17 Comments

Summary:

That small slate market — which in Apple’s eyes, didn’t exist — will account for more sales than larger slates, says IDC. And due to lower prices, Android’s tablet market share will reach just past that of iOS this year.

ipad-android-featured

Apple entered the small slate market with its iPad mini but less expensive Android tablets are poised to soon surpass iPad sales. So says IDC, which on Tuesday released a quarterly update to its Worldwide Tablet Tracker report. By the end of 2013, IDC says, Android tablets will take 48.8 percent of the market compared to 46 percent for Apple’s iPad. That, of course, doesn’t leave much room for Microsoft Windows tablets.

lots of tabletsThe two factors driving Android’s tablet rise are costs and size. Apple’s iPad starts at $329 for a 16 GB Wi-Fi model while tablets with similar hardware running Google’s Android software can be had for half that cost. It’s a valid argument to suggest that consumers may get a better experience with the more expensive iPad, but if $329 isn’t in a consumer’s budget when tablet shopping, a lower-priced Android may land in the shopping cart.

Apple was also a little late to the small slate market. Decent Android tablets sized at 7 inches were available as far back in 2010; a time when Apple publicly squashed the idea of a tablet in this size. We all know how the company changed its tune: After reading articles and reader comments on the merits of a 7-inch tablet, Apple executives realized there was indeed a market for these. And in late 2012, the iPad mini arrived, with its 7.85-inch screen.

IDC tablets March 2013

IDC’s data suggests that one in two tablets shipping this quarter are 8 inches or less in size, confirming a recent report from Display Search. The research firm that studies display panel shipments — and the implications of those numbers — says the iPad mini will outsell larger iPads this year.  IDC Research Analyst Jitesh Ubrani echoes the usability of small slates that I noted in 2010: “Vendors are moving quickly to compete in this space as consumers realize that these small devices are often more ideal than larger tablets for their daily consumption habits.”

Microsoft Surface RTWhere does that leave Microsoft Windows tablets? IDC doesn’t hold out much hope for Windows RT, forecasting a dismal 2.7 percent of the tablet market by 2017. I agree with IDC here because tablets running the full version of Windows 8 with the same battery life as RT devices can be had for nearly the same price. There’s simply not a huge market for Windows RT without a drastic price drop in the devices.

Windows 7 and 8 tablets, however, should eke out some gains over Android and iOS tablets over the next five years, says IDC. These could account for 7.4 percent of the tablet market by 2017. If Microsoft continues to evolve the platform at the same time hardware improves, I think 10 percent (or more) of the market is actually possible by then.

Ultimately, Apple doesn’t care about its overall market share provided it continues to rake in massive profits. That’s a good strategy, but I’m curious to see how the sales mix of iPads and iPad mini devices affects Apple’s profit margin in tablets. Surely the ASP, or average selling price, will decline due to the lower-priced iPad mini. Can Apple make it up in volume?

You’re subscribed! If you like, you can update your settings

  1. crazyscribbling Tuesday, March 12, 2013

    How can you take these guys seriously ? Last year before Jelly Bean, Android tablets were not selling and these so-called experts suggested that iPad will be the biggest seller for the next few years. Nexus 7/10 and Kindle comes out and they change their tune.

  2. If you are to count the Kindle as an Android tablet, you may have a shot at something close to this. But, will the Nexus and other Android tablets sell 20+ million devices between now and January? Are you counting the iPads in market?

    This simply smacks of under-analysis.

    1. In other words, bollocks! Look at the list: he’s a Windows shill.

      shill
      an accomplice of a confidence trickster or swindler who poses as a genuine customer to entice or encourage others.

  3. Why do the headlines always make it sounds like Apple is doomed, but then the details show Apple still having 43% of the market way off in 2017? That is pretty impressive, and as usual, Apple will have 43% market share and probably 70-80% earnings share.

    No question Apple sees ASP and margin drop in the tablet market as the iPad mni makes up more and more sales. Again, in a market growing like this one that is not a bad thing. Earnings will still grow and units increase and the $329 price on the mini is far above what some pundits were expecting. It will be interesting to see the pricing of the mini retina when it is delivered in 2014. I expect it to push the old mini down, but still take a good percentage of the sales.

    The only problem with Apple tablet sales is that the basically started as the entire market, and share cannot grow from there. Clearly the tablet has been a success, and the overall market for tablets is growing. Any market that generates the kind of revenue as this will attract competition at cheaper price points and different configurations. This is completely predictable unless Apple made it impossible for other to enter by making no money themselves. We know Apple does not operate that way, and tablet market is going completely as expected.

  4. If Apple really wants to shore up their market share, they could simply drop the price of the first generation iPad Mini to, say, $249 when they come out with the 2nd generation model. I’m assuming they would still make a solid (if smaller) profit at that price.

  5. Where’s the critical comment about IDC’s track record and about IDC measuring channel sales? Apple sells it’s tablets to REAL people as fast as they can make them, not to resellers where they sit on shelves and no one buys them.

    1. Very true: there is still the whole “sales vs. shipments” argument in any widespread multi-platform comparison. That’s not going to change unless vendors provide actual sales numbers, of course, which I doubt will happen any time soon.

        1. Yes it does. And my point still stands. ;)

          1. It does, but the story itself needs to mention this, no?

    2. The data here is a forecast; we’re not talking about 2012 sales vs. shipments.

      1. Considering IDC’s track record maybe we should…

  6. I agree, with @scottph, why is so little emphasis placed on the lack of unit sales data and especially usage of apple’s competitors? Something is not adding up. Take a look at Asymco’s recent article regarding this subject.

  7. Google’s communist act is failing miserably. Samsung is taking almost all profits leaving Google and other Android manufacturer’s almost nothing.

    Moreover, Windows 8 tablet market share will surpass Android tablets very soon according to the IDC’s estimate. The IDC’s market share estimate is based on number of units. Windows 8 tablets are more expensive now, so it will sell fewer for now. But low cost models will come out soon. On the other hand, Android is going after the lower and lower end market at cheaper and cheaper prices.

    In terms of market share based on revenue, Microsoft’s Surface is selling at $999, or $1140 plus the touch cover, that’s about 5 times of 7″ Android tablets. Revenue-wise, Microsoft only needs 1/5 of Android’s market share to beat all Android manufacturers combined. Moreover, Surface has a gross margin of 45%, vs. cheap Android devices at less than 20% of gross margin, in terms of gross profit, Microsoft makes 11 times more profit selling one Surface Pro than Android vendors selling one Android tablet!

    And price-wise, Dell, Asus, HP and Lenovo are offering lower end Win 8 tablets at about $399 to $499, which is very competitive to iPad and 10″ Android tablets. Lastly, don’t forget that Microsoft receives $5-$10 of royalty for each Androud device sold.

  8. Louis A. Carliner Thursday, March 21, 2013

    Apple’s pricing policy still continues to be rotten to the core! Back in 1983 when the first Macintosh was introduced, at a price of $2500, which was a successor to the ill-fated Lisa at some $10,000, had Apple been willing to some aggressive price cutting, right before Microsoft finally came out with its first viable GUI operating system (Window 3.0), it would have been able decimate Microsoft before its Windows offering could build up a domineering critical mass!

    Early and aggressive price cutting by Apple just at the first inking of the possibility of the emergence of any competitive product would have been enough to discourage the Korean and Taiwanese companies to enter the marketplace!

  9. Well if you can get everything for less then why go for something expensive. Android’s OS platform is quite competitive, more affordable mini tablets should expand the tablet market penetration towards customer segments that are less wealthy or more mobile than the average couch ipad user.

    If you want to get more background about the tablet market you may find the Uniqloud tablet market overview insightful.

  10. Apple may not care about the overall market share immediately, but it will def become an issue at some point. Particularly with international expansion, the common stats show that Android pulls way ahead. And in the medium term, revenue is definitely correlated with reach & market penetration.

    If you want to get more background about the tablet market you may find the Uniqloud tablet market overview insightful.

Comments have been disabled for this post