Market Overview

Tablet Sales to Experience Tipping Point in 2014

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According to a new study by researchers at Canalys, 2014 should be a tipping point in the tablet market.

Canalys believes that next year 50 percent of all “PCs” shipped around the world won’t be PCs in the traditional sense—they’ll be tablets.

Reigning supreme will be tablets built on Google's (NASDAQ: GOOG) Android platform accounting for about 65 percent of all shipped tablets or about 185 million units. Much like the smartphone market, Samsung (OTC: SSNLF) will lead the charge in the Android tablet market.

Apple (NASDAQ: AAPL) will remain the largest single brand accounting for 30 percent market share, and Microsoft (NASDAQ: MSFT), the remaining five percent.

If tablets take 50 percent market share, that’s 285 million units shipped in 2014. Canalys expects that number to rise to 396 million units by 2017.

The shift from PCs to tablets is dramatic. In February of this year, Canalys noted that only one-third of PCs were tablets. It’s original prediction for 2013 was for tablets to hold a 37 percent market share by the end of the year but has since upped that number to 40 percent.

The Android platform holds the lead because of volume. Multiple manufacturers create devices based on the Android platform at multiple price points. This allows nearly any consumer to purchase an Android-based Tablet. In contrast, Apple is the only device using the iOS operating system and its tablets, like its phones, are priced at high-end premium prices.

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The report makes a bold statement about Apple’s market share. “Apple’s decline in PC market share is unavoidable when considering its business model. Samsung narrowly took the lead in EMEA this quarter and Apple will lose its position to competitors in more markets in the future.”

But as the report later notes, Apple isn’t likely to find this alarming. Apple’s business model is to put the emphasis on profitability rather than market share.

“However, Apple is one of the few companies making money from the tablet boom. Premium products attract high value consumers; for Apple, remaining highly profitable and driving revenue from its entire ecosystem is of greater importance than market share statistics.”

What about Microsoft? With its acquisition of Nokia (NYSE: NOK) the company may be poised to become a major player in the mobile device market but Canalys notes that it has to first shore up its business model. Multiple mobile operating systems is problematic to developers.

Looking out to 2014, expect the tablet landscape to look much like the smartphone market—an Apple and Samsung duopoly but some of the smaller manufacturers are finding momentum.

Disclosure: At the time of this writing, Tim Parker was long Apple. 

Posted-In: Apple Canalys Google Microsoft SamsungNews Econ #s Tech Best of Benzinga

 

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