Strategy Analytics released its second quarter analysis of global tablet shipments which showed a continued deterioration in
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Peter King, Director of Tablets at Strategy Analytics, commented ‘Android is now making steady progress due to hardware partners like Samsung, Amazon, Google and White-Box tablets which, despite the fact that branded OEMs are lowering price-points and putting pressure on the White-Box manufacturers, are still performing well.’
I have seen a third party app developer demonstrate a white box tablet earlier this year and its quality seemed quite good. The set of apps from this developer is targeted to corporate customers who would be looking to rollout thousands of tablets. A lower priced, lower function tablet would decrease their costs which would then increase their financial return.
When using shipment data that includes white boxes Apple’s market share has decreased from 47% in the June 2012 quarter to 28% in the June 2013 quarter. If you exclude white boxes then its market share of branded tablets has decreased from 69% to 40%. This quarter is the first quarter that branded Android tablets have over 50% (actual of 53%) market share.
I believe it is worthwhile to be cognizant of both sets of data. The branded tablets, especially Apple, will generate higher profits and usage but if the white box tablets can continue to gain meaningful share it will steal sales from Apple and third-party app developers will put more effort into them.
In Apple’s July earnings conference call Tim Cook, Apple’s CEO, said the “iPad accounts for 84% of the web traffic from tablets which is absolutely incredible and so if there are lots of other tablets selling I don't know what they are being used for because that’s a pretty, the basic function is web browser.’
This data comes from Chitika Insight’s June survey of tablet usage in the U.S. and Canada from tens of millions of on-line ad impressions from June 15 to the 21st. It determined that the iPad’s web traffic increased for the second month in a row reaching 84.3%. Amazon’s Kindle Fire was a very distant second with 5.7% usage and Samsung’s Galaxy tablets was third at 4.2%.
This is in direct contrast to units shipped but there are a couple of reasons with the first being an apples to oranges comparison since Strategy Analytics measures global numbers while Chitika is North America specific. I believe that North America tablets would have higher usage than low priced ones in other countries.
A second reason is that the iPad has been shipping for a longer timeframe so its install base is a higher percentage than the June quarters unit shipments. As of June Apple has sold over 155 million iPads while the branded OEMs have probably sold between 50 to 70 million units.
One of the biggest reasons for the difference in unit shipments and web usage is that it appears that Amazon’s Kindle is included in Strategy Analytics numbers, which is mainly used for reading books or publications and not surfing the web. Also only a few Kindle models have 3G connectivity so that further limits its web surfing.
Overall Apple has a very strong position in the tablet space but due to the importance of this new computing platform for both consumers and businesses there will be continued competition and share loss. Offsetting this will be very good growth rates and if Apple can develop apps or services that generate incremental revenue and profit it should be one if not the largest beneficiary of tablets.
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