Tuesday, November 6, 2012

Apple Inc. (NASDAQ:AAPL): Don’t Read Too Much into the iPad’s declining market share in Q3

Recent data from International Data Corp on the sale of tablet PCs for the third quarter showed that Apple Inc. (NASDAQ:AAPL)’s share in the market had dipped to 50.4 percent from the commanding 65.4 percent it had in the second quarter.

This has immediately set tongues wagging as to whether Apple's domination in the segment is coming to an end.

It’s quite common knowledge, one which the company has acknowledged publicly that it sold fewer iPads in its fiscal fourth quarter which end on September as anticipation of its iPad Mini resulted in many customers deferring purchases.

Of course, the tablet landscape has change enormously over the months as newer tablets are coming into the market. There also have been new entrants such as Google and Amazon, all of which have come at lower price points than the premium-price Apple.

It is significant that Android-powered tablets have gained the most market share. Especially Samsung, which increased its market share in the segment to 18.4 percent from 9.4 percent in the previous sequential quarter.

Amazon, the vendor of Kindle Fire tablets, followed with a 9 percent share, while Taiwan’s Asustek Computer Inc., known for its Asus brand for PCs, came fourth with an 8.6 percent share.

It might be too premature to read any trend just based on the figures of a single quarter. IDC itself has said that the fourth quarter of 2012 would be a good quarter for Apple as it has two more models to sell - the iPad Mini and the fourth generation iPad.

The company is bound to face more competition in the coming months as Microsoft has just recently launched its Surface tablets - which is at the same price point as that of Apple.

The thing is that Apple shouldn’t end up pricing itself out of the market and catering solely to one segment. Its strategy of introducing the iPad Mini was pretty sound but then it spoilt the whole thing by pricing it way too high.

It all depends on how the rest of the market responds to Apple now.

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