The breadth of Apple Inc. (NASDAQ:AAPL)‘s problems relative to the apparent strength of Google Inc (NASDAQ:GOOG) seems to be a bitter pill for the company and investors to swallow as the shift in dominance between these two behemoths continues. This week, research firm IDC released its current outlook for the tablet market, showing for the first time that Android is expected to outsell iOS for the entire year. With Apple Inc. (NASDAQ:AAPL) sitting on a 40% decline from its historic high last fall, you must ask yourself if this is reason for concern or simply a reflection of a different business approach.
The song remains the same
When Google Inc (NASDAQ:GOOG) first introduced Android to compete with Apple Inc. (NASDAQ:AAPL)’s mighty iPhone, it was easily dismissed as an unimportant market participant that was too far behind to ever catch up. Android now commands a nearly 70% market share on a global basis, while iOS remains below 20%. This is tempered by the fact that Android has a much larger presence on the low end of the price spectrum, while iPhones are the preference of those looking for a premium product.
Along these same lines, the iPad that once created and defined the tablet market is facing the same kind of pressure that the iPhone experienced. According to IDC’s projections, Android will account for 48.8% of the market in 2013, which is a significant increase from the 41.5% expected in the firm’s last report. This comes as a part of an overall increase in the projected size of the tablet market in 2013, largely as a result of expanded expectations for lower-priced devices: IDC upped its forecast to 190.9 million units from the previously expected 172.4 million units.
To put this into some perspective, Apple Inc. (NASDAQ:AAPL) had 51% of the market in 2012 but is projected to fall to 46% in 2013. This is not purely bad news for Apple, because a smaller percentage of a much larger number means that overall sales should continue to increase, but it underlines a trend toward cheaper Android products that Apple needs to address. In yet another market, the company must decide if it wants to compete across the price spectrum or remain a specialty brand. At the premium end, iProducts remain the aspirational choice for many consumers; the concern is that if Apple abandons this image, it will trade away its one major advantage.