Blog Post

Even as the iPad grows, Apple loses ground

IDC’s quarterly report about tablet market share was published Thursday, and its findings show Apple(s AAPL) is still the biggest tablet maker in the world, as of the end of the fourth quarter of 2012. But when compared to previous quarters and to its competition, its growth is slipping. And that partly explains why, despite Apple selling the most iPads ever in its history, investors are worried that Apple isn’t long going to be able to hold off the likes of Samsung and Asus.

Here’s IDC’s Quarterly Worldwide Tablet Tracker study for tablets shipped between October and December 2012:

IDC tablet shipments in 2012Q4

Apple, as you can see, is by far the world’s biggest tablet brand, shipping 22.9 million iPads during Q4. Samsung is a distant second, selling about a third as many. But it’s the rate of growth of these iPad competitors, more than the absolute number of tablets shipped, that is astounding: Samsung held a 7.3 percent share of the tablet market during the last quarter of 2011; it’s more than doubled that to 15.1 percent a year later. Meanwhile, Asus, which is down in fourth place, had a 2 percent share at the end of 2011, and it grew its shipments at a rate of more than 400 percent in the last year.

How long can Apple stay ahead?

The iPad just turned three years old; it is by far the most established brand on this list. So 48 percent growth, not to mention 22 million iPads in one quarter, is still very good. But this table also reveals that while Apple is still growing, it is losing ground. Its tablet market share was about 52 percent at the end of 2011 — a year later it’s at 44 percent.

This is not unexpected. The iPad is not the iPod — Apple is not going to hold a 70-plus percent share of the tablet market for a decade. But the current strategy isn’t dissimilar: For the first time, Apple released two new 9.7-inch iPad models in the same year, and introduced the iPad mini. The mini was clearly a market share play — Apple doesn’t want to cede sales of the increasingly popular smaller tablet market to competitors. The latest, high-end 128GB iPad is yet another way to bring in buyers at an even higher price point who have more specific needs for a tablet.

Just as we’ve seen in the smartphone business, while Apple’s figured out the best way to profit off of its tablet strategy, that isn’t necessarily synonymous with remaining the most popular brand.

14 Responses to “Even as the iPad grows, Apple loses ground”

  1. Guestolio

    You can probably throw away the “All Others” data as well.

    Even if it represents numbers for anything known, you’re talking about a myriad of throw away junk. Those are the throw ins when you buy some overpriced TV or a $39 doorbuster deal at Wizmart and so on. Landfill fodder at best.

  2. Two things: #1 I don’t trust estimates from IDC. Generally these numbers are self-reported. Unless and until Samsung and Amazon disclose their shipments and sell-through the way Apple does, I’m not buying. That being said, do I think that Samsung and Amazon have gained share and sold tablets. Yes. To what extent is the question.

    Secondly, you say “while Apple’s figured out the best way to profit off of its tablet strategy, that isn’t necessarily synonymous with remaining the most popular brand”. Now maybe I’m not as good as I used to be in math, but 43% is still way higher than 15. And further if you want to look at another definition of “popular”, when you look at purchase intent, many surveys have the iPad at super-majority numbers.

    OK, one more thing. Do you think that Amazon would have sold as many Kindle Fire’s (assuming that regular Kindles aren’t in the comparison) if they actually tried to sell them for a profit? Bezos has admitted there is no profit on the hardware. Conversely, if Apple simply sold iPads at breakeven, do you think Samsung or Amazon would even approach double digit share? I’m not sure why selling things profitably is not viewed as important (not just by you, but apparently Wall Street too).

  3. I’m guessing by the fake numbers IDC doesn’t have Nate Silver on staff working for them. Samsung, Microsoft, Google and Amazon haven’t reported a actual units sold number in years, if you are a developer deciding on which platform to design software for using IDC’s numbers will put you out of business.

  4. jajajaja, amazing comparison…. apple reduced its market, because they sold 22.5M tablets compared with 15 in 2011, lol… what a title! I prefer to have 10% of 1 Billon than 50% of 1 Millon,

    The growth of Apple (7.5M) is as large of all the sells of Samsung (7.1M), how can you say that Apple is losing ground?

  5. James Katt

    Note that BMW is coming out with the BMW 320i, an “inexpensive BMW”. This starts at $32,000 and rapidly rises to $40,000. That isn’t so inexpensive. But it will grow interest in BMW as well as profits as younger people can buy it.

  6. James Katt

    Apple doesn’t have to go for marketshare. That is like asking BMW if it need to go for marketshare by selling an inexpensive BMW.

    Apple has GROWN the market so its marketshare would naturally shrink. This means Apple has more room to grow since market saturation won’t be reached.

    Years ago, Apple targetted 1% of all cell phones as its target. Of course, cell phones have become smartphones as companies made cheap smartphones to replace dumb phones.

    Apple thus grew the smartphone market. Yes, its marketshare has shrunk. But all this means is that its profits have room to move up since the market is not saturated with Apple products.

    Currently, Apple has about 70% of all the profit in the cell phone market. Not bad at all for a small marketshare – which is actually larger than Apple’s original target of 1% of the market.

  7. Nicholas Paredes

    Ford owned the auto industry for a bit as well. That doesn’t mean that Ford was a bad investment or that their product was headed towards irrelevancy.

    These conversations are personally odd, in that who really expected that there would be a Microsoft-like dominance of mobile? Who thinks that such a scenario would be a good thing?

    My problem with Apple is that they have not been open enough in the app business. Frankly, as an app designer, I start with iOS. That isn’t changing for quite a while given the inherent issues with development on other platforms. Android hasn’t even built decent media APIs yet.


  8. Apple doesn’t care as much about market share as they do about absolute sales and profits. Even though Samsung makes many of the components in their tablets, I would bet Apple still has higher margins than them, and sells a lot more (almost 3x).

    If you look at the PC business, you can see Apple is perfectly content with a small market share but high margin. They probably make more money on their PC business than any of the companies that sell 10x as many computers.

    The only issue for Apple is the lower margins on the ipad mini, which they are forced to sell because Amazon and Google sell small tablets at or below cost.

    Companies that focus on market share almost always fail, because they fall into the trap of lowering prices to maintain or grow their shares. That only works if you can establish a near monopoly position, but given that the essence of technology is constant change, accepting lower margins or temporary losses in exchange for market share is a fool’s bargain.

    It’s articles like this that contribute to the general impression that Apple is failing, and I really wish they would all stop, as my Apple shares have taken a beating!

    • Agreed. I’m not sure what the motivation is in pieces like this but it helps to promote an incredibly inaccurate picture of Apple’s health. This has a direct material effect on the company and its investors. Truth is that real sales numbers and all usage data point to an iPod market here. Non-iPad usage is essentially non-existent.

      • eldernorm

        Totally correct….. “Truth is that real sales numbers…” Apple sells, Samsung ships.

        Remember the Zune… Big shipping numbers, lots of sitting in warehouses.

        Just a thought,

  9. “Just as we’ve seen in the smartphone business, while Apple’s figured out the best way to profit off of its tablet strategy, that isn’t necessarily synonymous with remaining the most popular brand.”

    Which is exactly why Apple doesn’t care if it is most popular or not.
    They only care about profit. Which is why they sell less products than the others, but make more money. Being #1 is not so important.

    From a business standpoint, I have no doubt Apple would prefer to be #2, #3 but still make more money than #1. From a pride standpoint, everyone wants to be #1.

  10. Bruno Pinto

    A growth of hundreds of % is pretty normal when you go from an unexisting market to a market (descent or not) !!!
    What will be interesting is to compare the growth after some years of existence in the market (nearly 3 years for the iPad)

    Only then, you can compare values.