Apple iPad Market Share Hits One-Year High14 Aug, 2012 By: Erik Gruenwedel
The Apple iPad commanded nearly 70% of the global tablet market share in the second quarter (ended June 30) — up 11.5% from the first quarter, according to a new report.
The iPad, which created the tablet market with its launch in April 2010, shipped 17 million iPad and new iPad 2 media tablets, up 44.1% from 11.8 million units the first quarter, according to IHS Suppli. The increase in shipments translated into Apple’s second-quarter global tablet share climbing to 69.6%, up from 58.1% in the first quarter.
This marks a five-quarter high for Apple’s tablet market share. The last time Apple accounted for such a large portion of the tablet market was the first quarter of 2011, when it also had a 70% share.
Major competitors Samsung (Galaxy Tab) and Amazon (Kindle Fire) saw a slight uptick and significant decline, respectively, in Q2 from Q1. Samsung shipped 2.2 million units to end the period with 9.2% market share — up 2.8% from Q1. The Kindle Fire shipped 1 million units to end the period with 4.2% market share — down 13.3% from Q1, according to IHS.
In July of this year, Apple exceeded the 85 million mark for iPad media tablets sold since the product’s launch in April of 2010.
“Apple is making all the right moves to rebuild its dominant position in the tablet space,” Rhoda Alexander, director of tablet and monitor research for IHS, said in a statement. “The company is pushing visual performance boundaries with the new iPad, while providing value customers with a lower-priced alternative, the iPad 2.”
Alexander said a major component of Apple’s iPad success is the company’s well-developed ecosystem of content and applications it had in place before entering the tablet market, and its absolute control of the hardware, software and operating system.
With the expected entrance of the 7-inch version of the iPad in September, Apple is expected to dominate the market over the long term, according to IHS. Apple’s major media tablet rivals, Google and Microsoft, hope to challenge Apple in the second half of the year, but will be facing formidable headwinds with no sign that the market leader is backing off of its aggressive strategy in the market, said Alexander.
“When a customer buys a media tablet, what he or she is really doing is purchasing a key to that ecosystem, not just a piece of hardware,” she said.
The analyst said competitors have found it difficult to duplicate Apple’s approach — a reality Google, with the Nexus 7, and Microsoft, with its Surface product, aim to broach. IHS said both firms have invested heavily in proprietary ecosystem development. While this investment benefits the Android and Windows original equipment manufacturer (OEM) partners of both companies, it is not surprising to see Google and Microsoft, respectively, test the waters with media tablets of their own, especially given Apple’s prolonged stranglehold on the fast-growing market.
“It’s possible that each of these vendors is entering the market intending to lead by example, rather than trying to be serious branded tablet competitors,” Alexander said. “However, they both have the potential to end up as major players even if their original intent was only to demonstrate how it could be done.”
Microsoft in particular will be one to watch, with its existing Xbox gaming community on the consumer side and its operating-system dominance in business markets. In contrast, Samsung, Apple’s closest competitor, has shipped almost 13 million total media tablets. Samsung was one of the first to enter the market after Apple, introducing its first Galaxy Tab in the fourth quarter of 2010. However, Samsung hasn’t yet achieved the cumulative unit sales that Apple reached by Christmas of 2010.
One difficulty for players other than Apple has been in establishing a clear brand identity in the media tablet market. Without a distinctive brand identity, competitors are forced to battle on price, robbing them of the profit margin that fuels future product and ecosystem development. Google’s entry-level $199 price point exacerbates the price pressure across the Android tablet universe, just as Amazon’s entry did in the fourth quarter of 2012. It remains to be seen at what price point Microsoft will enter, according to IHS.
“Tablets are becoming an increasingly important piece of the consumer electronics space,” Alexander said. “Vendors must understand that customers are not buying hardware, but that they are buying an experience. Users then want to carry that experience across multiple devices, creating an opening for the savvy vendor into a much larger sales opportunity than a single tablet.”
Apple, Microsoft and Google are all keyed in to this much larger user experience. To date, the media tablet for the most part has been a consumer phenomenon, but the next big battle will be fought in the business space.