Apple Sees Declining Tablet Market Share in Third Quarter

on Nov 6, 2012

Apple (NASDAQ:AAPL) managed to sell 3 million of its new iPads in the first three days the tablets became available, instilling confidence in shareholders that the tech giant is headed for a strong last quarter despite the intensified competition. The company did not specify what portion of the sales were iPad minis but according to analysts, about 2.3 million of the new iPads sold were the mini-tablets, beating forecasts of 1 million to 1.5 million.

**Apple’s Declining Market Share**
Despite strong sales by Apple, a recent study by the International Data Corporation (IDC) shows that Samsung (KRX:005930) and Amazon (NASDAQ:AMZN) are gaining ground at the expense of the iPad-maker, which saw its market share slip notably in the June-September period.
“After a very strong second quarter, Apple saw growth slow as both consumer and commercial shipments declined, and rumours of a forthcoming iPad mini began to heat up,” said Tom Manelli, research director, Tablets at IDC. “We believe a sizeable percentage of consumers interested in buying an Apple tablet sat out the third quarter in anticipation of an announcement about the new iPad mini. Now that the new mini, and a fourth-generation full-sized iPad, are both shipping we expect Apple to have a very good quarter.” Mr Manelli also adds that due to the relatively high starting price of $329 for the iPad mini, Android vendors will have the opportunity to continue building momentum on top of what they achieved in the third quarter.

!m[High Sales of The Two New iPads Hint at a Stronger Q4](/uploads/story/726/thumbs/pic1_inline.png)Apple’s market share in the tablets market went down from 65.5 percent in the second quarter of 2012 to 50.4 percent in the third. The remaining tablet-makers all gained market share during the quarter with Samsung registering the biggest growth in the third quarter of 115 percent rise in shipments compared to Q2 and a 325 percent year-on-year increase. Other major players in the tablet market were Amazon, Asus and Lenovo. Apple also faces a new rival to its iPad series – Microsoft’s first mobile device Surface, which runs on the new Windows 8. “Competitors are turning up the pressure on market leader Apple,” commented Ryan Reith, program manager at IDC’s Mobile Device Trackers. “With the recent introduction of a number of Windows 8 and Windows RT tablets, consumers now have a third viable tablet platform from which to choose.”

**Apple Considers Making Its Own Processors**
Bloomberg reported today (06.11) that Apple is exploring ways to replace the Intel processors in its Mac personal computers with chips similar to what it uses in the iPad and the iPhone. According to people familiar with the company’s research, Apple’s engineers are working hard to make their chips powerful enough for desktops and laptops.

Ditching Intel is not expected for at least a few years but analysts opine Apple switching to its own chips is inevitable as mobile devices and PCs become increasingly similar. This is certainly bad news for Intel as the company is already suffering from declining demand in the PC market and its failure to gain a foothold in mobile gadgets.
Bill Evans, a spokesman for Apple, declined to comment. Intel said all questions regarding Apple’s plans should be directed towards Apple.

**US Judge Dismisses Patent Lawsuit**
A US judge has dismissed a suit filed by Apple in which the company accuses Google’s Motorola of seeking excessive royalty payments for patents. Motorola, which was acquired by Google for $12.5 billion (£7.9 billion), demands 2.25 percent of the price of Apple products that use some of its patents. On the other hand Apple has said it would not pay more than $1 (£0.60) per device.
According to analysts it is extremely difficult to price patents: “It is very tough to determine what a fair price is of any patent held by a firm,” Andrew Milroy of Frost & Sullivan told the BBC. Mr Milroy also points out that the models used to determine the value of royalties are extremely complex and often times subjective. “It can hardly be described as a science.”
The dismissal of the case will be a major handicap for Apple in its negotiations with Motorola.


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