New data from research firm IDC indicates that Apple Inc. (NASDAQ: AAPL) has started to lose its stranglehold on the tablet market, at least based on third-quarter global data. It will give investors another reason to question the primacy of Apple and consequently to sell down its stock. The information may not be as bad as its appears though. Buyers could just be waiting for the new iPad mini. Demand for Apple products continues to be so great that the company is its own worst enemy as new products shift sales from one quarter into the next.
Worldwide tablet shipments totaled 27.8 million units in the third quarter of 2012 (3Q12), according to preliminary data from the International Data Corporation (IDC) Worldwide Quarterly Tablet Tracker. The tablet market grew 49.5% year over year in 3Q12 and 6.7% over the second quarter of 2012. Android shipments, led by Samsung and Amazon, surged during the quarter, at the expense of Apple, which saw its share slip notably during the quarter
And, as a consequence:
Apple’s slowdown put a sizeable dent in the company’s commanding worldwide market tablet share, which slipped from 65.5% in 2Q12 to 50.4% in 3Q12. The remaining top five tablet vendors all gained share during the quarter as a result. Most notable was the impressive quarter turned out by Samsung—driven by its Galaxy Tab and Note 10.1. Samsung shipped 5.1 million tablets worldwide in 3Q12, up 115.0% from 2Q12; that’s an increase of 325.0% from 3Q11, when it shipped 1.2 million tablets.
Even if the mini lifts Apple tablet sales in the final quarter of 2012, the presence of Samsung in Apple’s rear-view mirror continues. Apple has tried to slow Samsung’s gains with a series of patent challenges in courts around the world. The tactic has had mixed success. Samsung cannot be held off forever by legal action. Nor can Google Inc.’s (NASDAQ: GOOG) Android, which may have patent issues of its own.
The worry that Samsung, and to a lesser extent Amazon.com Inc. (NASDAQ: AMZN), could take larger parts of the tablet market has been among the most consistent worry about Apple’s future. Add to that concern that Samsung smartphones will take share from the iPhone, and Apple has its greatest challenge in years.
But Apple continues to hold one advantage. That is its upgrade cycle. As long as there is great enthusiasm that turns into sales for products like the iPad mini, Apple will keep its share, although it will dip and then rise from time to time. So far, the formula has worked for Apple, and it will until it doesn’t anymore.
Douglas A. McIntyre