Apple Inc. (AAPL), Google Inc (GOOG): Android Tablets Are Taking Off

Apple Inc. (AAPL)A few months ago I wrote that Apple Inc. (NASDAQ:AAPL)‘s tablet crown was looking a little dented — now it appears it may be falling apart. The latest numbers from Strategy Analytics show that Android’s made huge gains against Apple Inc. (NASDAQ:AAPL)’s iOS over the past year, and it’s showing no signs of slowing down.

In the second quarter of 2012, Apple shipped 17 million iPads, partly due to the successful launch of the iPad Retina. That helped bolster Apple’s iOS tablet market share to 47.2%. But even after the launch of the iPad Mini later that year, Apple Inc. (NASDAQ:AAPL)’s market share has dropped to 28.3% at the end of this year’s second quarter, with 14.6 million units shipped.

Apple Inc. (NASDAQ:AAPL)’s drop has been Android’s gain. Over the same period, Google Inc (NASDAQ:GOOG)‘s tablet OS jumped from 51.4% to a staggering 67%. Strategy Analytics said that Android’s success is due to the success of Samsung, Amazon.com, Inc. (NASDAQ:AMZN), and Google Inc (NASDAQ:GOOG) tablets. Overall, branded tablet shipments shot up 47% to 36.2 million units from 24.6 million a year earlier.

According to Q1 2013 data from IDC, Samsung is the No. 1 Android tablet vendor, followed by Asus — which makes Google Inc (NASDAQ:GOOG)’s Nexus tablets — and then Amazon.com, Inc. (NASDAQ:AMZN). Samsung easily beat the competition, shipping 8.8 million units compared to Asus’ 2.7 million and Amazon.com, Inc. (NASDAQ:AMZN)’s 1.8 million.

Not to be left out of the tablet conversation is Microsoft Corporation (NASDAQ:MSFT)‘s Surface tablets, which jumped to 4.5% OS market share this past quarter and 2.3% global shipment market share. Strategy Analytics believes that third-quarter shipments of the Surface could spike because of the recent price drop for Surface RT tablets. If that happens, investors should keep in mind that any significant growth for that quarter would likely be temporary compared to the steady gain of Android tablets.

In the coming months, Apple Inc. (NASDAQ:AAPL) is expected to launch updated versions of both the iPad and the iPad Mini, which could help boost market share. Apple is king when it comes to tablets larger than 8 inches, but according to NPD, two-thirds of tablets being sold in the first quarter were smaller than that size. Though Apple Inc. (NASDAQ:AAPL) still commands a 30%-40% share of smaller tablets, a plethora of small Android tablets compete with the Mini and typically can be had for a much lower cost.

One of the bright spots for Apple is the coming release of iOS 7. The software is currently in its fourth version of beta for iPads, but when it launches this coming fall it could help tip the tablet scales back in Apple’s favor. Customers who’ve been holding out on an iPad purchase may be more inclined to make a purchase once the new software is released.

iOS 7 will give Apple a much-needed operating system revamp in both style and substance. It may be enough to entice some consumers, but the real issue for Apple Inc. (NASDAQ:AAPL) going forward will be how the next iPad and iPad Mini evolve. A Retina Mini seems like an obvious product, but some have speculated that Apple’s afraid it could eat into traditional iPad sales. Even if iOS 7 is a hit and pushes iPad sales up temporarily, Apple would be unwise to think the new OS is the only answer to its slowing iPad sales. I hate to join the chorus and say that Apple needs to innovate, but as cheap Android tablets flood the market, it seems that innovation is the only way for the company to make major gains.

The article Android Tablets Are Taking Off originally appeared on Fool.com and is written by Chris Neiger.

Fool contributor Chris Neiger has no position in any stocks mentioned. The Motley Fool recommends Amazon.com, Apple, and Google. The Motley Fool owns shares of Amazon.com, Apple, Google, and Microsoft.

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