While tablet sales grew at an amazing 75.3% in Quarter 4 2012, compared to the same quarter in 2011, Apple's share in the growing market it sliding. Despite the release of the Apple iPad mini, a new iPad 4 and the availability of the iPad 2 at lower costs, Apple's share in the tablet market dropped to 43.6% in Q4 2012, from 51.7% in Q4 2011. The reason is while the market grew 75.3% during the quarter, Apple's growth during that period was a more modest 48.1%.
The year 2012 saw access to iPad's becoming more feasible than ever with the entry level price going down from US$499, to US$399 with the repriced iPad 2 16 GB. Later in the year, the iPad mini brought down the entry fee into the iPad world down to US$349.
The problem is the tablet has become the cheapest computing platform ever built, with the cheapest models coming in at a bit less than US$100. If Netbooks brought cheaper computing to the consuming public, tablets are bringing it down to a fraction of the price of a Netbook. Relative to processing power and operating system, the cheapest tablets are cheaper than the cheapest equivalent smartphones. Cheaper US$199-249 tablets from Amazon, Asus and Samsung account for a big portion of the sales increase. This has resulted in some calling Apple's US$349 mini expensive. I don't agree with that proposition. I ironically, Apple seems to be in a better position to compete in a world awash with cheap tablets, than it is in a world awash with cheap smartphones.
Technology, Apple's iPad mini has solid design edge. It seems to me, to be priced well enough for what it offers. You just have to go past the processor specifications and look at the fact that Apple created a tablet that gives 0.9-inches more display area than it competitors, while offering it in a package 10-15% lighter than its 7-inch competition.
Unlike the smartphone wars in which four or five Android's are sold per Apple iPhone, the number of Android apps equals Apple apps, and Apple seems to be falling further and further behind in terms of hardware, Apple's dominant position in the market is unlikely to be lost anytime soon. I actually think Apple might be able to get back to a majority share.
In Q4 2012, Apple's iPad mini sale were hobbled by lack of supply. If the Apple iPad 5 adopts the more size and weight efficient design of the iPad mini that should give it an edge over the Android and Windows tablets I have seen coming down the pipeline. The new offering would boost sales.
A US$399 Apple iPad 4, with its high resolution display would give BlackBerry, Android and Windows RT manufacturers a lot of headaches. If Apple continues to sell the current iPad mini at a reduced US$299 price after the release of the iPad mini 2, that will be even more problematic for the competition. Even if Apple's margins are affected by a maintaining lower priced iPad 4's and mini's it probably would be worth it to stop Asus, Samsung and Microsoft OEM's from gaining traction.
Apple's shares have taken a beating, and the future of its iPhone and MacBook's looks a bit problematic, but I think Apple has a solid hold on tablets and it has the money to fight a war of attrition. Apple is best off fighting the battle for consumers dollars than waging war in the courts.
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