Apple iPad losing market share but keeping high margins
Apple's main rival, Korean based Samsung, was second with 10.7 million slates shipped and a 22.2% market share in the third quarter. Over the last 12 months, Samsung has closed the gap with Apple as it added 8.1 percentage points to its market share while Apple has lost 12.7 percentage points. Apple's drop in market share was "inevitable," according to Rhoda Alexander, director, tablet research for IHS. The increase in Android tablets priced at under $250 helped tablets powered by Google's open source OS pick up market share but made it harder for vendors to find any profits. Thanks to its popular Google Nexus 7 (2013), Asus saw its shipments soar 87% in the third quarter compared to the prior quarter. On that basis, Lenovo reported 94.6% growth in the third period.
Alexander points out that while Android and Windows tablet manufacturers are using lower prices to pick up volume at the expense of profits, the average revenue for each iPad shipped in the third quarter was actually $3 higher. "Hardware profit plays a big role in Apple’s success, enabling the design, durability and performance innovations that in turn support Apple’s premium pricing," said the IHS director. Apple has shipped a cumulative total of 170 million slates since launching the iPad in 2010 while Samsung has shipped a cumulative total of 54 million units since it started offering its own tablets 2 quarters after Apple.
With new Windows slabs expected to sell for prices lower than the new Apple iPad with Retina display, IHS expects Apple's pricing strategy to allow it to continue to lead the global tablet market in revenue even if it continues to lose market share. While it was Amazon that practically invented the low priced 7 inch Android tablet niche, in China a large number of manufacturers are producing poorly made sub $100 7 inch Android tablets. The poor build quality of these slates leads to a high number of returns allowing the iPad to continue to have the largest installed base amongst rival tablets.
With Apple pricing its new Apple iPad mini with Retina display $70 above its first Apple iPad mini, Apple is obviously going for bottom line growth instead of top line growth, a strategy that has served them well in the smartphone market and is now being used by Apple in the tablet market.
source: IHS via BGR
1. appleDOESNT.com (banned) (Posts: 456; Member since: 19 Nov 2011)
We aren't selling well but when we do, we over charge like a mother fu@%a! love this kinda of raw raw apple article!
2. Ninetysix (Posts: 1679; Member since: 08 Oct 2012)
Who's not selling well?
9. Ninetysix (Posts: 1679; Member since: 08 Oct 2012)
They are not selling well because they sold the most tablets last quarter? Did I miss anything?
10. appleDOESNT.com (banned) (Posts: 456; Member since: 19 Nov 2011)
i took the article example, losing market share means not selling as well as they used to. Yet, their margins are FANTASTIC, awesome, higher than everyone elses which in reality means, year after year we churn out incremental upgrades and our prices never come down, we never lower prices, we always overcharge!
In fact, we take the 2 year old retina screen, add it to the mini, which should of had it in the first place and raise the price to a whopping $400 for the mini 2?! Joke! seriously, that market is around $150-200 and apple just arrogantly raised the price! iFollowers own 4 ipads, 6 ipods, 3 iphones so whats another $50 for their 2nd mini, nuttin to iClan, absolutely nuttin
11. greathero1 (Posts: 494; Member since: 13 Jun 2008)
Well losing market share does not mean not selling well lol. The tablet market is growing at an alarming pace. There are just a lot more options for people to consider at all price points now.
As for being overpriced, that's a matter of your opinion because if the market thought iPad was overpriced then people wouldn't buy it. That's how our market system works. There are lots of people who find the iPad a great value even if you don't. It is still the best selling tablet by model so they are doing something right no?
Arrogantly raised the price? What are you talking about. Upgraded the display, processor, and RAM, why not increase the price? Samsung increased the price of the note with the addition of that gorgeous display and added RAM.
iFollowers own X amount of devices. What's your point? When a company makes a good product and develop a great reputation, why not buy other products from that company. Why not own a Samsung TV, Bluray, Tablet, and Cell Phone when they've given you a great experience?
Just silly all around. SMDH!
19. donfem (Posts: 554; Member since: 30 Mar 2011)
Need not bother about explaining. Some find deciphering English language extremely difficult. :)
20. DukeX (Posts: 327; Member since: 28 Aug 2013)
Ifans say android isn't good because of the high market share. Ifans say ipad is the best even though it's constantly losing marketshare and has been for months! See the hypocrisy? All ifans ever do is hold on to old arguments while android fans move on to better things. They really expect apple to compete with those insane prices. Justifying the high price just because it's apple. I'm sorry but it won't be me.
5. MobileKicker (Posts: 212; Member since: 19 Sep 2013)
Because iPad Air is going to be released tomorrow
16. Droid_X_Doug (Posts: 5954; Member since: 22 Dec 2010)
RIM had really high margins on their phones, too. Look where that got them. Got to keep the market presence (aka market share) up as well. Otherwise, it is the beginning of a long slide.
4. PapaSmurf (Posts: 8922; Member since: 14 May 2012)
Numbers are only going to increase now that Christmas season is near. Expect a nice hike in sales for Q4.
7. _Bone_ (Posts: 2140; Member since: 29 Oct 2012)
Sales and %s are two different things. Apple increased it's numbers in this quarter yet lost market share due to others (mainly Samsung) increased numbers more. Or in other words, not just Apple will sell tablets this Christmas, so will Samsung, Google, Nokia, Asus etc.
8. PapaSmurf (Posts: 8922; Member since: 14 May 2012)
I was talking about sales on tablets. Q4 is every OEM's.favorite quarter, so I wouldn't be surprised if either Apple or Samsung sold over 15 million tablets each.
12. Finalflash (Posts: 1903; Member since: 23 Jul 2013)
But the problem is that now there is actual competition and likely Apple won't match last year's numbers. No one is going to buy an iPad 2 and those sales won't go to the air like apple wants. That crap might have worked while there was no competition and android was still catching up but not anymore. People who don't want to spend that much will just look to other options. Just like their iPhone strong arming tactics failed so will their iPad efforts. Maybe they'll learn that screwing customers doesn't work in the long run.
22. gallitoking (Posts: 4690; Member since: 17 May 2011)
"Just like their iPhone strong arming tactics failed "
please look up the iphone latest sales and compared them with .... HTC, LG Moto and Samsung... and tell me whom has really failed...
24. jacko1977 (Posts: 400; Member since: 11 Feb 2012)
of course apple going to say more then they sold they lie about everything
6. _Bone_ (Posts: 2140; Member since: 29 Oct 2012)
iOS devices are also cheaply made, just sold at a higher price.
It takes roughly the same amount of money to build a Huawei flagship and an Apple flagship, but only one is sold at €700. Pinkgate, batterygate, scratchgate, just cause they use aluminum and sapphire and whatnot it's still suffering from issues only you pay more.
13. zekes (Posts: 213; Member since: 14 Aug 2012)
If you know Apple you know they don't go for marketshare so most of y'all's arguments are Irrelevant
14. Slammer (Posts: 1125; Member since: 03 Jun 2010)
I don't know why this generation finds it appealing to celebrate Apple's high profit margin as though the consumer is benefiting from it. 37 years of Apple existence has proved that Apple wants to benefit off consumers willing to mortgage a house to purchase an Apple product. This logic left Apple on a death bed.
While I understand the new interest in Apple when the original iphone was launched, Apple's MO hasn't changed. Most of the world is realizing the more economical direction in mobile computation as it it did with PCs and laptops.
There will always be the small few percentage willing to pay more for Apple products which are basically Frankenstein items made of parts made by competitors.
18. greathero1 (Posts: 494; Member since: 13 Jun 2008)
Why does it have to be a one size fits all approach to making and releasing a product? Different companies have different strategies. Why should Apple use everybody else's pricing and manufacturing strategies? They have spent a lot of time and money building a brand which has allowed for them to get high profits from it. You speak as if the strategy you prefer them to take is full proof. How is Dell, HP, Toshiba, and all the others doing right now? What comes up, will eventually go down and if they are resilient enough, can rise again. As for the Frankenstein comment, that's pretty much everything on the market. While there are a few names who has large supply chains, it's very few. Are we now looking at companies negatively for sourcing for their needs?
23. Slammer (Posts: 1125; Member since: 03 Jun 2010)
I'm not asking any company to take any type of approach. I'm just stating that Apple is a 37 year old company that has always asked far more for its products yet offered nothing more than what anyone else has. Today's generation acts as if it is a new company in 2007. It's not. It continues to dangle the carrot in front of consumers to extract as much cash out of them as possible. The epilogue of this post, is that my generation realized the game Apple was playing and that this generation is now beginning to realize the same thing. How many times can a company offer incremental upgrades before society catches on that paying extra cash for a product that is outgrown in couple of years, is not worth the logo pasted on the back of it. Is it a good product? Absolutely. Is it God? Hardly. It is a product to appease the shareholders. It cares nothing of the consumers. Apple could ask much less for their product and still make profits. I know many people that would purchase an Apple product today if it would quell the price gouging. I think that is an important thing to consider. A product great enough that everyone would like it but priced too high where only a small percentage will actually support it. Android offers far more at less price. Not just my opinion. 81% percent of the world mobile device users agree.
25. networkdood (Posts: 6326; Member since: 31 Mar 2010)
Apple is great at marketing mediocrity.
15. JunitoNH (Posts: 985; Member since: 15 Feb 2012)
When you look at sales figures, you have to look at the dynamics of everything involved. How much you sale, and what you sale, revolves around the current economic climate. The US is in one of the worst recession ever, unemployment remains high, and disposable goods are expensive. You may want an iPad, however, due to your current situation you might decide to settle for a Nexus 7; is either pay $399 or $229, especially if you have children, and near the holiday season. However, if you income is upwards of $100k, paying for premium goods is not a factor.
17. willard12 (Posts: 886; Member since: 04 Jul 2012)
The old "people buy other products because they can't afford apple" argument. Aside from citing a financial article that is over a year old, your theory is actually pretty good. However, a recession is 2 consecutive quarters of negative growth in GDP. The US hasn't been in recession, but slow recovery, since 2010. In Germany, one of the countries least affected by the world-wide economic downturn, Apple has much lower market share. Price is a consideration in every purchase decision. But value is also a consideration. People buy other products because the retina display doesn't mean what it used to. Some devices can use sd cards or usb otg, hdmi out, customization, so on and so forth. Everyone who buys a tablet, even all of the peasants you speak of, are some how affording home internet or data plans to go with them. And that's much more of a financial consideration than the one -time $200-$400 a tablet will cost. If people want an ipad, $100 isn't going to stop them, what they lose while paying the extra $100 will.
21. DukeX (Posts: 327; Member since: 28 Aug 2013)
Truth is people just want different. They aren't choosing android tabs because they are cheaper they choose them because they are more useful in the end. The app argument ifans use is bs. They act as if android apps CANT run on android tablets. They never mention what an iphone app looks like on ipad......I'd take a blown up phone app over a tiny windowed app on ipad anyday.
26. jroc74 (Posts: 5192; Member since: 30 Dec 2010)
"Apple iPad losing market share but keeping high margins"
Of course it is.....same exact thing that happened with the phones. Its de ja vue....like a mother...lol.