, up 123% from the prior year.

Google itself is working to make Android tablets more attractive, redesigning its app store to better showcase apps optimized for Android tablets. The problem with Android tablets is that most apps are blown-up versions of their handset counterparts; emphasizing tablet apps could bring more money to developers, and thereby increase the chance they design tablet-optimized apps.

Is Apple doomed?
Although I think it's only a matter of time until Apple's share of the tablet market falls into the single digits, the King of Cupertino is far from doomed. Tablets running Google's Android (many of which will be made by Samsung) will continue to gain share at Apple's expense, but Apple can continue to survive and thrive in the tablet market.

Even though the Mac's market share has stayed in the single digits, Apple's Mac has been more profitable than its Windows PC competitors; indeed, analyst Horace Dediu estimates that Apple now makes more from its Mac than the top five Windows PC vendors combined. The same will likely be true for tablets.

Investors just shouldn't expect the iPad to take over the world.

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Read/Post Comments (10) | Recommend This Article (1)

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 November 01, 2013, at 11:07 AM, bassman62 wrote:

    Oh, come on. Make up your mind! Why don't you people say something that can help investors make a financial move regarding the purchase or sale of stocks? Isn't what this is all about anyway? Yea or nay? palllllEEEEZZZZZ!!! You are ALL too wishy washy!!! You base everything on an opinion! Now, have the guts to post this! I dare you!

    Ron Shawver

  • Report this Comment On November 01, 2013, at 11:12 AM, lrd555 wrote:

    As long as Apple makes 75% or more of the profits; market share could fall to 0%.

  • Report this Comment On November 01, 2013, at 11:17 AM, GaryDMN wrote:

    iOS has 90+% of both the enterprise and K-12 markets, which is probably an insurmountable lead at this point.

  • Report this Comment On November 01, 2013, at 11:20 AM, rcloud0 wrote:

    Come on your fool ask which company make the most money. Apple is not for cheap, junk products or market shares. Apple is here to make great products and a lot , a lot money!

  • Report this Comment On November 01, 2013, at 11:24 AM, JT1951 wrote:

    For 2014 Apple's tablet share will take a spike up due to the new products just released. Their new iPad Air and Mini are the BEST of the BEST. Add that to the best APP store and you have a loyal following.

    The tablet market continues to grow and the el-cheapo tablets that are sold AT A LOSS by Amazon and others will get more of the market. However Apple will continue to grow their high end share of the market. They still control 65% of all tablet profits. Also I believe 90% of all Internet use of tablets comes from the iPad. As long as they do that they really don't care about what the other guys do.

    When are you guys going to figure out it is all about PROFIT, not market share.

  • Report this Comment On November 01, 2013, at 11:25 AM, larryw101 wrote:

    Sam Mattera is the biggest Apple basher on Motley.

    He has no credentials to speak of and yet he continues to pump out these negative stories on Apple so he can collect his pennies a click when you click on one of his his stories.

    Further, he's NEVER been right on any of his predictions concerning Apple. Despite any good news surrounding Apple, Sam, Sam, The Apple bashing man, will dig up something negative to write about Apple. If you don't believe me, look back at all his previous articles. Every one of them is negative Apple.

    Motley is supposed to be a source for investment advice. You mean to tell me that this clown can't find one good thing to say about Apple?

    Today his article says Apple's tablet share will drop to single digits. Yet this very morning on CNBC they report that Apple's tablet share is increasing. Apple currently has 29% global market share in tablets and of course that does not include factoring in the new iPad Air.

    Where does Tom Gardner (CEO of Motley Fool) come up with these clowns?

    Does anyone at Motley even edit these stories before they go out? I don't think so. I think Motley Fool has lowered itself to garbage journalism just for the sake of collecting advertising dollars.

    What Tom Garner doesn't understand is that MF is the laughing stock of the financial community. Read any message board when Motley is commented on you'll see what I mean. Everyone laughs at them.

    Motley use to be a good source of advice and insight, but not any more.................!

  • Report this Comment On November 01, 2013, at 11:32 AM, halifaxhal wrote:

    Total clickbait garbage. Utterly devoid of fact or intelligence. All readers should ignore and Motley Fool should ditch this guy.

    Just went to an Apple store and bought two ipad airs. Yeah they're more expensive but I've never met an ipad owner that regrets buying their devices. They are still an amazing value when you consider how much people use them, the value added of Apple's app store, free software now including iWork and iLife, their longevity, etc.

    AAPL will be just fine for a very long time.

    I am long AAPL if you haven't guessed.

  • Report this Comment On November 01, 2013, at 11:32 AM, empyreal wrote:

    Wow this is lame. Mattera writes an article about how Google and Samsung make tablets that are cheaper than iPads, which everybody is well aware of, and that they are gaining market share. He then states that Google is working to make their tablets "more attractive" hoping to erode the iPad's advantage on premium and quality. There is nothing here. We all know that. And he knows that as well. So last night when he was writing this his last task is to come up with a good headline... No need to support it with analysis, wild speculation is just fine. Let's see, I know, here's a good one! – "Apple’s Tablet Market Share Will Fall Into the Single Digits". How do I know that? Well I don't, but it's gonna get clicks! Truly pathetic.

  • Report this Comment On November 01, 2013, at 11:35 AM, twolf2919 wrote:

    Apple continues to increase the number of iPads it sells every year (yes, I am aware that last quarter had negative growth - but that's an anomaly due to timing of new iPads). Existing iPads (the number of which is increasing) generate additional, increasing amounts of profits from services (iTunes purchases, cloud services, etc.) So clearly, Apple is making more money every year - even as Android's tablet "market share" increases. Sure, Apple could be making a lot more money if it weren't for Android tablets, Android tablets are certainly not taking real money away from Apple.

    The author says "Companies are introducing cheaper tablets than ever before, and some of them are quite capable" - but what "capable" means is a subjective and moving target, isn't it? Yes, some tablets are certainly matching and sometimes even exceeding Apple in raw hardware specs. But Apple's ecosystem is unmatched. There isn't a single Android tablet that offers the breadth of apps and services and integration with other devices that iPads offer. There isn't a single Android tablet that comes close to matching iPads in the educational and gaming markets. There isn't a single Android tablet that is as easy to use.

    So, yes, as the author "astutely" observes, Apple tablets will continue to lose market share to Android tablets. But it will likely follow the same trend as in the smartphone industry: the "haves" will increasingly demand the richness & simplicity of iPads, while the "have nots" in the emerging markets (and the few who just love customizing and configuring their devices) will opt for the more affordable Android tablets.

  • Report this Comment On November 01, 2013, at 12:11 PM, larryw101 wrote:

    Back a few weeks ago I contacted Motley Fool's corporate office to see if I could get Tom Gardner's (Motley's CEO) email address so that I could write to him about this clown Mattera and let him know how bad he is hurting Motley's credibility each time this bozo posts an article. My request was polite and I did not mention as to why I wanted to contact Mr. Gardner. The reply I got back was:

    We regret to inform you that your request cannot be granted. Mr. Garner does not take message from readers.

    Of course I replied back with surprise and bewilderment and asked why. To date I still never received a reply. Yet, just weeks earlier I was bombarded nearly everyday with email after email directly from Tom Gardner trying to entice me to join his subscription for a special reduced price. Are you kidding me! He wants me to pay him money for his advice but won't even give out his email address for reader comment?

    Even the largest firms allow access to fund managers through email.

    This is just another reason why Motley Fool will continue to have whatever is left of it's reputation erode even further.

    They truly are a bunch of fools.

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