By Erik Christiansen
The once great tablet monolith (the iPad) is no longer as dominant as it once was - dropping from a 47.2 percent market share to 28.3 percent.
Many analysts have predicted that Apple wouldn't be able to hold a majority market share indefinitely - simply because price sensitive customers would opt for cheaper Android devices. Android eclipsed the iPhone a long time ago. The only reason the iPad held out was because Google took so long to create a version of Android that would scale to larger screen sizes. Jellybean fixed that problem, and it's been a downward spiral for the iPad ever since. Does that mean the iPad's days are numbered? Highly unlikely. It's a well supported device, and still retains advantages with regard to the sheer quantity of tablet optimized apps. (Though I would argue that while Android lacks as many tablet apps, they scale much better than on iOS - especially if you are using a 7" inch device). The problem for Apple is that not only did they manage to lost market share (14 percent year over year), they did so in an expanding market.
There are several reasons for this drop. First, there hasn't been a huge amount of innovation from Apple over the last 9 months. Also, Apple's sales tend to take a hit when new devices are expected to release - a fault of Apple's historically predictable "tick tok" product release cycle.
There is still lots of promise in the pipeline, however. iOS 7 will surely take huge strides - providing developers with a plethora of new tools to work with. I also expect iOS 7's introduction as the first step in a long line of changes to the platform. This is good, as those people who are unhappy with their experience on Android (those who bought cheap devices that quickly became unsupported by the manufacturer) might drift toward iOS. Apple has a good shot at gaining back market share.
Another advantage, is monetization and browsing share. Now, neither of these factors will prevent Apple from losing more ground if they don't position themselves more competitively, but they do yield some advantages. Developers are morel likely to make money off the iOS platform than Android. That might seem counterintuitive considering Android's explosive growth. The problem is that measuring Android growth is difficult and potentially unreliable. Google is careful not to distinguish overall Android growth from the Google Play Store's growth. Depending on your source (and there are many contradicting numbers) Android growth is primarily driven by a) cheap phones, and b) devices that don't talk to the Play Store. Yes, we all hear about Samsung's explosive growth, and yes they have access to the Google Play Store. But did you know OEM's have to sign a deal with Google to gain access to their app market? Again, depending on the source, there are a considerable number of Android devices that don't talk to the Play Store. So, if you're a developer and you're expecting to reach all of those 1.5 million Android devices activated daily, think again.
It's this lack of consistent access to the Google Play Store that limits app sales. There's also a body of statistical evidence suggesting Android users are cheap and don't purchase much content. Not surprisingly, iPad users tend to browse the internet more and tend to make a greater number of e-commerce transactions. This is expected, since Apple users in general fall into a higher income bracket. It's for all these reasons, that one could argue market share isn't really the most important metric for measuring success. The Macintosh hasn't exactly swept the PC market, but high margins and popularity in key sectors has made it one of the best selling lines of computers in North America.
Unfortunately, North America isn't good enough. I won't rehash the numbers, but look up Apple's recent quarterly results and tell me they don't need to work harder in international markets such as China, Europe, and Latin America (though they seem to be doing surprising well in India).
So what does the future look like? Not bad. There are challenges ahead, but also lots of positives. This is exactly what consumers should want to see - a healthy market with plenty of competition.
What is most interesting, is which of its iPads does Apple see as its most important line. This is a tough call to make, since I see tablet users everyday - all of them using a variety of screen sizes. Some have called the larger 10 inch form factor "horsy" and "bulky" - a legitimate argument if you are used to a smaller tablet. Yet, as a graduate student, I can tell you that 7 inches is too small to warrant leaving my Mac at home. Swype is great, but it doesn't' replace a larger virtual keyboard.
If I were to put money on which tablet Apple sees as its future, I would have to say the Mini. It's cheaper (though arguably an inferior deal compared to the New Nexus 7, which Google announced last week). Small lightweight devices are perfectly acceptable for consuming content. Email, web browsing, games, movies, music. Larger models will continue to be hugely profitable, but among those like me who want more screen real-estate. A good analogy is the 13 inch laptop (preferred by most) versus the 15 inch desktop replacement. I don't take the position that one screen size is the "right" size. It seems arrogant to assume that 7 inches is preferable for most people.
One thing is for sure, the tablet market has become such a competitive landscape that big innovations are almost certainly imminent. Google, Apple, and especially Microsoft, cannot afford to sit idle. I'm almost certain that we've entered a new era of tablet evolution, one that will provide them substantially improved functionality.