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Apple Inc. (AAPL): The Tablet Market’s Growing Too Fast For The Tech Giant

Apple Inc. (NASDAQ:AAPL)Investors have been fretting lately over Apple Inc. (NASDAQ:AAPL)‘s declining tablet market share. The days of the iPad gobbling up 75% of the market are gone. That’s not to say that the iPad is faring poorly overall as a business; it’s just that the overall tablet market is just growing too fast for Apple Inc. (NASDAQ:AAPL) to maintain such hegemony as rivals jump in.

Market researcher Strategy Analytics has now released its estimates on first quarter tablet shipments, as the company was likely waiting for Apple Inc. (NASDAQ:AAPL) to disclose its official iPad figures. Total units in the first quarter surged an incredible 117%, to 40.6 million. Google Inc (NASDAQ:GOOG) Android and Microsoft Corporation (NASDAQ:MSFT) Windows are starting to make a dent, even though Apple’s own iPad units jumped 65%, to 19.5 million in the first quarter.

Operating System Q1 2012 Units Q1 2012 Market Share Q1 2013 Units Q1 2013 Market Share
iOS 11.8 million 63.1% 19.5 million 48.2%
Android 6.4 million 34.2% 17.6 million 43.4%
Windows 0 0% 3 million 7.5%
Others 500,000 2.7% 400,000 1%
Total 18.7 million 100% 40.6 million 100%

Source: Strategy Analytics. Figures may not sum due to rounding.

Android, in particular, has risen dramatically, in large part due to low-cost models targeting lower market segments. This is the first full quarter that Apple Inc. (NASDAQ:AAPL) has been shipping the iPad Mini, but that device is still priced at a premium relative to the competition in the small-sized segment. Two of the most prominent Android tablets,, Inc. (NASDAQ:AMZN)‘s Kindle Fire and Google Inc (NASDAQ:GOOG)’s Nexus 7, are also sold at cost, so there’s little profit opportunity within the Android army.

Windows is now showing up on the scene with 3 million tablets shipped during the quarter. Strategy Analytics believes that there are several key factors holding Microsoft Corporation (NASDAQ:MSFT) back: very limited distribution, a lack of top tier apps, and consumer confusion. It’s for these reasons that Strategy Analytics currently considers Windows tablets a “niche” market segment.

Just because Apple Inc. (NASDAQ:AAPL)’s tablet market share is slipping doesn’t mean its profit share will drop. If investors look back on how the smartphone market has played out, Apple Inc. (NASDAQ:AAPL)’s profit share will be just fine.

The article The Tablet Market is Growing Too Fast for Apple originally appeared on and is written by Evan Niu, CFA.

Fool contributor Evan Niu, CFA, owns shares of Apple. The Motley Fool recommends, Apple, and Google. The Motley Fool owns shares of, Apple, Google, and Microsoft.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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