Amazon is a winner in tablets, because it treats the device as a loss leader. Source: Amazon.com.
Tablets may be the device that went from introduction to maturity fastest. Less than five years ago, the market seemed limitless for the device, and now tablets are considered a soft spot in the technology industry. Analyst firm IDC recently reported its fourth-quarter and full-year tablet shipments figures and the results are not encouraging. On a full-year basis, tablet shipments fell 10.1% from 2014's total according to IDC's estimates. In the important fourth calendar quarter, the year-on-year shipment decline was even more pronounced, with a 13.7% decrease.
Against that backdrop, it's not surprising many tablet makers reported fewer tablet shipments than the previous year. The results were particularly worrisome for high-end device makers as a combination of a slowing market and a defection to lower-end models took a toll on shipments. Here are the winners and losers of today's tablet market, according to IDC.
Losers: Apple and Samsung
Samsung (NASDAQOTH: SSNLF) and Apple (AAPL -1.37%) hit the trifecta of struggling tablet performance, according to IDC's data. Both companies experienced year-on-year decreases in tablet shipments and tablet market share losses, and both saw bigger shipment declines in the seasonally heavy fourth quarter as compared to the year overall. Market share runner-up Samsung did marginally better than Apple by reporting narrower declines.
Versus the overall 10.1% year-on-year decline, Samsung saw shipments fall 16.1% in 2015. As a result, the company saw its 2015 market share fall 1.1 percentage points, falling from 17.3% to 16.2%. In the fourth quarter, the unit drop was 18.1% over last year's corresponding period.
For Apple, the company shipped 21.8% fewer tablets in 2015 than the prior year. As a result of a larger decline than the overall market, the company's market share percentage dropped 3.6 percentage points, falling to 24% of the market. In the fourth quarter, the decrease was even more pronounced, with the company shipping 24.8% fewer models, even with the company releasing the iPad Pro during the quarter.
Versus expectations, Apple's iPad division has underperformed for an extended period, as competition from other firms and cannibalization from its larger iPhone Plus smartphone have combined to hurt Apple's tablet sales.
Winners: Amazon and Huawei
Bucking the trend by posting full-year shipment growth of 117% is Chinese device maker Huawei. The company had a strong 2015 in both tablets and smartphones, as IDC's smartphone survey found the company was the fastest-growing smartphone maker. The company appeared to be strengthened as the year progressed with fourth-quarter growth of 125%. However, it should be noted that the company is still a minor player in tablets, as its full-year shipment figure of 6.5 million only claims a 3.1% market share.
Amazon.com's (AMZN -2.71%) another case of a minor player in the tablet market on a hot streak. While IDC's data doesn't give Amazon's full-year totals, as the figure is relegated to the "others" category as a result of not being in the top five vendors, on account of amazing holiday sales, the company finished No. 3 in the fourth quarter with 176% growth over last-year's corresponding quarter. This year, Amazon released a low-cost Fire 7-inch model for $50, and the unit is Amazon's best-seller in computers and accessories.
Unlike most tablet competitors, Amazon essentially treats the device as a loss leader to get a shopping outlet in the hands of consumers. If the fourth quarter is any indication, it's doing a good job of doing just that by shipping 5.2 million units, according to IDC's estiamtes. Amazon and Huawei were rare positive spots in a struggling tablet market; investors should expect further sales contractions in tablets.
