ABI Research Finds Apple iPad Losing Share to Android in Q3

| Analysis

Apple Inc. led the media tablet market it created for the 10th straight quarter, but ABI Research issued a report that said iPad's market share declined 14 points during the September quarter to 55 percent. Android devices took 44 percent of the market and almost all of Apple's 14 point decline, and the firm believes that trend will continue.

"Fifty-five percent is the lowest share Apple has ever had since launching the iPad in 2010," the company wrote in its report.

The Apple-Android See Saw

ABI's figures are similar to figures for August of 2012 from Pew Research, which had Apple at 52 percent of the market, and Android at 48 percent. It's not a direct comparison, but the trend has been fairly consistent since Google introduced the US$199 Nexus 7 and Amazon announced its own Kindle Fire HD at $199, and that trend is that Apple is losing share.

“With the introduction of a smaller, lower-cost iPad mini, Apple has acknowledged Android’s beachhead of 7-inch-class tablets, though at the same time, it has failed to deliver a knock-out punch through innovation, pricing, and availability during the most critical selling period of the year,” ABI's senior practice director Jeff Orr said in a statement.

Mr. Orr added the usual refrain that more OEMs, more devices, and more more more of Android will continue to build the platform's tablet share going forward.

The report did not, however, address the stark reality that Android tablet owners don't actually do anything with them. iPad accounts for almost all of tablet-based Internet traffic, and over the Thanksgiving weekend in the U.S., iPad was responsible for almost all Internet purchases made from tablet devices.

The report also didn't account for the release of the iPad mini on October 23rd, after the third quarter on which it was reporting. Despite the reality that iPad mini wasn't for sale during the third quarter, the research firm concluded that, "ABI Research believes the iPad mini has caused demand for standard iPad models to shift down-market."

It's a curious conclusion to reach under the circumstances, and it's one that lies in contrast to Wall Street analysts that consistently get it right, such as Shaw Wu of Sterne Agee, who has called the iPad mini the competition' worse nightmare. He has also disagreed with those, like ABI, who feel that the price of the iPad mini at $329 is a problem for the company.

Ben Reitzes of Barclays also ventured a different opinion on the cannibalizing effect of the iPad mini. The analyst has said that he believes 25-50 percent of iPad mini sales this quarter, which he estimated at 5-10 million units, will have cannibalized sales of the iPad 2 and iPad with Retina Display.

Other analysts we trust have offered similar opinions, and it contrasts with the notion that, "iPad mini has caused demand for standard iPad models to shift down-market." That's a very dire statement that paints the picture of the larger iPads dropping off considerably in unit volume.

None of which is intended to make excuses for Apple losing share in the tablet space. The reality is that Apple has lost share. It had 81 percent of the market as recently as July of 2011, and owns just more than half today.

Our point is that it remains to be seen what kind of effect the iPad mini and the new iPad with Retina Display will have on the tablet market. This is the holiday season, and people are buying right now. Messrs. Wu and Reitzes may have gotten it wrong, but we trust their conclusions more than those published by ABI Research in this report.

If Apple loses more share this quarter, this holiday shopping season, the Apple doubters probably have it right and Android will soon surpass iPad in sales. With all those Android devices gathering dust, however, we don't see that happening, and we expect Apple to reclaim share this quarter.

Image made with help from Shutterstock.

Comments

Palenoue

From what I make of the small print in the footnotes of ABI’s report, they’re counting Android tablets _shipped_ as if they sold every one of them, yet offers no research to support this assumption.  So yes, when it comes to tablets gathering dust in warehouses Android is doing swell.

Terrin

A couple of things. First, every time I log on to Groupon I see some Android Tablet market over half off. So, the tablets might be moving, but at what cost? Google might be making some money in terms of advertising, but the hardware manufacturer in many cases is selling them at a loss.

Second, why is it fair to count Amazon’s sales as Android sales? To be called Android, a manufacturer must comply with strict Google rules. Amazon uses its own forked version of the OS Android is based on, but it is not Android. Google makes no money off a Amazon Fire. You might as well give RIM’s tablet credit towards Android sales, as its tablet does run some Android apps, but also is not Android.

Third, as the other poster pointed out. Apple counts a sale as a device that has reached a customer as opposed to a retail sales partner. Companies like Samsung acknowledged they count devices in the channel.

Terrin

PS

The importance to Google in terms of Android is advertising revenue. Considering Android tablet users don’t seem to use the Internet very much, how is that effecting Google’s intended goal?

Rocwurst

Bryan,
ABI’s figures are from before the launch of the iPad mini so represent the artificial dip before the huge amount of pent-up demand exploded with the launch of the iPad mini.

Apple sold more iPads in the first three days of the launch of the iPad mini than Google or Amazon sold in their entire first three months of sales (sorry I mean shipments).  Google only managed 500,000 Nexus 7 tablets in their first month according to the manufacturer Asus.  So much for these 7” Android tablets finally being able to earn the title of “iPad killer”.

In China, at the heart of the Android tablet flood, Apple’s iPad captured an astounding 71% marketshare last quarter and that was also before the launch of the iPad mini.

IBM’s recent report that the iPad accounted for a massive 88% of all mobile e-commerce transactions over Black Friday combined with web browser marketshare of 91% and 98% according to Strategy Analytics and OnSwipe respectively confirms that actual sales of Android tablets are far lower than analysts would have you believe - either that or they are sitting unused in people’s drawers.  or something.

Even in smartphones, iOS is going gangbusters.  Kantar Worldpanel ComTech reports that in the last three months the iPhone has surged to 48.1% Marketshare in the influential US market beating Android which plunged from 63.3% to 46.7% in the same timeframe.  And this is on the back of only 1 month’s worth of iPhone 5 sales.

mrmwebmax

+

Terrin wrote:

The importance to Google in terms of Android is advertising revenue. Considering Android tablet users don’t seem to use the Internet very much, how is that effecting Google’s intended goal?

Likewise, with the importance of the Kindle Fire to Amazon being product sales, what good can the Fire be doing if nearly all online sales are being made from iPads?

Just as in smartphones, Android may one day lead in market share with tablets, but Apple will continue to lead in profits. In fact, the whole Android strategy reminds me of an old SNL skit. It was for a bank that did nothing but make change for people: Someone could walk in with a ten and leave with a five and five ones, and endless such variations. When asked how the bank made any money, the reply was, “Volume.”

Or better said by Jayne in an episode of Firefly, “Nothin’ plus nothin’ equals, let me see, nothin’.”

Neal

What is the obsession with market share? Some analysts equate above 50% market share with “winning”, and less than 50% “losing”.  As if developers will abandon iOS for Android as soon as iOS market share is below 50%. 

What is wrong with, say, 30% share of the tablet market, when you include cheap no-name Chinese piece’s of crap tablets sold at CVS pharmacy for $99 as well as Kindle Fires and Nooks? If a tablet runs Android, but all someone does with it is surf the web and download videos, and very few apps are installed on it, who cares what operating system it runs? How much profit will Google make from any $99 Android tablet?  In fact, how much profit will anyone make from that tablet?

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