Posted on 12/14/2015 10:14:10 AM PST by SeekAndFind
Apple Inc. (AAPL) has long been thought of as the king of the tablet space. After all, it was responsible for popularizing the tablet with the release of the first iPad, and years later, the device remains an important source of revenue for the company.
Yes, more than 60% of AAPL revenues still come from the iPhone, but AAPL investors can't afford to ignore the importance of the iPad, with roughly 10% of sales last fiscal year coming from that product line.
Interestingly, iPads were Apple's worst-performing product line in FY 2015, as net sales actually fell 23% year-over-year.
Believe it or not, Microsoft Corporation (MSFT) is partly to blame and AAPL shareholders might have to get used to it.
Surface is Seizing Market Share
As consumer trends clearly shift towards e-commerce and away from brick-and-mortar retail, keeping tabs on shifts in e-commerce is increasingly important.
Over the past 12 months, that's an area where AAPL has been outperforming MSFT, especially when it comes to tablets.
According to 1010data.com, AAPL has the biggest market share in online tablet sales over that time period, with a 34% share. Next is MSFT with 19%, then Amazon.com (AMZN) with 11%, then Samsung (SSNLF) with 9%. No one else owns more than 6%.
Interestingly, MSFT has managed to remain competitive in the area despite its massive average selling price (ASP) of $844. That's three times the category average of $280, and more than double Apple's ASP of $392. Amazon boasts an ASP of just $150 … but then again, Amazon has resorted to selling tablets in six-packs, so perhaps it's not strictly comparable to Microsoft and Apple.
As an owner of AAPL stock myself, I find a few things worrisome. First of all, it's disconcerting to see sales for the entire iPad category fall 23% year-over-year in 2015. It was understandable to see that sort of decline back when the iPhone was cannibalizing sales of the iPod, but there's no such obvious cannibalization going on with the iPad nowadays.
Secondly, October was the first month in 2015 in which MSFT overtook Apple in online tablet market share. The release of the Surface Pro 4 and the Surface Book drove huge gains for the category, and MSFT ended up taking 45% of the market to Apple's 17%.
Since sales obviously tend to heat up in the last three months of the year as consumers rush to get gifts for the holiday season, AAPL shareholders should cross their fingers and hope the one-month trend doesn't turn into a season-long one.
It sure doesn't hurt Microsoft's cause that its Surface tablets are all over NFL broadcasts, either. Microsoft has had an exclusive deal with the NFL for a few years now to prominently feature its tablets on the sidelines and in the studio, but it seems as if the Microsoft Surface is more visible than it has ever been.
While iPhones remain the core driver of AAPL stock, seeing Apple cede market share to its arch-nemesis Microsoft in an important segment like tablets still doesn't sit well.
It's time for Apple to step up its game.
If you think Apple is loosing ground in Tablets or Laptops for that matter, You’re going to Hell! I say Hell!! At least that’s what some apple fans here think.
Scary if you agree with me that the Droid system is far superior to apple.
So, has the author not heard of Android?
The big iPhone stole some sales. Where Apple may REALLY get hit is in the Enterprise. A Surface Table makes a great “remote connected” on call device. Thos companies standardizing on AD can use the same standards for their regular networks on the tablets.
THAT is why Windows 8 was what it was. Microsoft just didn’t handle the first iteration gracefully.
Is the whole thing crazy complicated? Yes. But a lot of those complications have to be addressed for in-house networks and especially wireless laptops running Windows.
And of course, the apps are there already.
Tablet as consumption devices may be coming to an end in terms of their usefulness.
I know I find their limitations irritating as heck. Not to mention that they aren’t as upgradable or expandable as something like the Surface hybrid.
Bound to happen. MS did the right thing by not trying to make another consumption device and position themselves for the next generation.
I got a 7-inch tablet running full Windows, and I’m sold just on the simple ability to print and access my shared external drives without having to install a 3rd party app that doesnt work that great.
Alot of people are replacing laptops with the Surface, since it can run Office products so well.
But I still think of Apple as king of the category (and I’m an Android/Samsung guy).
Early SurfacePro’s were not that great. Lot more uptake in the Enterprise with the SurfacePro 3, 4 and the Surface Book. There are a few iPad users in our enterprise, but they mostly use the iPad for a larger mobile email device. Anymore complex usage really requires a keyboard and enterprise apps.
You can get a non-Apple tablet for a fraction of the cost, and Office comes bundled with the MS ones. And the Apple user interface, which used to be focused on ease of use, now is obsessed with “looking cool”. I’m sorry, “cool” doesn’t help me get my work done.
It’s not hard to figure out, if the Apple leadership was willing to listen.
Well, Apple really doesn’t care about the tablet market, it was never that important in the first place.... </fanboi>
My point wasn’t specific to the enterprise, but that iOS comprises less than 25% of the tablrpet market, and declining. Three Android tablets are sold for each Apple and ten for every Windows tab.
A lot of those Android tablets are $60 toys that don’t get the same amount or type of use. Apple is definitely walking away with bulk of the profits.
The iPads also last a long time, and don’t get replaced every couple of years like the phones do.
My family gave me an Acer 8" tablet and an Android Tracfone Phone for Christmas, and I bought an Acer 15" chromebook to supplement the Androids and to replace my dying HP Win 7 Desktop. I got my wife an Alcatel Android Tracfone for Christmas. We paid less for all four than we did for our Grand Daughters required I pad at her private school. Our grandson's required Mac Air cost more than our stuff and our grand daughters I Pad.
We had previous Gmail accts., and I had been using the Chrome browser for a few years. In less than a half day, I had the Acer tablet and the Android phones up and running. I installed the Chrome app/browser on my tablet and our Android phones. Everything works and very fast.
We had an electronic digital hour or so this Thanksgiving evening so our adult kids and grandkids could get caught up on texts and emails. Our adult sons after going through their texts and emails on their I phone 6s, shared my Acer Tablet for some surfing and whatever as it is easier to see for tjheir late 40 something eyes. My grandson used my Acer Chromebook for his getting in touch session. He did complain about the lack of games, which he was not supposed to have on his MacAir.:)
The apple type table ( to big to the portable phone/ less then full pc os and power) is getting squeezed out between the smart phone/phablet(Samsung Note type) and the convertible table /pc ( Microsoft Surface Lenovo Yoga)
Apple is already moving to these new niches...with IPhone Plus, iPad Pro... Apple’s next will likely be a move would be to get the iPad off iphone ios and on to full Mac OS /tablet os
bottom line its appliance consolidation
people don’t want to have to have three appliances (phone, tablet, PC)
When they can get by with two(phablet/phone and convertible PC)
I have owned every apple device ever made except the watch and what I experience is bigger devices filled with more glitter and useless trash and redundancy that in intrusive , pops up when you done want it and the stuff you need you cant find. Then there is the daily reboot on the ipad pro necessary to clear a locked up app. Yes its simpley, simply more and more illogical and harder to use.
just my experience but to old to change now
Those horrible Apple fans!
Do you have a Mac XL?
Just kidding. I get by pretty well with my iPod Touch 5th gen. (That’s why I have typos) I agree with you about the glitz. Make it fast, make it work. I stick with Apple cor quality of hardware and aversion to Google.
I think Microsoft is loosing the tablet space and winning the desktop replacement space.
right now they are all grouped under tablets, people are in the process of converting from desktops to these new desktop replacement tablets and this is a huge growing share of the tablet space.
Not an Apple cheerleader, but I can spot trends in the market. Look for the new tablets from companies like ASUS and Nvidia to make huge headway as they work on gaming desktop replacement tablets.
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