As seen in the chart above, Apple’s share of the worldwide tablet market dropped to just below 27 per cent in the second quarter of this year from the 33 per cent share it held in the same quarter last year. While iPad device shipments have fallen from 14.6 million units last year to 13.3 million units. During the quarter of June, Samsung also saw its market share fall relative to the quarter of the year-ago. The market share of the Korean business fell from 18.8 percent last year to 17.2 percent, although its unit shipments actually increased marginally from 8.4 million units in the quarter of the year to 8.5 million units. Before recently, Apple and, to a lesser degree, Samsung remained at the top of the market, minimally affected by the gains made by competitors, IDC research analyst Jitesh Ubrani noted. Now we are seeing growth among the smaller vendors as the market enters a new phase and a levelling of shares among more vendors. Despite its rise in shipping units, Samsung’s decline in market share may be partly due to the explosive growth of relative newcomers to the tablet market such as China’s Lenovo. Lenovo reported growth of 64.7 percent year-over-year after growing its unit shipments from 1.5 million to 2.4 million and raising its market share from 3.3 per cent to 4.9 percent. Source: Thinkstock Asus, based in Taiwan, also achieved an impressive growth rate of 13.1 percent year-over-year by raising its unit shipments from 2 million to 2.3 million and growing its market share from 4.5 percent to 4.6 per cent. Although low-cost tablet maker Acer lost significant market share growth continued to come from the tablet company Others category which consists primarily of similarly low-cost white box tablet vendors. Tablet vendors in the Others segment posted a year-over-year growth rate of 33.4 per cent and in the second quarter of 2014 took a 44.4 per cent share of the global tablet market. As recently announced by Bouchard Apple, it is partnering with IBM to create a new class of business apps for mobile devices such as the iPad. IBM’s partnership could give Apple a critical competitive edge in the tablet market’s enterprise segment just as it is expected to grow. During the company’s latest quarterly earnings call, Apple CEO Tim Cook shared his faith in the tablet market enterprise segment. Source: IBM.com We are very optimistic about the future of the tablet market and we are confident that we can continue to bring substantial innovation to this segment through hardware products and services, said Cook according to Seeking Alpha’s third-quarter tax revenue call transcript. We believe that one such catalyst for potential iPad growth will be our collaboration with IBM providing a new generation of mobile enterprise applications built with iPad’s iconic ease of use and backed by IBM’s cloud services and data analytics. There are also several other trends when it comes to dealing with the changes in the rapidly evolving tablet market that may soon put Apple in a more advantageous position than rival Samsung. As Bouchard noted, the increasing popularity of large-screen smartphones is expected to affect tablet sales as users understand that tasks that previously could only be done on a laptop can now be performed on a so-called phablet or phone-tablet hybrid. Although Apple’s latest iPhone 5S has only a 4-inch screen size, it has been widely reported that the new iPhone 6 will be available in two larger screen sizes of 4.7 inches and 5.5 inches. The launch of two new iPhone large-screen models would allow Apple to take advantage of the rising demand for phablets and counter its declining tablet market declines. In other words, the iPhone 6 cannibalizes Apple’s iPad sales by subsuming its laptop functions close to how the iPhone cannibalized iPod sales by subsuming its storage functions for digital media. Most analysts have estimated that Apple’s biggest iPhone launch in history will be the introduction of the iPhone 6 models due to the pent-up consumer demand for an iPhone on a large-screen. The iPhone 6 big screen may also at least give Apple a temporary advantage over Samsung on the smartphone market, where both companies have also lost market share. According to IDC data Apple’s share of the global smartphone market dropped from 17.1 per cent in the quarter of the year-ago to 15.5 per cent in the first quarter of 2014, while Samsung’s share fell from 31.9 per cent to 30.2 per cent. Nevertheless, because Samsung already has multiple large-screen smartphones on the market, the boost that Apple will soon get from the introduction of its larger-screen iPhones won’t match. Finally, as reported by recent studyConsumer Intelligence Research Partners (CIRP) revealed that over half or 52 percent of last quarter Apple’s iPad sales came from its new iPad Air model flagship. The iPad mini with Retina display accounted for about 20 per cent of Apple’s overall iPad sales during the same time period. This indicates Apple might be less vulnerable than other tablet makers to this phenomenon. Although it is not clear how much longer Apple will be able to maintain its leading position on the worldwide tablet market, it appears that in the larger scheme of things it may not matter. It should also be remembered that Apple has never made winning a particular category of product by market share a priority. Apple has historically focused on maximizing the profit that it generates off its premium selling of goods. On the other hand, Samsung has historically concentrated on selling a wide range of products in a single category at different price points a strategy that now leaves it vulnerable to low-cost rivals on the tablet market. For all these factors, the future of Apple’s tablet market looks far better than its biggest rival at the moment.
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April 18, 2014 5/5.500
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