Android tablets still rule, while Windows continues to slip
Both Apple- and Windows-branded tablets lost market share in the second quarter, each retreating in the face of increased pressure from Android, a market research analyst said last week.
In preliminary estimates for the quarter ending June 30, U.K.-based Strategy Analytics pegged Apple's share of the global tablet market at 28.3 percent, a dramatic decline from 47.2 percent the year before. When so-called "white box" tablets, which are almost exclusively powered by Android, are excluded, Apple's share fell to 40.4 percent from 48.2 percent in the first quarter of 2013.
Windows' share of the branded tablet market also slipped in the second quarter compared to the first, falling to 6.4 percent from 7.4 percent. With white-box tablets included, however, its year-over-year share jumped nine-fold, from a paltry 0.5 percent in 2012's second quarter to 4.5 percent in 2013.
Windows tablets had only one way to go when compared year-over-year, as Windows 8 and Windows RT, the two tablet-appropriate operating systems from the Redmond, Washington company, were not released until late in the third quarter of 2012.
By any measurement, Android solidified its first place position. Of the entire tablet market, including white-box units—which comprised 37 percent of all shipments—Android's share climbed to 67 percent from 2012's 51.4 percent. Strip out the white box tablets and Android's increase, while on a slower pace, was still impressive: 52.9 percent in the second quarter, up from 43.4 percent in the first three-month stretch of 2013.
Apple, Microsoft both challenged
Peter King, an analyst with Strategy Analytics, attributed Apple's share decline to a lack of new tablet models, echoing others who have pointed out that the Cupertino, California company has not released a new tablet or even refreshed an existing tablet since late in 2012.
"We may see Apple get back on track later this year if, as everyone expects, they launch new models," said King in an interview Tuesday. "We may start to see a bit of fight back in them."
Windows' problem in tablets has also been well documented.
"They screwed up in terms of sales and marketing," said King, referring to the 2012-13 launch of the Microsoft-made Surface RT and Surface Pro. "They excluded the vast majority of the world from buying it. People want to see a tablet, feel it, touch it, want their friends to buy it."
Microsoft still overwhelmingly relies on its hardware partners for Windows-powered hardware. They have also been dogged by sluggish sales, and virtually all have either declined to support Windows RT or abandoned the scaled-down OS designed exclusively for tablets.
Nor have Windows tablet prices been competitive. "The $349 is where they should have started," said King, of this month's $150 price cut to the Surface RT line, a move that forced Microsoft to take a $900 million charge against earnings as it accounted for the discount and the overstock that drove it.
Microsoft regroups, rallies
Microsoft has taken corrective steps, including the Surface RT price cut and a deal with the U.S. electronic retail chain Best Buy that will balloon the number of outlets selling Surface.
"Microsoft will be back," said King, ticking off the company's strengths, including a large war chest and this fall's free Windows 8.1 upgrade. "But for them, it's 'Okay, back to the drawing board,'" he added, noting that in the meantime Microsoft will have lost 12 months in its fight to claw out a significant share.
Android's lead is hard to overcome
Some of the factors involved in the decline of share in Apple- and Windows-marked tablets, however, will not be easily addressed.
Android tablets, especially the cut-rate white box units, have a stranglehold on the low-priced segment. "Outside the U.S. and Europe, sales are driven by the low-cost models, not because they're great, because they're not, but because people [in those markets] don't have as much disposable income," said King.
The cutthroat price war in tablets has prompted analysts to call for Apple to consider discounting the iPad mini, the company's $329 7.9-inch tablet, to $249.
Minus cost cuts and discounts—far from a given by either Apple or Microsoft—there's no chance either company will shove Android aside as the share leader, said King, parroting other analysts who have said Google's operating system will remain dominant for the foreseeable future.
Strategic Analytics based its early tablet estimates on polls of vendors, publicly-released data and supply chain checks. Its numbers represent "sell-in," or tablet shipments, not final sales.