News Column

Apple's Mobile Dominance May Be Done

March 12, 2013

Jeremy C. Owens, San Jose Mercury News

Apple iPad

Apple (AAPL) has dominated the mobile device market since basically inventing the sector with the iPhone and iPad, but tablets running the Android operating system will overtake the iPad in 2013 much as smartphones utilizing Google's (GOOG) offering already have, according to analyses from IDC.

A study released Tuesday by the technology sector analysis firm reported that Apple's majority rule of the tablet market will end in 2013 for the first time since the iPad was introduced, with the Cupertino company's share of the market expected to drop from 51 percent in 2012 to 46 percent in 2013. Android devices will grow from 41.5 percent of the market in 2012 to 48.6 percent in 2013, the study concluded, because the preponderance of smaller devices running Google's operating system have proven extremely popular.

"One in every two tablets shipped this quarter was below 8 inches in screen size. And in terms of shipments, we expect smaller tablets to continue growing in 2013 and beyond" IDC research analyst Jitesh Ubrani said in Tuesday's news release. "Vendors are moving quickly to compete in this space as consumers realize that these

small devices are often more ideal than larger tablets for their daily consumption habits."

Apple, noticing this trend, moved into the market for smaller tablets in 2012 with the iPad Mini, but the smaller device is likely hurting sales of the larger iPad more than competing Android tablets, which Apple CEO Tim Cook has noted, using the industry term "cannibalizing."

"Our base philosophy is to never fear cannibalization. If we do, somebody else will just cannibalize it, and so we never fear it," Cook said in Apple's first-quarter earnings report conference call.

Cook's theory is that the tablet market will eventually overtake the personal-computer market, allowing the iPad to continue to grow sales at a rate that will keep Apple very profitable, an idea that the IDC numbers support. IDC increased its projection for 2013 tablet sales to 190.9 million in Tuesday's report, while the firm projects PC sales will decline for the second consecutive year to 345.8 million; by 2017, the two are expected to be close to even, with IDC projecting 350 million tablet sales and 382 million PC sales.

Apple is also facing more competition in the smartphone market, as rival Samsung has overtaken it while the two tech giants fight in court on accusations that Samsung copied the iPhone and iPad in creating its galaxy line of mobile devices.

The smartphone market is slightly more mature than the tablet market, and the trends are similar yet more advanced -- smartphone shipments are growing but Apple's dominance has subsided.

Smartphone shipments are expected to outpace their less accomplished brethren, dubbed feature phones, in 2013 for the first time, IDC reported earlier this month. ?While Apple's operating system market share remained the same from 2011 to 2012 in the global smartphone market, IDC has reported, but Android's share grew heavily. Google's operating system was used on 68.8 percent of the smartphones shipped in 2012, up from 49.2 percent in 2011, while Apple's iOS stayed the same at 18.8 percent.

Samsung's strength in developing countries such as India and China -- where the iPhone is prohibitively expensive for much of the population -- allowed it to take the crown for manufacturers in 2012, with 29 percent of the market to Apple's 21.8 percent. In 2011, Apple ruled smartphones with 23 percent of the market, barely ahead of Samsung's 22.5 percent, IDC has reported.

Competition is only gearing up in the tablet and smartphone markets, with other manufacturers offering stronger products. Samsung is expected to show off its Galaxy S4 smartphone in an event Thursday, with a launch date likely to precede the next iPhone.

"I really doubt it is a coincidence that Samsung is launching in a quarter [when] there is nothing coming from Apple," Citigroup analyst Glen Yeung told Marketwatch on Tuesday.

Other Android-based manufacturers such as HTC, Nokia, Huawei, LG and Motorola continue to develop new devices, as well, while Microsoft has already introduced a mobile operating system for phones and BlackBerry's new operating system arrives this month. In the tablet market, Microsoft's Surface tablet received only 1 percent of the market in 2012, but that is expected to grow to 7.4 percent by 2017, IDC reported.

Apple's lessening dominance of the mobile-device market has been one factor in a rapid decline of its stock price in the past six months, with shares falling as much as 40.6 percent since reaching an all-time high of $705.07 on Sept. 21, the day the iPhone 5 launched in the United States and several other countries. Shares fell again Tuesday, with Apple stock ending the morning session on Wall Street at $431.67, a daily decline of $6.20, or 1.4 percent.


For more stories covering the world of technology, please see HispanicBusiness' Tech Channel



Source: (c)2013 the San Jose Mercury News (San Jose, Calif.) Distributed by MCT Information Services


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