Apple eats itself in tablet war

Latest research from IHS iSuppli reveals the vendor's biggest competitor for tablet market share was iPhone 4S

Apple ended up competing with itself for market share as its iPad 2 and iPhone 4S battled to tempt buyers.

This is the latest view from analyst firm HIS iSuppli, which revealed that although rocketing sales of the Kindle Fire and other low-priced tablets ate away at Apple’s media tablet market share in the fourth quarter of 2011, it was the iPhone 4S that proved to be the strongest competitor for the iPad.

Apple shipped 15.4 million iPads during Q4, according to the IHS iSuppli Display Materials and Systems Service, but while shipments were up 39 per cent from 11.1 million in Q3, Apple’s global market share slipped to 57 per cent in Q4, down 10 per cent from the previous quarter.

Rhoda Alexander, senior manager, tablet and monitor research for IHS, said: “Shipments of the iPad line fell short of IHS estimates in the fourth quarter, as many loyal Apple customers devoted their dollars to shiny new alternatives.

"However, the primary alternative wasn’t the Kindle Fire – which debuted to solid sales in the fourth quarter – but Apple’s own iPhone 4S smartphone. The rollout of the iPhone 4S in October generated intense competition for Apple purchasers’ disposable income, doing more to limit iPad shipment growth than competition from the Kindle Fire and other media tablets.”

In 2011, Apple shipped 40.5 million iPads – up 168 per cent from 15.1 million in 2010.

This gave the company a 62 per cent share for the year, down from the dominant 87 per cent in 2010, when Apple had the media tablet market all to itself for most of the year.

Despite Amazon’s strong showing at the end of the year, Samsung held on to second place, with shipments of its Galaxy Tab line amounting to 6.1 million units, or 9.4 per cent of the 2011 market. Amazon’s share for the year amounted to six per cent.

But Amazon did manage to become the world’s second-largest tablet shipper in Q4, IHS iSuppli claimed, shifting 3.9 million Fire tablets and gaining a 14.3 per cent share in the market.

Alexander added: “Kindle Fire shipments in the fourth quarter came right in line with our early December forecast of 3.9 million units, representing a respectable start for the Fire. However, the long-term viability of the product will hinge on the success of Amazon’s business gamble, which depends on tablet sales driving substantial new online merchandise sales at Amazon.com in order to attain profitability.”

IHS iSuppli also noted that the Q4 introduction of value-priced tablets caused pandemonium in the Android marketplace, forcing competitors to slash pricing in order to clear inventory.

“The surge in non-iPad shipments in the fourth quarter was achieved at considerable financial cost, with sharp price reductions across most of the competing Android tablets and actual product giveaways from a number of vendors as part of promotional efforts for other electronic products,” Alexander said.

The firm said Apple’s battle to reclaim its lost market share would start with the launch of the iPad 3, expected some time in March, according to reports.